What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-07 compared with 2023-11-08 · 361 added, 500 removed, 319 unchanged (73% of the section changed)

15 unchanged sentences

Executive Summary

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.

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 are a global financial innovator, offering

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

We empower investors and consumers

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

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

Digital Funds and tokenized assets, as well as our blockchain-native digital wallet, WisdomTree Prime.

Including the forthcoming launch

in New York, WisdomTree Prime will be available in the U.S.

in 41 states and to approximately 75% of the U.S.

We had approximately $107.2 billion in AUM as

of March 31, 2024.

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

and Portfolio Solutions programs 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 we believe 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 what we refer to as “responsible

DeFi,” which we believe upholds the foundational principles of regulation in this innovative and quickly evolving space.

that our expansion into digital assets and blockchain-enabled finance complements our existing core competencies in a holistic manner

and will 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.

of Delaware on September 19, 1985 as Financial Data Systems, Inc.

and were ultimately renamed WisdomTree, Inc.

on November 7, 2022.

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WisdomTree ETPs

We offer ETPs covering equities, fixed income,

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

We offer ETPs covering equities, commodities,

currency, fixed income, leveraged-and-inverse, cryptocurrency and alternatives.

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

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

March 31, 2024, December 31, 2023 and March 31, 2023:

Market Environment

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.

Resilient economic data boosted investor sentiment

during the first quarter of 2024.

economy grew by more than expected during the fourth quarter of 2023, while macroeconomic data

elsewhere around the world also showed encouraging signs.

Global equities posted strong returns, while volatility remained low.

inflation and steady interest rates maintained by the Federal Reserve combined to drive negative returns for bonds.

Gold prices reached

all-time highs given continued inflationary concerns.

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

yen, respectively.

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

dollar) and gold prices increased

by 10.6%, 10.0%, 10.3%, 18.8%, 2.2% and 7.4%, respectively, during the quarter.

dollar strengthened 2.2%, 0.8% and 6.8% versus

the euro, British pound and Japanese yen, respectively, during the quarter.

Listed ETF Industry Flows

listed ETF industry net flows were $194.6

billion for the three months ended September 30, 2023.

billion for the three months ended March 31, 2024.

equity and fixed income gathered the majority of those flows.

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European listed ETP industry net flows were

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

$50.4 billion for the three months ended March 31, 2024.

Equity and fixed income gathered the majority of those flows.

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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.

listed ETFs, increased from $72.5 billion at December 31, 2023 to $78.1 billion at March 31, 2024 due to market appreciation and

European Listed ETPs

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.

cross-listed) ETPs, or European listed ETPs, increased from $27.6 billion at December 31, 2023 to $29.1 billion at March 31, 2024 due

to market appreciation.

Consolidated Operating Results

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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.

Revenues – Total revenues increased 18.0% from the three months ended March 31, 2023 to $96.8 million in the comparable period

in 2024 primarily due to higher average AUM.

Expenses – Total operating expenses increased 5.2% from the three months ended March 31, 2023 to $68.9 million in the comparable

period in 2024 primarily due to higher stock-based compensation and headcount and higher fund management and administration costs.

increases were partly offset by the termination of the contractual gold payments on May 10, 2023.

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

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Further information is provided herein.

● 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.

Net income – We reported net income of $22.1 million and $16.2 million during the three months ended March 31, 2024 and 2023,

respectively.

Guidance Update for the Year Ending December 31, 2024

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December 31, 2024 is currently estimated to range from $108.0 million to $118.0 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.

and takes into consideration planned hires for 2024 as well as year-end compensation adjustments and the annualization of hires made during

This range considers variability in incentive compensation, with drivers including the magnitude of our flows, revenues and operating

income growth, margin expansion and our share price performance in relation to our peers.

We currently anticipate trending toward the

upper half of the range given the strong start to the year.

Discretionary Spending

Discretionary spending includes marketing,

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

During the nine months ended September

Discretionary spending includes marketing, sales,

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

During the three months ended March 31,

2024, our discretionary spending was $14.9 million.

We currently estimate our discretionary spending for the year ending December 31,

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

2024 to range from $64.0 million to $68.0 million (unchanged from our guidance range 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 nine months ended September 30,

non-recurring expenses in response to an activist campaign, including $0.7 million incurred during the three months ended March 31, 2024.

We define gross margin as total operating revenues

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

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

Our gross margin was 79.4% during the three months ended March 31, 2024.

Our gross margin guidance for the year ending December 31, 2024

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 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.

remains 79.0% to 80.0% (unchanged from our guidance range provided last quarter).

If AUM increases from continued organic flow growth

or favorable market conditions, we would anticipate further gross margin expansion.

Third-Party Distribution Fees

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.

fees to range from $10.0 million to $11.0 million (unchanged from our guidance range provided last quarter), which is dependent upon the

AUM growth on our respective platforms.

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).

We currently estimate our interest expense for

the year ending December 31, 2024 to be $16.5 million, which is inclusive of approximately $2.6 million of interest cost we are required

to impute under U.S.

GAAP related to our interest-free financing of the shares of Series C Non-Voting Convertible Preferred Stock, par

value $0.01 per share (the “Series C Preferred Stock”) we repurchased from GBH in November 2023.

Interest Income

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.

We currently estimate our interest income for

the year ending December 31, 2024 to be $5.0 million, based upon the magnitude of our forecasted interest earning assets.

Income Tax Expense

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.

normalized effective tax rate will be 24.0% to 25.0% (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 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.

This estimated rate may change and is dependent

upon our actual taxable income earned in relation to our forecasts as well as any other items which may arise that are not currently forecasted.

Such items may include, but are not limited to increases or decreases in valuation allowances and any stock-based compensation windfalls

or shortfalls.

Additional corporate tax legislation could also impact our normalized effective tax rate.

Weighted Average Diluted Shares

We currently estimate our weighted average diluted

shares to be between 166.0 million and 168.0 million during the year ending December 31, 2024.

This guidance is exclusive of any incremental

shares associated with our convertible notes.

While our convertible notes require principal to be paid in cash, our diluted shares would

need to be increased for any incremental shares associated with an exercise of the conversion option if our stock price exceeds the applicable

conversion price of our convertible notes of $9.54 per share for the 5.75% Convertible Senior Notes due 2028 and $11.04 per share for

the 3.25% Convertible Senior Notes due 2026.

Key Operating Statistics

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that serve as indicators for the performance of our business:

Three Months Ended

Nine Months Ended

September 30,

GLOBAL ETPs (in millions )

Beginning of period assets

Market (depreciation)/appreciation

Fund closures

Inflows/(outflows)

Market appreciation

End of period assets

Average assets during the period

Average ETP advisory fee during the period

Average advisory fee during the period

Number of ETPs—end of period

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Beginning of period assets

Market (depreciation)/appreciation

Inflows/(outflows)

Market appreciation

End of period assets

Average assets during the period

Number of ETFs – end of the period

EUROPEAN LISTED ETPs (in millions )

Number of ETFs—end of period

EUROPEAN LISTED ETPs (in

Beginning of period assets

Market depreciation

Fund closures

Inflows/(outflows)

Market appreciation

End of period assets

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Number of ETPs—end of period

PRODUCT CATEGORIES (in millions )

PRODUCT CATEGORIES (in

Beginning of period assets

Market (depreciation)/appreciation

Inflows/(outflows)

Market appreciation

End of period assets

Average assets during the period

Commodity & Currency

Beginning of period assets

Market (depreciation)/appreciation

(Outflows)/inflows

Market appreciation

End of period assets

Average assets during the period

Commodity & Currency

Beginning of period assets

Market depreciation

(Outflows)/inflows

Market appreciation/(depreciation)

End of period assets

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Beginning of period assets

Inflows/(outflows)

Market (depreciation)/appreciation

Market appreciation

End of period assets

Average assets during the period

Three Months Ended

Nine Months Ended

September 30,

Emerging Market Equity

Beginning of period assets

Market (depreciation)/appreciation

Market appreciation

End of period assets

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(Outflows)/inflows

Market (depreciation)/appreciation

End of period assets

Average assets during the period

Beginning of period assets

Market (depreciation)/appreciation

Market appreciation/(depreciation)

End of period assets

2 unchanged sentences

Beginning of period assets

Inflows/(outflows)

Market (depreciation)/appreciation

Market appreciation

End of period assets

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Beginning of period assets

Market depreciation

Fund closures

Inflows/(outflows)

Market appreciation

End of period assets

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due to fund closures and trade adjustments.

Three Months Ended September 30, 2023 Compared to Three Months

Ended September 30, 2022

Three Months Ended March 31, 2024 Compared to Three Months Ended

March 31, 2023

Selected Operating and Financial Information

Three Months Ended

AUM (in millions)

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Advisory fee revenues increased 19.1% from $77.6

$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.

million during the three months ended March 31, 2023 to $92.5 million in the comparable period in 2024 due to higher average AUM.

average advisory fee was 0.36% during each of the three months ended March 31, 2023 and 2024.

Other income was essentially unchanged from

the three months ended March 31, 2023.

Operating Expenses

Compensation and benefits

Three Months Ended

(in thousands)

Compensation and

Fund management and administration

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Professional fees

Occupancy, communications and equipment

Occupancy, communications and

Depreciation and amortization

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Total operating expenses

September 30,

a Percent of Revenues:

As a Percent of Revenues:

Compensation and benefits

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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

13.3% from $27.4 million during the three months ended March 31, 2023 to $31.1 million in the comparable period in 2024 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,

Headcount was 279 and 300 at March 31, 2023 and 2024,

respectively.

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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.

16.4% from $17.2 million during the three months ended March 31, 2023 to $20.0 million in the comparable period in 2024 primarily due

to higher average AUM.

We had 80 U.S.

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.

listed ETFs and 261 European listed ETPs at March 31, 2023 compared to 77 U.S.

listed ETFs and 261

European listed ETPs at March 31, 2024.

Marketing and advertising

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.

10.0% from $4.0 million during the three months ended March 31, 2023 to $4.4 million in the comparable period in 2024 primarily due to

higher online advertising related to our digital assets business.

Sales and business development

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.

20.6% from $3.0 million during the three months ended March 31, 2023 to $3.6 million in the comparable period in 2024 primarily due to

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

Contractual gold payments

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.

Contractual gold payments expense decreased

from $4.5 million during the three months ended March 31, 2023 to $0 in the comparable period in 2024 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 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.

Professional fees expense was essentially unchanged

from the three months ended March 31, 2023.

Occupancy, communications and equipment

Occupancy, communications and equipment expense

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

was essentially unchanged from the three months ended March 31, 2023.

Depreciation and amortization

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

251.4% from $0.1 million during the three months ended March 31, 2023 to $0.4 million in the comparable period in 2024 due to amortization

of software development costs.

Third-party distribution fees

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.

Third-party distribution fees expense was essentially

unchanged from the three months ended March 31, 2023.

Other expenses were essentially unchanged from

the three months ended September 30, 2022.

Other Income/(Expenses)

September 30,

Interest expense

Gain on revaluation/termination of deferred consideration—gold payments

Interest income

Other losses, net

Total other income/(expenses), net

September 30,

a Percent of Revenues:

Interest expense

Gain on revaluation/termination of deferred consideration—gold payments

Interest income

Other losses, net

Total other income/(expenses), net

Interest expense

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 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 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

AUM (in millions)

Operating Revenues (in thousands)

Advisory fees

Total operating revenues

Operating Revenues

Advisory fees

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

Compensation and benefits

Fund management and administration

Marketing and advertising

Sales and business development

Contractual gold payments

Professional fees

Occupancy, communications and equipment

Depreciation and amortization

Third-party distribution fees

Total operating expenses

September 30,

As a Percent of Revenues:

Compensation and benefits

Fund management and administration

Marketing and advertising

Sales and business development

Contractual gold payments

Professional fees

Occupancy, communications and equipment

Depreciation and amortization

Third-party distribution fees

Total operating expenses

Compensation and benefits

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 $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 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

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 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 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 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

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 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.

the three months ended March 31, 2023.

Other Income/(Expenses)

(in thousands)

Interest expense

Gain on revaluation/termination of deferred consideration—gold payments

Gain on revaluation/termination of deferred consideration—gold

Interest income

Loss on extinguishment of convertible notes

Other losses, net

Total other income/(expenses), net

September 30,

Other gains and losses, net

Total other (expenses)/income, net

As a Percent of Revenues:

Interest expense

Gain on revaluation/termination of deferred consideration—gold payments

Gain on revaluation/termination of deferred consideration—gold

Interest income

Loss on extinguishment of convertible note

Other losses, net

Total other income/(expenses), net

Loss on extinguishment of convertible notes

Other gains and losses, net

Total other (expenses)/income, net

Interest expense

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 expense increased 3.1% from $4.0 million

during the three months ended March 31, 2023 to $4.1 million in the comparable period in 2024 due to the

recognition of imputed interest on our obligation payable to GBH, partly offset by a lower level of debt outstanding .

Our effective

interest rate during the three months ended March 31, 2023 and 2024 was 4.6% and 5.0%, respectively.

Interest income

Interest income increased 29.1% from $1.1 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 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 $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 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.

during the three months ended March 31, 2023 to $1.4 million in the comparable period in 2024 due to a

higher level of interest earning assets .

During the three months ended March 31, 2023,

we recognized a non-cash impairment charge of $4.9 million on our investment in Securrency, Inc.

Other gains and losses, net

Other gains and losses, net were ($2.0) million

and $2.6 million during the three months ended March 31, 2023 and 2024, respectively.

This quarter includes gains of $2.1 million and

$0.1 million on our financial instruments and our investments, respectively.

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 during the three

months ended March 31, 2024 was 20.5%, resulting in income tax expense of $5.7 million.

The effective tax rate differs from the federal

statutory rate of 21% primarily due to the decrease in the deferred tax asset valuation allowance on losses recognized on the Company’s

financial instruments owned, tax windfalls associated with the vesting of stock-based compensation awards and a lower tax rate on foreign

These items were partly offset by state and local income taxes.

Our effective income tax rate for the first

quarter of 2023 was 7.9%, resulting in income tax expense of $1.4 million.

The effective tax rate differs from the federal statutory rate

of 21% primarily due to a non-taxable gain on revaluation of deferred consideration and a reduction in unrecognized tax benefits upon

the expiration of the statute of limitations.

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.

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

Non-GAAP Financial Measurements

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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.

non-GAAP financial measurements exclude the following:

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:

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 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.

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.

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.

● 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 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

Nine Months Ended

Adjusted Net Income and Diluted Earnings per Share:

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:

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

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 of stock-based compensation awards:

GAAP requires the recognition of tax windfalls and

shortfalls within income tax expense.

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

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

and the date the award vested.

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.

Imputed interest on our payable to GBH:

During the fourth quarter of 2023, we repurchased our Series C Preferred Stock, which was

convertible into approximately 13.1 million shares of our common stock, from GBH for aggregate cash consideration of approximately $84.4

Under the terms of the transaction, we paid GBH $40.0 million on the closing date, with the remainder of the purchase price payable

in equal, interest-free installments on the first, second and third anniversaries of the closing date.

GAAP, the obligation

is recorded at its present value utilizing a market rate of interest on the closing date of 7.0% and the corresponding discount is amortized

as interest expense pursuant to the effective interest method of accounting over the life of the obligation.

We exclude this item when

calculating our non-GAAP financial measurements as recognition of interest expense is non-cash and contrary to the stated terms of our

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

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

allowance and expenses incurred in response to an activist campaign are excluded when calculating our non-GAAP financial measurements.

Adjusted Net Income and Diluted Earnings

Net income, as

Gains on financial

instruments owned, net of income taxes

Tax windfalls upon

vesting of stock-based compensation awards

(Deduct)/add back:

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

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

(Decrease)/increase

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

Expenses incurred

in response to an activist campaign, net of income taxes

Imputed interest

on payable to GBH, net of income taxes

(Deduct)/add back:

(Gains)/losses

recognized on our investments, net of income taxes

Impairments, net

of income taxes

Gain on revaluation/termination

of deferred consideration—gold payments

Loss on extinguishment

of convertible notes, 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

Income distributed to participating securities

Income distributed

to participating securities

Undistributed income allocable to participating securities

Adjusted net income available to common stockholders

Weighted average diluted

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

Adjusted earnings per share – diluted

Adjusted net income available

to common stockholders

average diluted shares, excluding participating securities (in thousands) (See Note 20 to our Consolidated Financial Statements)

Adjusted earnings per

share – diluted

Liquidity and Capital Resources

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

Sheet Data (in thousands):

Cash and cash equivalents

Balance Sheet Data (in thousands):

Cash, cash equivalents and restricted

Financial instruments owned, at fair value

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Total current liabilities

Other assets — seed capital (WisdomTree Digital Funds)

Regulatory capital requirements

Available liquidity

Nine Months Ended September 30,

Other assets — seed

capital (WisdomTree Digital Funds)

Regulatory capital

Three Months Ended March 31,

Cash Flow Data (in thousands):

Operating cash flows

Operating cash

Investing cash flows

Financing cash flows

Foreign exchange rate effect

Decrease in cash and cash equivalents

exchange rate effect

in cash, cash equivalents and restricted cash

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.

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

our subsidiaries.

Liquid assets consist of cash, cash equivalents and restricted cash, 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 $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.

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, cash equivalents and restricted cash decreased

by $12.4 million during the three months ended March 31, 2024 due to $7.8 million used to repurchase our common stock, $5.0 million used

to pay dividends, $2.5 million used to purchase financial instruments owned, at fair value, $1.0 million used in operating activities,

$0.6 million used to pay for software development and $0.7 million used for other activities.

These decreases were partly offset by $5.2

million of proceeds from the sale of financial instruments owned, at fair value.

Cash, cash equivalents and restricted cash decreased

by $13.0 million during the three months ended March 31, 2023 due to $130.0 million of proceeds from the issuance of convertible notes,

$18.3 million of proceeds from the sale of financial instruments owned, at fair value and $0.4 million from other activities.

These increases

were offset by $124.3 million used to repurchase convertible notes, $20.3 million used to purchase financial instruments owned, at fair

value, $5.4 million used in operating activities, $4.8 million used to pay dividends, $3.5 million used to cover convertible notes issuance

costs and $3.4 million used to repurchase our common stock.

Issuance of Convertible Notes

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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

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

and formed 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

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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.

loss on extinguishment of approximately $9.7 million during the three months ended March 31, 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 our common stock.

After the repurchase and settlement at maturity

of the 2020 Notes and the issuance of the 2023 Notes (such 2023 Notes, 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:

Principal outstanding

Maturity date (unless earlier converted, repurchased or redeemed)

Maturity date (unless earlier

converted, repurchased or redeemed)

August 15, 2028

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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.

● 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.

Convertible at an initial conversion rate set forth in the table above 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:

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.

Cash settlement of principal amount:

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We may redeem for cash all or any portion of the Convertible Notes, at our option, on or after August 20, 2025

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.

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:

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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.

of our common stock in the aggregate), 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 our

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

The 2023 Notes and 2021 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 Preferred Stock (See Note 11 to our Consolidated Financial Statements).

The indentures contain customary terms and covenants,

12 unchanged sentences

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.

at March 31, 2024 was approximately $42.1 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

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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,

During the three months ended March 31, 2024,

we repurchased 1,096,278 shares of our common stock under the repurchase program for an aggregate cost of $7.8 million.

1 unchanged sentence

$88.6 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

11 unchanged sentences

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.

Payable to GBH

On November 20, 2023, we repurchased our Series

C Preferred Stock from GBH for aggregate cash consideration of approximately $84.4 million.

Under the terms of the transaction, we paid

GBH $40.0 million on the closing date, with the remainder of the purchase price payable in equal, interest-free installments on the first,

second and third anniversaries of the closing date.

Operating Leases

Total future minimum lease payments with respect

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

to our operating lease liabilities were $0.3 million at March 31, 2024.

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.

See Note 13 to our Consolidated Financial Statements

for additional information.

Off-Balance Sheet Arrangements

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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.

The results of our most recent analysis identified no indicators of impairment

to be recognized based upon a quantitative assessment (discounted cash flow analysis) which relied upon significant unobservable inputs

including projected revenue growth rates of 3.0% and a weighted average cost of capital of 10.5%.

Revenue Recognition

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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