What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-04 · 572 added, 340 removed, 247 unchanged (79% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes and the other financial information included elsewhere in this Report.

In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences include those discussed below.

For a more complete description of the risks noted above and other risks that could cause our actual results to materially differ from our current expectations, please see Item 1A “Risk Factors” in our Annual Report on Form 10-K

for the fiscal year ended December 31, 2022.

We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

The following discussion and analysis of

our financial condition and results of operations should be read together with our consolidated financial statements and the related notes

and the other financial information included elsewhere in this Report.

In addition to historical consolidated financial information, the

following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ

materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences include

those discussed below.

For a more complete description of the risks noted above and other risks that could cause our actual results to

materially differ from our current expectations, please see Item 1A “Risk Factors” in our Annual Report on Form 10-K for the

fiscal year ended December 31, 2022.

We assume no obligation to update or revise publicly any forward-looking statements, whether as a

result of new information, future events or otherwise, unless required by law.

Executive Summary

We are a global financial innovator, offering a well-diversified suite of ETPs, models, solutions and products leveraging blockchain-enabled technology.

We empower investors to shape their future and support financial professionals to better serve their clients and grow their businesses.

We leverage the latest financial infrastructure to create products that provide access, transparency and an enhanced user experience.

Building on our heritage of innovation, we are also developing and recently launched next-generation digital products and structures, including WisdomTree Digital Funds, or “Digital Funds” and tokenized assets, as well as our blockchain-native digital wallet, WisdomTree Prime ™

We have approximately $93.7 billion in AUM as of June 30, 2023.

Our family of ETPs includes products that provide exposure to equities, commodities, fixed income, leveraged-and-inverse,

currency, cryptocurrency and alternative strategies.

We are a global financial innovator,

offering a well-diversified suite of ETPs, models, solutions and products leveraging blockchain-enabled technology.

investors and consumers to shape their future and support financial professionals to better serve their clients and grow their

We are leveraging the latest financial infrastructure to create products that provide access, transparency and an

enhanced user experience.

Building on our heritage of innovation, we are also developing and have launched next-generation digital

products, services and structures, including WisdomTree Digital Funds and tokenized assets, as well

as our blockchain-native digital wallet, WisdomTree Prime™.

We have approximately $93.7 billion in AUM

as of September 30, 2023.

Our family of ETPs includes products that provide exposure to equities, fixed income, commodities,

leveraged-and-inverse, currency, alternatives and cryptocurrency strategies.

We have launched many first-to-market

products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform.

Most of our equity-based funds employ a fundamentally weighted investment methodology, which weights securities based on factors such as dividends, earnings or investment factors, whereas most other industry indexes use a capitalization weighted methodology.

These products are distributed through all major channels in the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers primarily through our sales force.

We believe technology is altering the way financial advisors conduct business and through our Advisor Solutions program we offer technology-enabled and research-driven solutions including portfolio construction, asset allocation, practice management services and digital tools to help financial advisors address technology challenges and grow and scale their businesses.

We are at the forefront of innovation and believe that tokenization and leveraging the utility of blockchain technology is the next evolution in financial services.

We are building the foundation that will allow us to lead in this coming evolution.

WisdomTree Prime ™

, our blockchain-native digital wallet, positions us to expand our blockchain-enabled financial services product offerings with a new direct-to-consumer

channel where spending, saving and investing are united.

As we continue to pursue our digital assets strategy, we are embracing a concept we refer to as “responsible DeFi,” which we believe upholds the foundational principles of regulation in this innovative and quickly evolving space.

We believe that our expansion into digital assets and blockchain-enabled finance will complement our existing core competencies in a holistic manner, diversify our revenue streams and contribute to our growth.

We were incorporated under the laws of the state of Delaware on September 19, 1985 as Financial Data Systems, Inc., were renamed WisdomTree Investments, Inc.

on September 6, 2005, and ultimately renamed WisdomTree, Inc.

products and pioneered alternative weighting we call “Modern Alpha,” which combines the outperformance potential of

active management with the benefits of passive management to offer investors cost-effective funds that are built to perform.

our equity-based funds employ a fundamentally weighted investment methodology, which weights securities based on factors such as

dividends, earnings or investment factors, whereas most other industry indexes use a capitalization weighted methodology.

products are distributed through all major channels in the asset management industry, including banks, brokerage firms, registered

investment advisers, institutional investors, private wealth managers and online brokers primarily through our sales force.

believe technology is altering the way financial advisors conduct business and through our Advisor Solutions program we offer

technology-enabled and research-driven solutions including portfolio construction, asset allocation, practice management services

and digital tools to help financial advisors address technology challenges and grow and scale their businesses.

We are at the forefront of innovation and

believe that tokenization and leveraging the utility of blockchain technology is the next evolution in financial services.

building the foundation that will allow us to lead in this coming evolution.

WisdomTree Prime™, our blockchain-native digital

wallet, positions us to expand our blockchain-enabled financial product and services offerings with a new

direct-to-consumer channel where spending, saving and investing are united.

As we continue to pursue our digital assets strategy, we

are embracing a concept we refer to as “responsible DeFi,” which we believe upholds the foundational principles of

regulation in this innovative and quickly evolving space.

We believe that our expansion into digital assets and blockchain-enabled

finance will complement our existing core competencies in a holistic manner, diversify our revenue streams and contribute to our

We were incorporated under the laws of the state

of Delaware on September 19, 1985 as Financial Data Systems, Inc., were renamed WisdomTree Investments, Inc.

on September 6, 2005, and

ultimately renamed WisdomTree, Inc.

on November 7, 2022.

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WisdomTree ETPs

We offer ETPs covering equity, commodity, fixed income, leveraged-and-inverse,

currency, alternatives and cryptocurrency.

The chart below sets forth the asset mix of our ETPs at June 30, 2023, March 31, 2023 and June 30, 2022:

We offer ETPs covering equities, fixed income,

commodities, leveraged-and-inverse, currency, alternatives and cryptocurrency.

The chart below sets forth the asset mix of our ETPs at

September 30, 2023, June 30, 2023 and September 30, 2022:

Market Environment

During the second quarter of 2023, developed markets continued to stave off a recession, as interest rates were relatively stable as compared to the prior quarter.

The faster-than-expected re-opening

of the Chinese economy has also improved the outlook for global growth.

The S&P 500, MSCI EAFE (local currency) and MSCI Emerging Markets Index (U.S.

dollar) increased by 8.7%, 4.6% and 1.0%, respectively, during the quarter.

In addition, the European and Japanese equities markets both appreciated with the MSCI EMU Index and MSCI Japan Index increasing 3.3% and 15.6%, respectively, in local currency terms for the quarter.

Global equities posted a negative return during

the third quarter of 2023 after generating strong gains in the first half of the year.

Government bonds also declined in the quarter,

with yields rising.

Expectations that the Federal Reserve would soon be pivoting to lowering interest rates did not materialize, leading

to an end to bullish sentiment and a general market selloff.

The energy sector was the best performer during the quarter, attributable

to a rise in oil prices.

The S&P 500, MSCI EAFE Index (local currency),

MSCI EMU Index (local currency) and MSCI Emerging Markets Index (U.S.

dollar) decreased by 3.3%, 1.2%, 4.3% and 2.8%, respectively, during

In addition, the Japanese equities markets appreciated with the MSCI Japan Index increasing 1.7% in local currency terms

for the quarter.

Gold prices decreased by 2.2%.

dollar weakened 0.1% and 2.2% versus the euro and British pound, respectively, and strengthened 8.3% versus the Japanese yen, during the quarter.

dollar strengthened 2.8%, 3.2% and 3.1% versus the euro, British pound and Japanese

yen, respectively.

Listed ETF Industry Flows

listed ETF industry net flows were $135 billion for the three months ended June 30, 2023.

listed ETF industry net flows were $110.4

billion for the three months ended September 30, 2023.

equity and fixed income gathered the majority of those flows.

European Listed ETP Industry Flows

European listed ETP industry net flows were $28.9 billion for the three months ended June 30, 2023.

Fixed income and equities gathered the majority of those flows.

European listed ETP industry net flows were

$34.0 billion for the three months ended September 30, 2023.

Equity and fixed income gathered the majority of those flows.

Our Operating and Financial Results

We operate as an ETP sponsor and asset manager, providing investment advisory services globally through our subsidiaries in the U.S.

We operate as an ETP sponsor and asset manager,

providing investment advisory services globally through our subsidiaries in the U.S.

The AUM of our U.S.

listed exchange traded funds, or U.S.

listed ETFs, increased from $61.3 billion at March 31, 2023 to $65.9 billion at June 30, 2023 due to net inflows and market appreciation.

listed exchange traded funds,

listed ETFs, increased from $65.9 billion at June 30, 2023 to $68.0 billion at September 30, 2023 due to net inflows, partly offset

by market depreciation.

European Listed ETPs

The AUM of our European listed (including internationally cross-listed) ETPs, or European listed ETPs, decreased from $29.5 billion at March 31, 2023 to $27.8 billion at June 30, 2023, due to net outflows and market depreciation.

The AUM of our European listed (including internationally

cross-listed) ETPs, or European listed ETPs, decreased from $27.8 billion at June 30, 2023 to $25.7 billion at September 30, 2023, due

to net outflows and market depreciation.

Consolidated Operating Results

The following table sets forth our revenues and net income/(loss) for the most recent five quarters.

– Total revenues increased 11.0% from the three months ended June 30, 2022 to $85.7 million in the comparable period in 2023 primarily due to higher average AUM.

– Total operating expenses increased 9.9% from the three months ended June 30, 2022 to $67.5 million in the comparable period in 2023 primarily due to higher professional fees incurred in connection with an activist campaign, incentive compensation and headcount, and fund management and administration costs.

These increases were partly offset by lower contractual gold payments.

Other Income/(Expenses)

– Other income/(expenses) includes interest income and interest expense, gains on revaluation/termination of deferred consideration–gold payments and other losses and gains.

The following table sets forth our revenues

and net income/(loss) for the most recent five quarters.

● Revenues – Total revenues increased 24.9% from the three months ended September 30, 2022 to $90.4 million in the comparable

period in 2023 primarily due to higher average AUM.

● Expenses – Total operating expenses increased 10.7% from the three months ended September 30, 2022 to $63.7 million in

the comparable period in 2023 primarily due to higher stock-based compensation and headcount, fund management and administration costs,

professional fees, third-party distribution fees, marketing expenses and sales and business development expenses.

These increases were

partly offset by the termination of our deferred consideration—gold payments obligation.

● Other Income/(Expenses) – Other income/(expenses) includes interest income and interest expense, gains on revaluation/termination

of deferred consideration–gold payments, impairments and other losses and gains.

Further information is provided herein.

Net income/(loss)

– We reported net income of $54.3 million and $8.0 million during the three months ended June 30, 2023 and 2022, respectively.

● Net income/(loss) – We reported net income of $13.0 million and $81.2 million during the three months ended September

30, 2023 and 2022, respectively.

Guidance Update for the Year Ending December 31, 2023

Compensation Expense

Our compensation expense for the year ending December 31, 2023 is currently estimated to range from $104.0 million to $110.0 million (previously $100.0 million to $106.0 million).

This range considers variability in incentive compensation, with drivers including the magnitude of our flows, our share price performance in relation to our peers as well as revenue, operating income and operating margin performance.

Given the potential volatility in our performance-based metrics, we consider the midpoint of this range to be a reasonable estimate.

Our compensation expense for the year ending

December 31, 2023 is currently estimated to range from $104.0 million to $110.0 million (unchanged from our guidance provided last quarter).

This range considers variability in incentive compensation, with drivers including the magnitude of our flows, our share price performance

in relation to our peers as well as revenue, operating income and operating margin performance.

Given our performance to date, we anticipate

our compensation expense to be near the high-end of our guidance range.

Discretionary Spending

Discretionary spending includes, marketing, sales, professional fees, occupancy and equipment, depreciation and amortization and other expenses.

During the six months ended June 30, 2023, our discretionary spending was $28.3 million.

We currently estimate our discretionary spending for the year ending December 31, 2023 to range from $56.0 million to $59.0 million (unchanged from our guidance provided last quarter).

Not included in the guidance above are potential non-recurring

expenses in response to an activist campaign, including $5.9 million incurred during the six months ended June 30, 2023.

We define gross margin as total operating revenues less fund management and administration expenses.

Discretionary spending includes marketing,

sales, professional fees, occupancy and equipment, depreciation and amortization and other expenses.

During the nine months ended September

30, 2023, our discretionary spending was $43.4 million.

We currently estimate our discretionary spending for the year ending December

31, 2023 to be near the high-end of our guidance range of $56.0 million to $59.0 million (unchanged from our guidance range provided last

Not included in the guidance above are potential

non-recurring expenses in response to an activist campaign, including $5.9 million incurred during the nine months ended September 30,

We define gross margin as total operating revenues

less fund management and administration expenses.

Gross margin percentage is calculated as gross margin divided by total operating revenues.

Our gross margin was 79.2% during the six months ended June 30, 2023.

Our gross margin guidance for the year ending December 31, 2023 is estimated to be 79% (previously 78%) which we believe should be sustainable at current AUM levels.

Our gross margin was 79.6% during the nine months ended September 30, 2023.

Our gross margin guidance for the year ending December 31,

2023 is estimated to be 79% to 80% (previously 79%) which we believe should be sustainable at current AUM levels.

Contractual Gold Payments

Our contractual gold payments expense of $6.1 million during the six months ended June 30, 2023 will be zero going forward as our obligation to make continuing gold payments was terminated in May 2023.

Our contractual gold payments expense of

$6.1 million during the nine months ended September 30, 2023 will be zero going forward as our obligation to make continuing

contractual gold payments was terminated in May 2023.

Third-Party Distribution Fees

We currently estimate third-party distribution fees to range from $8.0 million to $9.0 million (unchanged from our guidance provided last quarter) for the year ending December 31, 2023.

We currently estimate third-party distribution

fees to range from $9.0 million to $10.0 million (previously $8.0 million to $9.0 million) driven largely by AUM growth we are experiencing

in Latin America.

Interest Expense

Our interest expense for the year ending December 31, 2023 is currently estimated to be $15.0 million (unchanged from our guidance provided last quarter).

Our interest expense for the year ending December

31, 2023 is currently estimated to be $15.0 million (unchanged from our guidance provided last quarter).

Interest Income

Our interest income for the year ending December 31, 2023 is currently estimated to be approximately $3.0 million taking into consideration the magnitude of our investments which has been reduced from the prior quarter after having paid approximately $110 million to settle our convertible notes maturing in June and to terminate our deferred consideration—gold payments obligation.

Our interest income for the year ending December

31, 2023 is currently estimated to be approximately $3.5 million to $4.0 million (previously $3.0 million) taking into consideration the

magnitude of our investments and higher interest rates.

Income Tax Expense

We currently estimate that our consolidated normalized effective tax rate will be 24% (previously 23%) taking into consideration the current distribution of profits amongst our U.S.

We currently estimate that our consolidated

normalized effective tax rate will be 24% (unchanged from our guidance provided last quarter) taking into consideration the current distribution

of profits among our U.S.

and European businesses.

This normalized effective tax rate excludes items that are non-recurring

and not core to our operating business including but not limited to the impact of any revaluation on deferred consideration—gold payments, the loss on extinguishment of convertible notes, remeasurement of contingent consideration from the sale of our former Canadian ETF business, gains and losses on financial instruments owned and investments, valuation allowances on capital losses, reductions in unrecognized tax benefits and any stock-based compensation windfalls or shortfalls.

Diluted Shares Outstanding

Our weighted average diluted shares outstanding were 170.7 million during the three months ended June 30, 2023 after having issued approximately 14 million shares of common stock or instruments convertible into common stock in connection with the termination of our deferred consideration—gold payments obligation and the maturity of our convertible notes during the second quarter.

The impact of the share issuance on our second quarter diluted shares was affected by the timing of when the shares were issued.

Going forward, we anticipate our diluted shares outstanding to be approximately 177 million per quarter.

This normalized effective tax rate excludes

items that are non-recurring and not core to our operating business including but not limited to the impact of any revaluation on deferred

consideration—gold payments previously recognized, the loss on extinguishment of convertible notes, remeasurement of contingent

consideration from the sale of our former Canadian ETF business, gains and losses on financial instruments owned and investments, valuation

allowances on capital losses, reductions in unrecognized tax benefits and any stock-based compensation windfalls or shortfalls.

Key Operating Statistics

The following table presents key operating statistics that serve as indicators for the performance of our business:

The following table presents key operating statistics

that serve as indicators for the performance of our business:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

GLOBAL ETPs (in millions )

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

Fund closures

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Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

3 unchanged sentences

Beginning of period assets

(Outflows)/inflows

Market (depreciation)/appreciation

Market depreciation

Fund closures

4 unchanged sentences

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

Average assets during the period

Commodity & Currency

Beginning of period assets

(Outflows)/inflows

Market (depreciation)/appreciation

1 unchanged sentence

Average assets during the period

Commodity & Currency

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market depreciation

End of period assets

3 unchanged sentences

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Emerging Market Equity

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

2 unchanged sentences

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

(Outflows)/inflows

Market (depreciation)/appreciation

End of period assets

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Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

2 unchanged sentences

Beginning of period assets

(Outflows)/inflows

Market appreciation/(depreciation)

Inflows/(outflows)

Market (depreciation)/appreciation

End of period assets

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Beginning of period assets

Inflows/(outflows)

Market depreciation

Fund closures

1 unchanged sentence

Average assets during the period

Previously issued statistics may be restated due to fund closures and trade adjustments

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Previously issued statistics may be restated

due to fund closures and trade adjustments

Three Months Ended September 30, 2023 Compared to Three Months

Ended September 30, 2022

Selected Operating and Financial Information

Three Months Ended

AUM (in millions)

1 unchanged sentence

Advisory fees

Total revenues

Total operating revenues

Operating Revenues

Advisory fees

Advisory fee revenues increased 8.5% from $75.6 million during the three months ended June 30, 2022 to $82.0 million in the comparable period in 2023 due to higher average AUM, partially offset by lower average advisory fee.

Our average advisory fee was 0.36% during the three months ended June 30, 2023 and 0.39% during the comparable period in 2022.

Other income increased 123.2% from $1.7 million during the three months ended June 30, 2022 to $3.7 million in the comparable period in 2023 primarily due to large flows into some of our European products.

Advisory fee revenues increased 22.6% from

$70.6 million during the three months ended September 30, 2022 to $86.6 million in the comparable period in 2023 due to higher

average AUM, partially offset by a lower average advisory fee.

Our average advisory fee was 0.36% during the three months ended

September 30, 2023 and 0.38% during the comparable period in 2022.

Other income increased 112.7% from $1.8 million

during the three months ended September 30, 2022 to $3.8 million in the comparable period in 2023 primarily due to large flows from some

of our European products.

Operating Expenses

(in thousands)

Three Months Ended

Compensation and benefits

8 unchanged sentences

Total operating expenses

As a Percent of Revenues:

Three Months Ended

September 30,

a Percent of Revenues:

Compensation and benefits

9 unchanged sentences

Compensation and benefits

Compensation and benefits expense increased 7.1% from $24.6 million during the three months ended June 30, 2022 to $26.3 million in the comparable period in 2023 due to increased headcount and higher stock-based compensation expense, partly offset by lower incentive compensation.

Headcount was 264 and 291 at June 30, 2022 and 2023, respectively.

Compensation and benefits expense increased

17.9% from $23.7 million during the three months ended September 30, 2022 to $28.0 million in the comparable period in 2023 due to higher

incentive and stock-based compensation expense, as well as increased headcount.

Headcount was 274 and 299 at September 30, 2022 and 2023,

respectively.

Fund management and administration

Fund management and administration expense increased 10.3% from $16.1 million during the three months ended June 30, 2022 to $17.7 million in the comparable period in 2023 primarily due to higher average AUM, product launches and inflows.

Fund management and administration expense increased

10.7% from $16.3 million during the three months ended September 30, 2022 to $18.0 million in the comparable period in 2023 primarily

due to higher average AUM, product launches and inflows.

We had 78 U.S.

listed ETFs and 267 European listed ETPs at June 30, 2022 compared to 80 U.S.

listed ETFs and 273 European listed ETPs at June 30, 2023.

listed ETFs and 269 European listed ETPs at September 30, 2022

compared to 80 U.S.

listed ETFs and 273 European listed ETPs at September 30, 2023.

Marketing and advertising

Marketing and advertising expense increased 14.7% from $3.9 million during the three months ended June 30, 2022 to $4.5 million in the comparable period in 2023 primarily due to higher spending related to our U.S.

Marketing and advertising expense increased

21.9% from $3.1 million during the three months ended September 30, 2022 to $3.8 million in the comparable period in 2023 primarily due

to higher spending related to our U.S.

listed products.

Sales and business development

Sales and business development expense was essentially unchanged from the three months ended June 30, 2022.

Sales and business development expense increased

24.2% from $2.7 million during the three months ended September 30, 2022 to $3.4 million in the comparable period in 2023 primarily

resulting from increases in travel and events spending, as well as higher spending on sales tools and data.

Contractual gold payments

Contractual gold payments expense decreased 64.4% from $4.4 million during the three months ended June 30, 2022 to $1.6 million in the comparable period in 2023 due to the termination of our deferred consideration—gold payments obligation on May 10, 2023.

See Note 9 to our Consolidated Financial Statements for additional information.

Contractual gold payments expense

decreased from $4.1 million during the three months ended September 30, 2022 to $0.0 million in the comparable period in 2023 due to

the termination of our deferred consideration—gold payments obligation on May 10, 2023.

See Note 9 to our Consolidated

Financial Statements for additional information.

Professional fees

Professional fees increased 93.5% from $4.3 million during the three months ended June 30, 2022 to $8.3 million in the comparable period in 2023 primarily due to higher expenses incurred in response to an activist campaign as well as expenses incurred to settle our deferred consideration—gold payments obligation and our acquisition of WisdomTree Transfers, Inc.

Professional fees increased 57.1% from $2.4 million

during the three months ended September 30, 2022 to $3.7 million in the comparable period in 2023 primarily due to higher expenses

related to our digital assets initiative.

Occupancy, communications and equipment

Occupancy, communications and equipment expense was essentially unchanged from the three months ended June 30, 2022.

Occupancy, communications and equipment expense

was essentially unchanged from the three months ended September 30, 2022.

Depreciation and amortization

Depreciation and amortization expense increased 128.3% due to amortization of software development costs.

Depreciation and amortization expense increased

429.3% from $0.1 million during the three months ended September 30, 2022 to $0.3 million in the comparable period in 2023 due to amortization

of software development costs.

Third-party distribution fees

Third-party distribution fees were essentially unchanged from the three months ended June 30, 2022.

Other expenses increased 24.0% from $2.1 million during the three months ended June 30, 2022 to $2.6 million in the comparable period in 2023 primarily due to higher travel, public relations and directors expenses.

Third-party distribution fees increased 47.0%

from $1.8 million during the three months ended September 30, 2022 to $2.7 million in the comparable period in 2023 primarily due to AUM

growth we are experiencing in Latin America.

Other expenses were essentially unchanged from

the three months ended September 30, 2022.

Other Income/(Expenses)

(in thousands)

Three Months Ended

September 30,

Interest expense

1 unchanged sentence

Interest income

Other gains and losses, net

Other losses, net

Total other income/(expenses), net

Three Months Ended June 30,

As a Percent of Revenues:

September 30,

a Percent of Revenues:

Interest expense

1 unchanged sentence

Interest income

Other gains and losses, net

Other losses, net

Total other income/(expenses), net

Interest expense

Interest expense increased 7.7% from $3.7 million during the three months ended June 30, 2022 to $4.0 million in the comparable period in 2023 due to a higher level of debt outstanding and a higher effective interest rate.

Our effective interest rate during the three months ended June 30, 2022 and 2023 was 4.6% and 5.0%, respectively.

Gain on revaluation/termination of deferred consideration—gold payments

We recognized a gain on revaluation/termination of deferred consideration—gold payments of $41.4 million and $2.3 million during the three months ended June 30, 2023 and 2022, respectively.

This obligation was settled on May 10, 2023 for approximately $137.0 million.

See Note 9 to our Consolidated Financial Statements for additional information.

Interest expense decreased 7.3% from $3.7 million

during the three months ended September 30, 2022 to $3.5 million in the comparable period in 2023 due to a lower level of debt outstanding.

Our effective interest rate during the three months ended September 30, 2022 and 2023 was 4.6% and 5.0%, respectively.

Interest income

Interest income increased 29.9% from $0.8 million during the three months ended June 30, 2022 to $1.0 million in the comparable period in 2023 due to, partially offset by a decrease in our financial instruments owned.

Other gains and losses, net

Other gains and losses, net was $1.3 million for the second quarter of 2023.

This quarter includes gains on our investments of $3.1 million, partly offset by losses on our financial instruments owned of $1.0 million.

Interest income was essentially unchanged from

the three months ended September 30, 2022.

During the three months ended September 30, 2023, we recognized a non-cash impairment charge of $2.7 million, primarily related to our investment in Securrency, Inc., as we marked our investment to its estimated realizable value in connection with Securrency entering into an agreement to be acquired by an unrelated third party.

Other losses, net

Other losses, net was $5.3 million and $2.5 million during the three months ended September 30, 2022 and 2023, respectively.

This quarter includes losses on our financial instruments of $2.0 million and other losses on our investments of $0.4 million.

Gains and losses also generally arise from the sale of gold earned from management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items.

Our effective income tax rate for the second quarter of 2023 was 6.1%, resulting in income tax expense of $3.6 million.

The effective tax rate differs from the federal statutory rate of 21% primarily due to a non-taxable

gain on revaluation/termination of deferred consideration—gold payments and a decrease in the deferred tax asset valuation allowance on losses recognized on our investments.

These items were partly offset by non-deductible

executive compensation.

Our effective income tax rate for the second quarter of 2022 of 25.0% resulted in an income tax expense of $2.7 million.

Our tax rate differs from the federal statutory rate of 21% primarily due to a valuation allowance on losses recognized on securities owned and non-deductible

compensation.

These items were partly offset by a non-taxable

gain on revaluation of deferred consideration—gold payments and a lower tax rate on foreign earnings.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

Our effective income tax rate during the three months ended September 30, 2023 was 31.0%, resulting in income tax expense of $5.8 million.

The effective tax rate differs from the federal statutory rate of 21% primarily due to an increase in the deferred tax asset valuation allowance on losses recognized on the Company's investments and non-deductible executive compensation.

Our effective income tax rate during the three months ended September 30, 2022 of 3.9% resulted in an income tax expense of $3.3 million.

Our effective tax rate differs from the federal statutory rate of 21% primarily due to a non-taxable gain on revaluation of deferred consideration.

This was partly offset by an increase in the deferred tax asset valuation allowance on losses recognized on financial instruments owned.

Nine Months Ended September 30, 2023 Compared to Nine Months

Ended September 30, 2022

Selected Operating and Financial Information

Six Months Ended

AUM (in millions)

1 unchanged sentence

Advisory fees

Total revenues

Total operating revenues

Operating Revenues

Advisory fees

Advisory fee revenues increased 5.0% from $152.1 million during the six months ended June 30, 2022 to $159.6 million in the comparable period in 2023 due to higher average AUM, partially offset by lower average advisory fee.

Our average advisory fee was 0.39% during the six months ended June 30, 2022 and 0.36% during the comparable period in 2023.

Other income increased 131.0% from $3.5 million during the six months ended June 30, 2022 to $8.1 million in the comparable period in 2023 primarily due to large flows into some of our European products.

Advisory fee revenues increased 10.6% from

$222.7 million during the nine months ended September 30, 2022 to $246.2 million in the comparable period in 2023 due to higher

average AUM, partially offset by a lower average advisory fee.

Our average advisory fee was 0.39% during the nine months ended

September 30, 2022 and 0.36% during the comparable period in 2023.

Other income increased 124.8% from $5.3 million

during the nine months ended September 30, 2022 to $12.0 million in the comparable period in 2023 primarily due to large flows from some

of our European products.

Operating Expenses

(in thousands)

Six Months Ended

Compensation and benefits

8 unchanged sentences

Total operating expenses

September 30,

As a Percent of Revenues:

Six Months Ended

Compensation and benefits

9 unchanged sentences

Compensation and benefits

Compensation and benefits expense increased 8.8% from $49.4 million during the six months ended June 30, 2022 to $53.7 million in the comparable period in 2023 due to increased headcount, stock-based compensation expense, payroll taxes and benefits, partly offset by lower incentive compensation.

Compensation and benefits expense increased

11.8% from $73.1 million during the nine months ended September 30, 2022 to $81.7 million in the comparable period in 2023 primarily due

to higher stock-based compensation and increased headcount.

Fund management and administration

Fund management and administration expense increased 10.5% from $31.6 million during the six months ended June 30, 2022 to $34.9 million in the comparable period in 2023 primarily due to higher average AUM, product launches and inflows.

Fund management and administration expense increased

10.5% from $47.9 million during the nine months ended September 30, 2022 to $52.9 million in the comparable period in 2023 primarily due

to higher average AUM.

Marketing and advertising

Marketing and advertising expense increased 7.0% from $7.9 million during the three months ended June 30, 2022 to $8.5 million in the comparable period in 2023 primarily due to higher spending related to our U.S.

Marketing and advertising expense

increased 11.2% from $11.1 million during the nine months ended September 30, 2022 to $12.3 million in the comparable period in 2023

primarily due to higher spending related to our U.S.

listed products.

Sales and business development

Sales and business development expense increased 10.1% from $5.7 million during the six months ended June 30, 2022 to $6.3 million in the comparable period in 2023 primarily resulting from increases in travel, conference and events spending.

Sales and business development expense increased

14.6% from $8.5 million during the nine months ended September 30, 2022 to $9.7 million in the comparable period in 2023 primarily resulting

from increases in travel and events spending.

Contractual gold payments

Contractual gold payments expense decreased 31.8% from $8.9 million during the six months ended June 30, 2022 to $6.1 million in the comparable period in 2023 due to the termination of our deferred consideration—gold payments obligation on May 10, 2023.

See Note 9 to our Consolidated Financial statements for additional information.

Contractual gold payments expense

decreased 53.3% from $13.0 million during the nine months ended September 30, 2022 to $6.1 million in the comparable period in 2023

due to the termination of our deferred consideration—gold payments obligation on May 10, 2023.

See Note 9 to our Consolidated

Financial statements for additional information.

Professional fees

Professional fees increased 37.4% from $8.8 million during the six months ended June 30, 2022 to $12.0 million in the comparable period in 2023 primarily due to higher expenses incurred in response to an activist campaign, as well as expenses incurred to settle our deferred consideration—gold payments obligation and our acquisition of WisdomTree Transfers, Inc.

Professional fees increased 41.6% from

$11.1 million during the nine months ended September 30, 2022 to $15.8 million in the comparable period in 2023 primarily

due to higher expenses incurred in response to an activist campaign, as well as expenses incurred to terminate our deferred

consideration—gold payments obligation and expenses related to our digital assets initiative.

Occupancy, communications and equipment

Occupancy, communications and equipment expense increased 26.1% from $1.8 million during the six months ended June 30, 2022 to $2.3 million in the comparable period in 2023 as our New York office lease became effective in May 2022.

Occupancy, communications and equipment expense

increased 24.7% from $2.8 million during the nine months ended September 30, 2022 to $3.5 million in the comparable period in 2023 as

our New York office lease became effective in May 2022.

Depreciation and amortization

Depreciation and amortization expense increased 130.0% from $0.1 million during the six months ended June 30, 2022 to $0.2 million in the comparable period in 2023 due to amortization of software development costs.

Depreciation and amortization expense increased

239.9% from $0.2 million during the nine months ended September 30, 2022 to $0.5 million in the comparable period in 2023 due to amortization

of software development costs.

Third-party distribution fees

Third-party distribution fees were essentially unchanged from the six months ended June 30, 2022.

Other expenses increased 23.2% from $4.0 million during the six months ended June 30, 2022 to $4.9 million in the comparable period in 2023 primarily due to higher travel, public relations and directors expenses.

Third-party distribution fees increased 16.5%

from $5.9 million during the nine months ended September 30, 2022 to $6.8 million in the comparable period in 2023 primarily due to AUM

growth we are experiencing in Latin America.

Other expenses increased 19.0% from $6.3 million

during the nine months ended September 30, 2022 to $7.5 million in the comparable period in 2023 primarily due to higher travel, public

relations and directors expenses.

Other Income/(Expenses)

(in thousands)

Six Months Ended

Interest expense

Gain/(loss) on revaluation/termination of deferred consideration—gold payments

Gain on revaluation/termination of deferred consideration—gold payments

Interest income

2 unchanged sentences

Total other income/(expenses), net

Six Months Ended June 30,

September 30,

As a Percent of Revenues:

Interest expense

Gain/(loss) on revaluation/termination of deferred consideration—gold payments

Gain on revaluation/termination of deferred consideration—gold payments

Interest income

Loss on extinguishment of convertible notes

Loss on extinguishment of convertible note

Other losses, net

1 unchanged sentence

Interest expense

Interest expense increased 7.5% from $7.5 million during the six months ended June 30, 2022 to $8.0 million in the comparable period in 2023 due to a higher level of debt outstanding and a higher effective interest rate.

Our effective interest rate during the six months ended June 30, 2022 and 2023 was 4.6% and 4.9%, respectively.

Gain/(loss) on revaluation/termination of deferred consideration—gold payments

We recognized a loss on revaluation of deferred consideration—gold payments of ($14.7) million and a gain on revaluation/termination of deferred consideration—gold payments of $62.0 million during the six months ended June 30, 2022 and 2023, respectively.

This obligation was settled on May 10, 2023 for approximately $137.0 million.

See Note 9 to our Consolidated Financial Statements for additional information.

Interest expense was essentially unchanged from

the nine months ended September 30, 2022.

Gain on revaluation/termination of deferred consideration—gold

We recognized a gain on revaluation of

deferred consideration—gold payments of $63.2 million and $62.0 million during the nine months ended September 30, 2022 and

2023, respectively.

This obligation was terminated on May 10, 2023 for approximately $137.0 million.

See Note 9 to our Consolidated

Financial Statements for additional information.

Interest income

Interest income increased 33.2% from $1.6 million during the six months ended June 30, 2022 to $2.1 million in the comparable period in 2023 due to rising interest rates, partially offset by a decrease in our financial instruments owned.

During the six months ended June 30, 2023, we recognized a non-cash

impairment charge of $4.9 million on the Securrency Series A Shares.

Interest income increased 21.0% from $2.4 million

during the nine months ended September 30, 2022 to $2.9 million in the comparable period in 2023 due to rising interest rates, partially

offset by a decrease in our financial instruments owned.

During the nine months ended September 30, 2023, we recognized a non-cash impairment charge of $7.6 million primarily related to our investment in Securrency, Inc., as we marked our investment to its estimated realizable value in connection with Securrency's announced sale to an unrelated third party.

Loss on Extinguishment of Convertible Notes

During the six months ended June 30, 2023, we recognized a loss on extinguishment of convertible notes of $9.7 million arising from the repurchase of $115.0 million in aggregate principal amount of our 2020 Notes.

During the nine months ended September 30, 2023,

we recognized a loss on extinguishment of convertible notes of $9.7 million arising from the repurchase of $115.0 million in aggregate

principal amount of our 2020 Notes.

Other losses, net

Other net losses were $0.7 million during the six months ended June 30, 2023.

This period includes a non-cash

charge of $1.4 million arising from the release of tax-related

indemnification assets upon the expiration of the statute of limitations (an equal and offsetting benefit was recognized in income tax expense);

gains on our financial instruments owned of $0.9 million and losses on our investments of $0.8 million.

Other net losses were $34.5 million and $3.2 million during the nine months ended September 30, 2022 and 2023, respectively.

This period includes a non-cash charge of $1.4 million arising from the release of tax-related indemnification assets upon the expiration of the statute of limitations (an equal and offsetting benefit was recognized in income tax expense);

losses on our financial instruments owned of $1.0 million and losses on our investments of $1.2 million.

Gains and losses also generally arise from the sale of gold earned on management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items.

Our effective income tax rate for the six months ended June 30, 2023 was 6.5%, resulting in an income tax expense of $4.9 million.

Our tax rate differs from the federal statutory rate of 21% primarily due to a non-taxable

gain on revaluation/termination of deferred consideration—gold payments, a reduction in unrecognized tax benefits associated with the release of the tax-related

indemnification asset described above and a lower tax rate on foreign earnings.

These items were partly offset by a non-deductible

loss on extinguishment of our convertible notes during the first quarter of 2023, non-deductible

executive compensation and an increase in the deferred tax asset valuation allowance on losses recognized on our investments.

Our effective income tax rate benefit for the six months ended June 30, 2022 was 86.2% resulting in an income tax benefit of $14.0 million.

Our tax rate differs from the federal statutory rate of 21% primarily due to a reduction in unrecognized tax benefits associated with the release of the tax-related

indemnification asset described above and a lower tax rate on foreign earnings.

These items were partly offset by a non-taxable

loss on revaluation of deferred consideration—gold payments and an increase in the deferred tax asset valuation allowance on losses recognized on our financial instruments owned.

Financial Measurements

In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP

information which we believe provides useful and meaningful information.

Our management reviews these non-GAAP

financial measurements when evaluating our financial performance and results of operations;

therefore, we believe it is useful to provide information with respect to these non-GAAP

measurements so as to share this perspective of management.

measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies.

These non-GAAP

financial measurements should be considered in the context with our GAAP results.

financial measurements contained in this Report include:

Our effective income tax rate during the

nine months ended September 30, 2023 was 11.4%, resulting in an income tax expense of $10.8 million.

Our effective tax rate differs

from the federal statutory rate of 21% primarily due to a non-taxable gain on revaluation/termination of deferred consideration, a

reduction in unrecognized tax benefits associated with the release of the tax-related indemnification asset described above and a

lower tax rate on foreign earnings.

These items were partly offset by a non-deductible loss on extinguishment of our convertible

notes during the first quarter of 2023, an increase in the deferred tax asset valuation allowance on losses recognized on our

investments and non-deductible executive compensation.

Our effective income tax rate during the

nine months ended September 30, 2022 was negative 15.7%, resulting in an income tax benefit of $10.7 million.

Our effective tax rate

differs from the federal statutory rate of 21% primarily due to the reduction in unrecognized tax benefits, a non-taxable gain on

revaluation of deferred consideration and a lower tax rate on foreign earnings.

These items were partly offset by an increase in the

deferred tax asset valuation allowance on losses recognized on financial instruments owned.

Non-GAAP Financial Measurements

In an effort to provide additional information

regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful

Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations;

therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective

of management.

Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements

and are unlikely to be comparable to similar measures presented by other companies.

These non-GAAP financial measurements should be considered

in the context with our GAAP results.

The non-GAAP financial measurements contained in this Report include:

Adjusted Net Income and Diluted Earnings per Share

We disclose adjusted net income and diluted earnings per share as non-GAAP

financial measurements in order to report our results exclusive of items that are non-recurring

or not core to our operating business.

We believe presenting these non-GAAP

financial measurements provides investors with a consistent way to analyze our performance.

These non-GAAP

financial measurements exclude the following:

financial measurements in order to report our results exclusive of items that are non-recurring or not core to our operating business.

We believe presenting these non-GAAP financial measurements provides investors with a consistent way to analyze our performance.

non-GAAP financial measurements exclude the following:

● Unrealized gains or losses on revaluation/termination of deferred consideration—gold payments:

Deferred consideration—gold payments was an obligation we assumed in connection with the ETFS Acquisition that was carried at fair value.

This item represented the present value of an obligation to pay fixed ounces of gold into perpetuity and is measured using forward-looking gold prices.

Changes in the forward-looking price of gold and changes in the discount rate used to compute the present value of the annual payment obligations have had a material impact on the carrying value of the deferred consideration and our reported financial results.

We exclude this item when arriving at adjusted net income and diluted earnings per share as it was not core to our operating business.

The item is not adjusted for income taxes as the obligation was assumed by a wholly-owned subsidiary of ours that is based in Jersey, a jurisdiction where we are subject to a zero percent tax rate.

During the second quarter of 2023, we terminated this obligation for aggregate consideration totaling approximately $137.0 million.

Deferred consideration—gold payments was an obligation we assumed

in connection with the ETFS Acquisition that was carried at fair value.

This item represented the present value of an obligation to pay

fixed ounces of gold into perpetuity and is measured using forward-looking gold prices.

Changes in the forward-looking price of gold and

changes in the discount rate used to compute the present value of the annual payment obligations have had a material impact on the carrying

value of the deferred consideration and our reported financial results.

We exclude this item when calculating our non-GAAP financial measurements

as it was not core to our operating business.

The item was not adjusted for income taxes as the obligation was assumed by a wholly-owned

subsidiary of ours that is based in Jersey, a jurisdiction where we are subject to a zero percent tax rate.

During the second quarter

of 2023, we terminated this obligation for aggregate consideration totaling approximately $137.0 million.

● Gains or losses on financial instruments owned:

We account for our financial instruments owned as trading securities, which requires these instruments to be measured at fair value with gains and losses reported in net income.

We exclude these items when calculating our non-GAAP

financial measurements as the gains and losses introduce volatility in earnings and are not core to our operating business.

We account for our financial instruments owned as trading securities, which

requires these instruments to be measured at fair value with gains and losses reported in net income.

We exclude these items when calculating

our non-GAAP financial measurements as the gains and losses introduce volatility in earnings and are not core to our operating business.

● Tax windfalls and shortfalls upon vesting and exercise of stock-based compensation awards:

GAAP requires the recognition of tax windfalls and shortfalls within income tax expense.

These items arise upon the vesting and exercise of stock-based compensation awards and the magnitude is directly correlated to the number of awards vesting/exercised as well as the difference between the price of our stock on the date the award was granted and the date the award vested or was exercised.

We exclude these items when determining adjusted net income and diluted earnings per share as they introduce volatility in earnings and are not core to our operating business.

Loss on extinguishment of our convertible notes, impairments, remeasurement of contingent consideration payable to us from the sale of our former Canadian ETF business, unrealized gains and losses recognized on our investments, changes in deferred tax asset valuation allowance, expenses incurred in response to an activist campaign and litigation expenses associated with certain provisions of our Stockholder Rights Agreement are excluded when calculating our non-GAAP

financial measurements.

GAAP requires the recognition of tax windfalls and shortfalls within

income tax expense.

These items arise upon the vesting and exercise of stock-based compensation awards and the magnitude is directly correlated

to the number of awards vesting/exercised as well as the difference between the price of our stock on the date the award was granted and

the date the award vested or was exercised.

We exclude these items when calculating our non-GAAP financial measurements as they introduce

volatility in earnings and are not core to our operating business.

● Other items:

Loss on extinguishment of our convertible notes, impairments, remeasurement of contingent consideration payable

to us from the sale of our former Canadian ETF business, unrealized gains and losses recognized on our investments, changes in deferred

tax asset valuation allowance, expenses incurred in response to an activist campaign and litigation expenses associated with certain provisions

of our Stockholder Rights Agreement are excluded when calculating our non-GAAP financial measurements.

Three Months Ended

Six Months Ended

Nine Months Ended

Adjusted Net Income and Diluted Earnings per Share:

Net income/(loss), as reported

Deduct/add back:

(Gain)/loss on revaluation/termination of deferred consideration—gold payments

Expenses incurred in response to an activist campaign, net of income taxes

Deduct/add back:

Unrealized (gain)/loss recognized on our investments, net of income taxes

September 30,

Net income, as reported

Impairments, net of income taxes

Losses on financial instruments owned, net of income taxes

Increase in deferred tax asset valuation allowance on financial instruments owned and investments

Add back/deduct:

Losses/(gains) on financial instruments owned, net of income taxes

Unrealized loss/(gain) recognized on our investments, net of income taxes

(Deduct)/add back:

(Decrease)/increase in deferred tax asset valuation allowance on financial instruments owned and investments

Litigation expenses associated with certain provisions of the Stockholder Rights Agreement, net of income taxes

Add back/(deduct):

Tax shortfalls/(windfalls) upon vesting and exercise of stock-based compensation awards

Tax (windfalls)/shortfalls upon vesting and exercise of stock-based compensation awards

Gain on revaluation/termination of deferred consideration—gold payments

Loss on extinguishment of convertible notes, net of income taxes

Impairments, net of income taxes (where applicable)

Expenses incurred in response to an activist campaign, net of income taxes

Remeasurement of contingent consideration—sale of former Canadian ETF business

Litigation expenses associated with certain provisions of the Stockholder Rights Agreement, net of income taxes

Adjusted net income

2 unchanged sentences

Adjusted net income available to common stockholders

Weighted average diluted shares, excluding participating securities (in thousands) (See Note 11 to our Consolidated Financial Statements)

Weighted average diluted

shares, excluding participating securities (in thousands) (See Note 11 to our Consolidated Financial Statements)

Adjusted earnings per share – diluted

Liquidity and Capital Resources

The following table summarizes key data regarding our liquidity, capital resources and use of capital to fund our operations:

Balance Sheet Data (in thousands):

The following table summarizes key data regarding

our liquidity, capital resources and use of capital to fund our operations:

Sheet Data (in thousands):

Cash and cash equivalents

7 unchanged sentences

Available liquidity

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flow Data (in thousands):

4 unchanged sentences

Decrease in cash and cash equivalents

We consider our available liquidity to be our liquid assets, less our current liabilities, seed capital in WisdomTree Digital Funds and regulatory capital requirements.

Liquid assets consist of cash and cash equivalents, financial instruments owned, at fair value, accounts receivable and securities held-to-maturity.

We consider our available liquidity to be our

liquid assets, less our current liabilities, seed capital in WisdomTree Digital Funds and regulatory capital requirements.

Liquid assets

consist of cash and cash equivalents, financial instruments owned, at fair value, accounts receivable and securities held-to-maturity.

Our financial instruments owned, at fair value are highly liquid investments.

Accounts receivable are current assets and primarily represent receivables from advisory fees we earn from our ETPs.

Our current liabilities consist primarily of payments owed to vendors and third parties in the normal course of business and accrued incentive compensation for employees.

Cash and cash equivalents decreased by $48.3 million during the six months ended June 30, 2023 due to $184.3 million used to repurchase and settle at maturity our convertible notes, $50.0 million used to settle our deferred consideration—gold payments obligation, $40.5 million used to purchase financial instruments owned, at fair value, $10.0 million used to purchase investments, $9.7 million used to pay dividends, $3.5 million used to repurchase our common stock, $3.5 million used for convertible notes issuance costs and $1.0 million used to acquire Securrency Transfers, Inc (renamed WisdomTree Transfers, Inc.).

These decreases were partly offset by $130.0 million of proceeds from the issuance of convertible notes, $102.0 million of proceeds from the sale of financial instruments owned, at fair value, $20.0 million provided by operating activities, $1.5 million from receipt of contingent consideration and $0.7 million from other activities.

Cash and cash equivalents decreased $31.0 million during the six months ended June 30, 2022 due to $32.5 million used to purchase securities owned, $11.9 million used to purchase investments, $9.7 million used to pay dividends on our common stock, $3.4 million used to repurchase our common stock, $3.4 million of foreign exchange rate losses and $0.1 million used in other activities.

These decreases were partly offset by $21.5 million of proceeds from the sale of securities owned and $8.5 million of net cash provided by operating activities.

Accounts receivable are current assets and primarily represent

receivables from advisory fees we earn from our ETPs.

Our current liabilities consist primarily of payments owed to vendors and third

parties in the normal course of business and accrued incentive compensation for employees.

Cash and cash equivalents decreased by $42.6

million during the nine months ended September 30, 2023 due to $184.3 million used to repurchase and settle at maturity our convertible

notes, $56.8 million used to purchase financial instruments owned, at fair value, $50.0 million used to settle our deferred consideration—gold

payments obligation, $14.9 million used to pay dividends, $10.0 million used to purchase investments, $3.6 million used to repurchase

our common stock, $3.5 million used for convertible notes issuance costs, $1.0 million used to acquire Securrency Transfers, Inc.

WisdomTree Transfers, Inc.) and $0.7 million used for other activities.

These decreases were partly offset by $130.0 million of proceeds

from the issuance of convertible notes, $102.3 million of proceeds from the sale of financial instruments owned, at fair value, $48.4

million provided by operating activities and $1.5 million from receipt of contingent consideration.

Cash and cash equivalents decreased $8.0 million

during the nine months ended September 30, 2022 due to $41.2 million used to purchase securities owned, $11.9 million used to purchase

investments, $14.5 million used to pay dividends on our common stock, $3.4 million used to repurchase our common stock, $7.6 million of

foreign exchange rate losses and $0.2 million used in other activities.

These decreases were partly offset by $27.7 million of proceeds

from the sale of securities owned and $43.1 million of net cash provided by operating activities.

Issuance of Convertible Notes

On February 14, 2023, we issued and sold $130.0 million in aggregate principal amount of 5.75% Convertible Senior Notes due 2028 (the “2023 Notes”) pursuant to an indenture dated February 14, 2023, between us and U.S.

Bank Trust Company, National Association, as trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (“Rule 144A”).

On June 14, 2021, we issued and sold $150.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2026 (the “2021 Notes”) pursuant to an indenture dated June 14, 2021, between us and the trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A.

On June 16, 2020, we issued and sold $150.0 million in aggregate principal amount of 4.25% Convertible Senior Notes due 2023 (the “June 2020 Notes”) pursuant to an indenture dated June 16, 2020, between us and the trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A.

On August 13, 2020, we issued and sold $25.0 million in aggregate principal amount of 4.25% Convertible Senior Notes due 2023 at a price equal to 101% of the principal amount thereof, plus interest deemed to have accrued since June 16, 2020, which constitute a further issuance of, and form a single series with, our June 2020 Notes (the “August 2020 Notes” and together with the June 2020 Notes, the “2020 Notes”).

In connection with the issuance of the 2023 Notes, we repurchased $115.0 million in aggregate principal amount of the 2020 Notes.

As a result of this repurchase, we recognized a loss on extinguishment of approximately $9.7 million during the six months ended June 30, 2023.

The remainder of the 2020 Notes matured on June 15, 2023 and were settled for approximately $59.9 million of cash and approximately 1.0 million shares of common stock of the Company.

After the repurchase and maturity of the 2020 Notes and the issuance of the 2023 Notes (and together with the 2021 Notes, the “Convertible Notes”), we had $280.0 million in aggregate principal amount of Convertible Notes outstanding.

On February 14, 2023, we issued and sold $130.0

million in aggregate principal amount of 5.75% Convertible Senior Notes due 2028 (the “2023 Notes”) pursuant to an indenture

dated February 14, 2023, between us and U.S.

Bank Trust Company, National Association, as trustee, in a private offering to qualified

institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (“Rule 144A”).

On June 14, 2021, we issued and sold $150.0

million in aggregate principal amount of 3.25% Convertible Senior Notes due 2026 (the “2021 Notes”) pursuant to an indenture

dated June 14, 2021, between us and the trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A.

On June 16, 2020, we issued and sold $150.0

million in aggregate principal amount of 4.25% Convertible Senior Notes due 2023 (the “June 2020 Notes”) pursuant to an indenture

dated June 16, 2020, between us and the trustee, in a private offering to qualified institutional buyers pursuant to Rule 144A.

13, 2020, we issued and sold $25.0 million in aggregate principal amount of 4.25% Convertible Senior Notes due 2023 at a price equal to

101% of the principal amount thereof, plus interest deemed to have accrued since June 16, 2020, which constitute a further issuance of,

and form a single series with, our June 2020 Notes (the “August 2020 Notes” and together with the June 2020 Notes, the “2020

In connection with the issuance of the 2023

Notes, we repurchased $115.0 million in aggregate principal amount of the 2020 Notes.

As a result of this repurchase, we recognized a

loss on extinguishment of approximately $9.7 million during the nine months ended September 30, 2023.

The remainder of the 2020 Notes

matured on June 15, 2023 and were settled for approximately $59.9 million of cash and approximately 1.0 million shares of common stock

of the Company.

After the repurchase and maturity of the 2020

Notes and the issuance of the 2023 Notes (and together with the 2021 Notes, the “Convertible Notes”), we had $280.0 million

in aggregate principal amount of Convertible Notes outstanding.

Key terms of the Convertible Notes are as follows:

8 unchanged sentences

● Interest rate:

Payable semiannually in arrears on February 15 and August 15 of each year for the 2023 Notes (beginning on August 15, 2023) and on June 15 and December 15 of each year for the 2021 Notes.

Payable semiannually in arrears on February 15 and August 15 of each year for the 2023 Notes (beginning on August

15, 2023) and on June 15 and December 15 of each year for the 2021 Notes.

● Conversion price:

Convertible at an initial conversion rate into shares of our common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price set forth in the table above), subject to adjustment.

Holders may convert at their option at any time prior to the close of business on the business day immediately preceding May 15, 2028 and March 15, 2026 for the 2023 Notes and the 2021 Notes, respectively, only under the following circumstances:

(i) if the last reported sale price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the respective Convertible Notes on each applicable trading day;

(ii) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sales price of our common stock and the conversion rate on each such trading day;

(iii) upon a notice of redemption delivered by us in accordance with the terms of the indentures but only with respect to the Convertible Notes called (or deemed called) for redemption;

or (iv) upon the occurrence of specified corporate events.

On or after May 15, 2028 and March 15, 2026 in respect of the 2023 Notes, and the 2021 Notes, respectively, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their

Convertible Notes at any time, regardless of the foregoing circumstances.

Convertible at an initial conversion rate into shares of our common stock, per $1,000 principal amount of

notes (equivalent to an initial conversion price set forth in the table above), subject to adjustment.

● Conversion:

Holders may convert at their option at any time prior to the close of business on the business day immediately

preceding May 15, 2028 and March 15, 2026 for the 2023 Notes and the 2021 Notes, respectively, only under the following circumstances:

(i) if the last reported sale price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending

on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the

respective Convertible Notes on each applicable trading day;

(ii) during the five business day period after any ten consecutive trading

day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Convertible Notes for

each trading day of the measurement period was less than 98% of the product of the last reported sales price of our common stock and the

conversion rate on each such trading day;

(iii) upon a notice of redemption delivered by us in accordance with the terms of the indentures

but only with respect to the Convertible Notes called (or deemed called) for redemption;

or (iv) upon the occurrence of specified corporate

On or after May 15, 2028 and March 15, 2026 in respect of the 2023 Notes, and the 2021 Notes, respectively, until the close of

business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at any

time, regardless of the foregoing circumstances.

● Cash settlement of principal amount:

Upon conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted.

At our election, we will also settle our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted in either cash, shares of our common stock or a combination of cash and shares of its common stock.

Upon conversion, we will pay cash up to the aggregate principal amount of the Convertible

Notes to be converted.

At our election, we will also settle our conversion obligation in excess of the aggregate principal amount of the

Convertible Notes being converted in either cash, shares of our common stock or a combination of cash and shares of its common stock.

● Redemption price:

We may redeem for cash all or any portion of the Convertible Notes, at our option, on or after August 20, 2025 and June 20, 2023 in respect of the 2023 Notes and the 2021 Notes, respectively, and on or prior to the 55 th

scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the respective Convertible Notes then in effect for at least 20 trading days, including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date.

No sinking fund is provided for the Convertible Notes.

We may redeem for cash all or any portion of the Convertible Notes, at our option, on or after August 20,

2025 and June 20, 2023 in respect of the 2023 Notes and the 2021 Notes, respectively, and on or prior to the 55 th scheduled

trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the

conversion price for the respective Convertible Notes then in effect for at least 20 trading days, including the trading day immediately

preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the

trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal

amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date.

No sinking fund is provided

for the Convertible Notes.

● Limited investor put rights:

Holders of the Convertible Notes have the right to require us to repurchase for cash all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain change of control transactions or liquidation, dissolution or common stock delisting events.

Holders of the Convertible Notes have the right to require us to repurchase for cash all or a

portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain change

of control transactions or liquidation, dissolution or common stock delisting events.

● Conversion rate increase in certain customary circumstances:

In certain circumstances, conversions in connection with a “make-whole fundamental change” (as defined in the indentures) or conversions of Convertible Notes called (or deemed called) for redemption may result in an increase to the conversion rate, provided that the conversion rate will not exceed 167.7853 shares and 144.9275 shares of our common stock per $1,000 principal amount of the 2023 Notes and the 2021 Notes, respectively (the equivalent of 43,551,214 shares of our common stock), subject to adjustment.

In certain circumstances, conversions in connection with a “make-whole

fundamental change” (as defined in the indentures) or conversions of Convertible Notes called (or deemed called) for redemption

may result in an increase to the conversion rate, provided that the conversion rate will not exceed 167.7853 shares and 144.9275 shares

of our common stock per $1,000 principal amount of the 2023 Notes and the 2021 Notes, respectively (the equivalent of 43,551,214 shares

of our common stock), subject to adjustment.

● Seniority and Security:

The Convertible Notes rank equal in right of payment, and are our senior unsecured obligations, but are subordinated in right of payment to our obligations to make certain redemption payments (if and when due) in respect of its Series A Non-Voting

Convertible Preferred Stock (See Note 11 to our Consolidated Financial Statements).

The indentures contain customary terms and covenants, including that upon certain events of

default occurring and continuing, either the trustee or the respective holders of not less than 25% in aggregate principal amount of the respective series of Convertible Notes outstanding may declare the entire principal amount of all such respective Convertible Notes to be repurchased, plus any accrued special interest, if any, to be immediately due and payable.

The Convertible Notes rank equal in right of payment, and are our senior unsecured obligations,

but are subordinated in right of payment to our obligations to make certain redemption payments (if and when due) in respect of our

Series A Non-Voting Convertible Preferred Stock (See Note 11 to our Consolidated Financial Statements).

The indentures contain customary terms and covenants,

including that upon certain events of default occurring and continuing, either the trustee or the respective holders of not less than

25% in aggregate principal amount of the respective series of Convertible Notes outstanding may declare the entire principal amount of

all such respective Convertible Notes to be repurchased, plus any accrued special interest, if any, to be immediately due and payable.

Capital Resources

Our principal source of financing is our operating cash flow.

We believe that current cash flows generated by our operating activities and existing cash balances should be sufficient for us to fund our operations for the foreseeable future.

Our ability to satisfy our contractual obligations as they arise are discussed in the section titled “Contractual Obligations” below.

Our principal source of financing is our operating

We believe that current cash flows generated by our operating activities and existing cash balances should be sufficient for

us to fund our operations for the foreseeable future.

Our ability to satisfy our contractual obligations

as they arise are discussed in the section titled “Contractual Obligations” below.

Use of Capital

Our business does not require us to maintain a significant cash position.

However, certain of our subsidiaries are required to maintain a minimum level of regulatory capital, which at June 30, 2023 was approximately $24.9 million in the aggregate.

Notwithstanding these regulatory capital requirements, we expect that our main uses of cash will be to fund the ongoing operations of our business.

We also maintain a capital return program which includes a $0.03 per share quarterly cash dividend and authority to purchase our common stock through April 27, 2025, including purchases to offset future equity grants made under our equity plans and purchases made in open market or privately negotiated transactions.

During the six months ended June 30, 2023, we repurchased 631,087 shares of our common stock under the repurchase program for an aggregate cost of $3.5 million.

Currently, approximately $96.4 million remains under this program for future purchases.

In addition, during the three months ended June 30, 2023, we paid approximately $50.0 million in cash to settle our deferred consideration—gold payments obligation (see Note 10 to our Consolidated Financial Statements for additional information) and also paid approximately $59.9 million in cash upon the maturity of our 2020 Notes.

Our business does not require us to maintain

a significant cash position.

However, certain of our subsidiaries are required to maintain a minimum level of regulatory capital, which

at September 30, 2023 was approximately $27.8 million in the aggregate.

Notwithstanding these regulatory capital requirements, we expect

that our main uses of cash will be to fund the ongoing operations of our business.

We also maintain a capital return program which includes

a $0.03 per share quarterly cash dividend and authority to purchase our common stock through April 27, 2025, including purchases to offset

future equity grants made under our equity plans and purchases made in open market or privately negotiated transactions.

During the nine months ended September 30, 2023,

we repurchased 635,653 shares of our common stock under the repurchase program for an aggregate cost of $3.6 million.

Currently, approximately

$96.4 million remains under this program for future purchases.

In addition, during the nine months ended

September 30, 2023, we paid approximately $50.0 million in cash to settle our deferred consideration—gold payments obligation

(see Note 9 to our Consolidated Financial Statements for additional information) and also paid approximately $59.9 million in cash

upon the maturity of our 2020 Notes.

Contractual Obligations

Convertible Notes

We currently have $280.0 million in aggregate principal amount of Convertible Notes outstanding, of which $150.0 million and $130.0 million are scheduled to mature on June 15, 2026 and August 15, 2028 in respect of the 2021 Notes and the 2023 Notes, respectively, unless earlier converted, repurchased or redeemed.

Conditional conversions or a requirement to repurchase the Convertible Notes upon the occurrence of a fundamental change may accelerate payment.

The Convertible Notes require cash settlement of up to the principal amount, while settlement of the conversion obligation in excess of the aggregate principal amount may be satisfied in either cash, shares of our common stock or a combination of cash and shares of our common stock.

We may settle and/or refinance these obligations when due.

See the section titled “Issuance of Convertible Notes” above for additional information.

We currently have $280.0 million in aggregate

principal amount of Convertible Notes outstanding, of which $150.0 million and $130.0 million are scheduled to mature on June 15, 2026

and August 15, 2028, in respect of the 2021 Notes and the 2023 Notes, respectively, unless earlier converted, repurchased or redeemed.

Conditional conversions or a requirement to repurchase the Convertible Notes upon the occurrence of a fundamental change may accelerate

The Convertible Notes require cash settlement

of up to the principal amount, while settlement of the conversion obligation in excess of the aggregate principal amount may be satisfied

in either cash, shares of our common stock or a combination of cash and shares of our common stock.

We may settle and/or refinance these

obligations when due.

See the section titled “Issuance of Convertible

Notes” above for additional information.

Deferred Consideration—Gold Payments

On May 10, 2023, the Company entered into and closed on a Sale, Purchase and Assignment Deed to terminate the Company’s obligations relating to the contractual gold payments.

Pursuant to that agreement, the Company paid consideration totaling $136.9 million, including an aggregate of $50.0 million in cash and the issuance of 13,087 shares of Series C Non-Voting Convertible Preferred Stock (valued at $86.9 million), which are convertible into 13,087,000 shares of the Company’s common stock.

See Note 9 to our Consolidated Financial Statements for additional information.

On May 10, 2023, the Company entered into and

closed on a Sale, Purchase and Assignment Deed to terminate the Company’s obligations relating to the contractual gold payments.

Pursuant to that agreement, the Company paid consideration totaling $136.9 million, including an aggregate of $50.0 million in cash and

the issuance of 13,087 shares of Series C Non-Voting Convertible Preferred Stock (valued at $86.9 million), which are convertible into

13,087,000 shares of the Company’s common stock.

See Note 9 to our Consolidated Financial

Statements for additional information.

Operating Leases

Total future minimum lease payments with respect to our operating lease liabilities were $0.9 million at June 30, 2023.

Cash flows generated by our operating activities and existing cash balances should be sufficient to satisfy the future minimum lease payments.

See Note 12 to our Consolidated Financial Statements for additional information.

Sheet Arrangements

We do not have any off-balance

sheet financing or other arrangements and have neither created nor are party to any special-purpose or off-balance

sheet entities for the purpose of raising capital, incurring debt or operating our business.

Total future minimum lease payments with respect

to our operating lease liabilities were $0.9 million at September 30, 2023.

Cash flows generated by our operating activities and existing

cash balances should be sufficient to satisfy the future minimum lease payments.

See Note 12 to our Consolidated Financial

Statements for additional information.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing

or other arrangements and have neither created nor are party to any special-purpose or off-balance sheet entities for the purpose of raising

capital, incurring debt or operating our business.

Critical Accounting Policies and Estimates

Goodwill and Intangible Assets

Goodwill is the excess of the purchase price over the fair values of the identifiable net assets at the acquisition date.

We test goodwill for impairment at least annually and at the time of a triggering event requiring re-evaluation,

if one were to occur.

Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value.

If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of goodwill.

A reporting unit is an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component.

Goodwill is the excess of the purchase price

over the fair values of the identifiable net assets at the acquisition date.

We test goodwill for impairment at least annually and at

the time of a triggering event requiring re-evaluation, if one were to occur.

Goodwill is considered impaired when the estimated fair

value of the reporting unit that was allocated the goodwill is less than its carrying value.

If the estimated fair value of such reporting

unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of

A reporting unit is an operating segment or a component of an operating segment provided that the component constitutes a business

for which discrete financial information is available and management regularly reviews the operating results of that component.

Goodwill is allocated to our U.S.

business and European business components.

For impairment testing purposes, these components are aggregated as a single reporting unit as they fall under the same operating segment and have similar economic characteristics.

Goodwill is assessed for impairment annually on November 30 th

When performing our goodwill impairment test, we consider a qualitative assessment, when appropriate, and the market approach and its market capitalization when determining the fair value of the reporting unit.

The results of our most recent analysis indicated no impairment based upon a quantitative assessment.

Indefinite-lived intangible assets are tested for impairment at least annually and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Indefinite-lived intangible assets are impaired if their estimated fair value is less than their carrying value.

European business components.

For impairment testing purposes, these components are aggregated as a single reporting unit as they fall

under the same operating segment and have similar economic characteristics.

Goodwill is assessed for impairment annually

on November 30 th .

When performing our goodwill impairment test, we consider a qualitative assessment, when appropriate, and

the market approach and its market capitalization when determining the fair value of the reporting unit.

The results of our most recent

analysis indicated no impairment based upon a quantitative assessment.

Indefinite-lived intangible assets are tested

for impairment at least annually and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount of an asset may not be recoverable.

Indefinite-lived intangible assets are impaired if their estimated fair value is less than

their carrying value.

We may rely on a qualitative assessment when performing our intangible asset impairment test.

Otherwise, the impairment evaluation is performed at the lowest level of reasonably identifiable cash flows independent of other assets.

The annual impairment testing date for our intangible assets is November 30 th

The results of our most recent analysis indicated no impairment based upon a quantitative assessment (discounted cash flow analysis) which relied upon significant unobservable inputs including projected revenue growth rates ranging from 3% to 8% (5% weighted average) and a weighted average cost of capital of 11.0%.

We account for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within ASU 2016-01,

Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities

, to the extent such investments are not subject to consolidation or the equity method.

Under the measurement alternative, these financial instruments are carried at cost, less any impairment (assessed quarterly), plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

In addition, income is recognized when dividends are received only to the extent they are distributed from net accumulated earnings of the investee.

Otherwise, such distributions are considered returns of investment and are recorded as a reduction of the cost of the investment.

Investments in debt instruments are accounted for at fair value, with changes in fair value reported in other income/(expenses).

See Note 7 to our Consolidated Financial Statements for information.

Otherwise, the impairment

evaluation is performed at the lowest level of reasonably identifiable cash flows independent of other assets.

The annual impairment testing

date for our intangible assets is November 30 th .

The results of our most recent analysis performed on November 30, 2022 indicated

no impairment based upon a quantitative assessment (discounted cash flow analysis) which relied upon significant unobservable inputs including

projected revenue growth rates ranging from 3% to 8% (5% weighted average) and a weighted average cost of capital of 11.0%.

We account for equity investments that do not

have a readily determinable fair value under the measurement alternative prescribed within ASU 2016-01, Financial Instruments –

Recognition and Measurement of Financial Assets and Financial Liabilities, to the extent such investments are not subject to consolidation

or the equity method.

Under the measurement alternative, these financial instruments are carried at cost, less any impairment (assessed

quarterly), plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment

of the same issuer.

In addition, income is recognized when dividends are received only to the extent they are distributed from net accumulated

earnings of the investee.

Otherwise, such distributions are considered returns of investment and are recorded as a reduction of the cost

of the investment.

Investments in debt instruments are accounted

for at fair value, with changes in fair value reported in other income/(expenses).

See Note 7 to our Consolidated Financial

Statements for information.

Revenue Recognition

We earn substantially all of our revenue in the form of advisory fees from our ETPs and recognize this revenue over time, as the performance obligation is satisfied.

Advisory fees are based on a percentage of the ETPs’ average daily net assets.

Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which we have a right to invoice.

We earn substantially all of our revenue in

the form of advisory fees from our ETPs and recognize this revenue over time, as the performance obligation is satisfied.

Advisory fees

are based on a percentage of the ETPs’ average daily net assets.

Progress is measured using the practical expedient under the output

method resulting in the recognition of revenue in the amount for which we have a right to invoice.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis