What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-02 compared with 2024-05-07 · 373 added, 408 removed, 272 unchanged (74% of the section changed)

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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, 2023.

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.

fiscal year ended December 31, 2023 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

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

Executive Summary

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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.

WisdomTree Prime is available in

in 44 states and to approximately 79% of the U.S.

We had approximately $109.7 billion in AUM as

of March 31, 2024.

of June 30, 2024.

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

currency, alternatives and cryptocurrency strategies.

currency, cryptocurrency and alternatives strategies.

We have launched many first-to-market products and pioneered alternative weighting

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on November 7, 2022.

Assets Under Management

WisdomTree ETPs

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

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

Market Environment

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), 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 March 31, 2024.

equity and fixed income gathered the majority of those flows.

European Listed ETP Industry Flows

European listed ETP industry net flows were

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

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.

The AUM of our U.S.

listed exchange traded funds,

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, increased from $27.6 billion at December 31, 2023 to $29.1 billion at March 31, 2024 due

to market appreciation.

Consolidated Operating Results

The following table sets forth our revenues

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

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.

leveraged-and-inverse,

cryptocurrency

alternatives.

communication

respectively,

internationally

cross-listed)

appreciation,

Revenues – Total revenues increased 24.9% from the three months ended June 30, 2023 to $107.0 million in the comparable

period in 2024 primarily due to higher average AUM and higher other revenues attributable to our European listed products.

Expenses – Total operating expenses increased 8.9% from the three months ended June 30, 2023 to $73.5 million in

the comparable period in 2024 primarily due to higher incentive and stock-based compensation expense and increased headcount, fund management

and administration costs, third-party distribution fees and marketing expenses.

These increases were partly offset by lower professional

fees and the termination of the deferred consideration—gold payments obligation 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 – We reported net income of $22.1 million and $16.2 million during the three months ended March 31, 2024 and 2023,

respectively.

Net income – We reported net income of $21.8 million and $54.3 million during the three months ended June 30, 2024

and 2023, respectively.

Guidance Update for the Year Ending December 31, 2024

Compensation Expense

Our compensation expense for the year ending

December 31, 2024 is currently estimated to range from $108.0 million to $118.0 million (unchanged from our guidance provided last quarter)

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.

Our compensation to revenue ratio for the year

ending December 31, 2024 is currently estimated to range from 28% to 29% (our prior compensation expense guidance was $108.0 million to

$118.0 million).

Our estimated compensation to revenue ratio takes into consideration planned hires for 2024 and variability in incentive

compensation, with drivers including the magnitude of flows, revenues and operating income growth, margin expansion and share price performance

in relation to our peers.

Discretionary Spending

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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,

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 $0.7 million incurred during the three months ended March 31, 2024.

During the six months ended June 30, 2024,

discretionary spending was $30.5 million.

We currently estimate discretionary spending for the year ending December 31, 2024 to range

from $64.0 million to $68.0 million (unchanged from our guidance range provided last quarter).

Due to seasonality, the discretionary spend

for the remainder of the year will likely be more skewed toward the fourth quarter.

Not included in the guidance above are non-recurring

expenses in response to an activist campaign, including $5.0 million incurred during the six months ended June 30, 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 79.4% during the three months ended March 31, 2024.

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

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 $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

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

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 24.0% 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 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

The following table presents key operating statistics

that serve as indicators for the performance of our business:

GLOBAL ETPs (in millions )

Our gross margin was 80.3% during the six months ended June 30, 2024 and we have updated our gross margin guidance for the year ending

December 31, 2024 to be between 80% and 81% (previously 79.0% to 80.0%) considering current AUM levels and higher forecasted other revenues

going forward.

If AUM increases from continued organic flow growth or favorable market conditions, we would anticipate further gross margin

approximately

interest-free

consideration

ETPs (in millions )

Beginning of period assets

Inflows/(outflows)

Market appreciation

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Beginning of period assets

Inflows/(outflows)

Market appreciation

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Average assets during the period

Number of ETFs—end of period

EUROPEAN LISTED ETPs (in

Number of ETFs – end of the period

LISTED ETPs (in millions)

Beginning of period assets

Inflows/(outflows)

Market appreciation

(Outflows)/inflows

Market appreciation/(depreciation)

End of period assets

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Number of ETPs—end of period

PRODUCT CATEGORIES (in

CATEGORIES (in millions)

Beginning of period assets

Inflows/(outflows)

Market appreciation

Market (depreciation)/appreciation

End of period assets

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(Outflows)/inflows

Market appreciation

Market appreciation/(depreciation)

End of period assets

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Beginning of period assets

(Outflows)/inflows

Market appreciation/(depreciation)

Inflows/(outflows)

Market (depreciation)/appreciation

End of period assets

Average assets during the period

International Developed Market Equity

International Developed

Market Equity

Beginning of period assets

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(Outflows)/inflows

Market appreciation/(depreciation)

Market appreciation

End of period assets

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Beginning of period assets

Market appreciation

Inflows/(outflows)

Market (depreciation)/appreciation

End of period assets

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Beginning of period assets

Inflows/(outflows)

Market appreciation

Market (depreciation)/appreciation

End of period assets

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due to fund closures and trade adjustments.

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

March 31, 2023

Three Months Ended June 30, 2024 Compared to Three Months Ended

June 30, 2023

Selected Operating and Financial Information

Three Months Ended

AUM (in millions)

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Advisory fees

Other revenues

Total operating revenues

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Advisory fee revenues increased 20.7% from $82.0

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

Three Months Ended

(in thousands)

Compensation and

million during the three months ended June 30, 2023 to $98.9 million in the comparable period in 2024 primarily due to higher average

Our average advisory fee was 0.36% and 0.37% during the three months ended June 30, 2023 and 2024, respectively.

Other revenues

Other revenues increased 117.6% from $3.7 million

during the three months ended June 30, 2023 to $8.1 million in the comparable period in 2024 due to higher other revenues attributable

to our European listed products.

Compensation and benefits

Fund management and administration

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Professional fees

Occupancy, communications and

Occupancy, communications and equipment

Depreciation and amortization

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Total operating expenses

Three Months Ended

As a Percent of Revenues:

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Third-party distribution fees

Total operating expenses

Total operating

Compensation and benefits

Compensation and benefits expense increased

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 279 and 300 at March 31, 2023 and 2024,

respectively.

17.0% from $26.3 million during the three months ended June 30, 2023 to $30.8 million in the comparable period in 2024 due to higher incentive

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

Headcount was 291 and 304 at June 30, 2023 and 2024, respectively.

Fund management and administration

Fund management and administration expense increased

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.

13.6% from $17.7 million during the three months ended June 30, 2023 to $20.1 million in the comparable period in 2024 primarily due to

higher average AUM.

We had 80 U.S.

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.

listed ETFs and 264 European listed ETPs at June 30, 2023 compared to 78 U.S.

listed ETFs and 272 European

listed ETPs at June 30, 2024.

Marketing and advertising

Marketing and advertising expense increased

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.

14.4% from $4.5 million during the three months ended June 30, 2023 to $5.1 million in the comparable period in 2024 primarily due to

higher spending related to our U.S.

listed products.

Sales and business development

Sales and business development expense increased

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.

9.4% from $3.3 million during the three months ended June 30, 2023 to $3.6 million in the comparable period in 2024 primarily due to increases

in travel and events spending.

Contractual gold payments

Contractual gold payments expense decreased from

$1.6 million during the three months ended June 30, 2023 to zero 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.

non-recurring

consideration—gold

communications

relationships.

Income/(Expenses)

Interest expense

Gain on revaluation/termination

of deferred consideration—gold payments

Interest income

and gains, net

Total other (expenses)/income, net

As a Percent of Revenues:

Interest expense

Gain on revaluation/termination

of deferred consideration—gold payments

Interest income

and gains, net

(expenses)/income, net

Interest expense

Interest expense was essentially unchanged from

the three months ended June 30, 2023.

Our effective interest rate during the three months ended June 30, 2023 and 2024 was 5.0% and 4.95%,

respectively.

Gain on revaluation/termination of deferred consideration—gold

We recognized a gain on revaluation/termination

of deferred consideration—gold payments of $41.4 million during the three months ended June 30, 2023.

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 income

Interest income increased 43.8% from $1.0 million

during the three months ended June 30, 2023 to $1.4 million in the comparable period in 2024 due to a higher level of interest-earning

Other losses and gains, net

Other losses and gains, net were $1.3 million

and ($1.3) million during the three months ended June 30, 2023 and 2024, respectively.

The three months ended June 30, 2024 include losses

of $1.3 million and $0.3 million on our investments and financial instruments owned, 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

non-deductible

compensation,

revaluation/termination

consideration—gold

non-deductible

compensation.

AUM (in millions)

Operating Revenues (in thousands)

Advisory fees

Other revenues

Total revenues

Operating Revenues

Advisory fees

Advisory fee revenues increased 19.9% from $159.6

million during the six months ended June 30, 2023 to $191.4 million in the comparable period in 2024 primarily due to higher average AUM.

Our average advisory fee was 0.36% during the six months ended June 30, 2023 and 0.37% during the comparable period in 2024.

Other revenues

Other revenues increased 53.0% from $8.1 million

during the six months ended June 30, 2023 to $12.4 million in the comparable period in 2024 due to higher other revenues attributable

to our European listed 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

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

Compensation and benefits

Compensation and benefits expense increased

15.1% from $53.7 million during the six months ended June 30, 2023 to $61.8 million in the comparable period in 2024 due to higher incentive

and stock-based compensation expense and increased headcount.

Fund management and administration

Fund management and administration expense increased

15.0% from $34.9 million during the six months ended June 30, 2023 to $40.1 million in the comparable period in 2024 primarily due to

higher average AUM and product launches.

Marketing and advertising

Marketing and advertising expense increased

12.3% from $8.5 million during the six months ended June 30, 2023 to $9.5 million in the comparable period in 2024 primarily due to higher

spending related to our U.S.

listed products.

Sales and business development

Sales and business development expense increased

14.7% from $6.3 million during the six months ended June 30, 2023 to $7.3 million in the comparable period in 2024 primarily due to increases

in travel and events spending.

Contractual gold payments

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

from $6.1 million during the six months ended June 30, 2023 to zero in the comparable period in 2024 due to the termination of our deferred

consideration—gold payments obligation on May 10, 2023.

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Professional fees

Professional fees expense was essentially unchanged

from the three months ended March 31, 2023.

Professional fees decreased 15.1% from $12.0 million

during the six months ended June 30, 2023 to $10.2 million in the comparable period in 2024 primarily due to lower activist campaign expenses

and non-recurring expenses incurred in the prior year to settle our deferred consideration—gold payments obligation and our acquisition

of WisdomTree Transfers, Inc.

Occupancy, communications and equipment

Occupancy, communications and equipment expense

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

was essentially unchanged from the six months ended June 30, 2023.

Depreciation and amortization

Depreciation and amortization expense increased

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

248.3% from $0.2 million during the six months ended June 30, 2023 to $0.8 million in the comparable period in 2024 due to amortization

of software development costs.

Third-party distribution fees

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 March 31, 2023.

Other Income/(Expenses)

(in thousands)

Third-party distribution fees increased 20.8%

from $4.1 million during the six months ended June 30, 2023 to $5.0 million in the comparable period in 2024 due to AUM growth we are

experiencing on our various platforms and new platform relationships.

Income/(Expenses)

Interest expense

Gain on revaluation/termination of deferred consideration—gold

Gain on revaluation/termination

of deferred consideration—gold payments

Interest income

Loss on extinguishment of convertible notes

Other gains and losses, net

Total other (expenses)/income, net

Loss on extinguishment of convertible

and losses, net

income/(expenses), net

Months Ended June 30,

As a Percent of Revenues:

Interest expense

Gain on revaluation/termination of deferred consideration—gold

Gain on revaluation/termination

of deferred consideration—gold payments

Interest income

Loss on extinguishment of convertible notes

Other gains and losses, net

Total other (expenses)/income, net

Loss on extinguishment of convertible

and losses, net

income/(expenses), net

Interest expense

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 expense was essentially unchanged from

the six months ended June 30, 2023.

Our effective interest rate during the six months ended June 30, 2023 and 2024 was 4.9% and 4.95%,

respectively.

Gain on revaluation/termination of deferred consideration—gold

We recognized a gain on revaluation/termination

of deferred consideration—gold payments of $62.0 million during the six months ended June 30, 2023.

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 income

Interest income increased 36.1% from $2.1 million

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.

during the six months ended June 30, 2023 to $2.8 million in the comparable period in 2024 due to a higher level of interest-earning assets.

During the six months ended June 30, 2023, we

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

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.

Other gains and losses, net

Other gains and losses, net were ($0.7) 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 and an increase in the deferred tax asset valuation allowance on losses recognized on our investments.

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:

and $1.3 million during the six months ended June 30, 2023 and 2024, respectively.

This period includes gains on our financial instruments

owned of $1.8 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.

non-deductible

revaluation/termination

consideration—gold

indemnification

non-deductible

extinguishment

non-deductible

non-recurring

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

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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 of stock-based compensation awards:

GAAP requires the recognition of tax windfalls and

shortfalls within income tax expense.

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

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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.

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 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.

GAAP, the obligation

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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:

(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

Gains and losses recognized on our investments, changes in deferred tax asset valuation allowance, expenses

incurred in response to an activist campaign, loss on extinguishment of convertible notes, impairments, remeasurement of contingent consideration

payable to us from the sale of our former Canadian ETF business, and litigation expenses associated with certain provisions of our Stockholder

Rights Agreement, dated as of March 17, 2023, as amended, are excluded when calculating our non-GAAP financial measurements.

Adjusted Net Income and

Diluted Earnings per Share:

Net income, as reported

Gain on revaluation/termination

of deferred consideration—gold payments

Expenses incurred in

response to an activist campaign, net of income taxes

Add back/(deduct):

Losses/(gains)

recognized on our investments, net of income taxes

interest on payable to GBH, net of income taxes

Add back/(deduct):

Increase/(decrease) 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

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

Litigation expenses

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

Loss on extinguishment

of convertible notes, net of income taxes

Remeasurement of contingent consideration—sale of former Canadian ETF business

Impairments, net of

income taxes (where applicable)

Remeasurement

of contingent consideration—sale of Canadian ETF business

Adjusted net income

Income distributed

to participating securities

Undistributed income allocable to participating securities

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

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 20 to our Consolidated Financial Statements)

Adjusted earnings per share

Liquidity and Capital Resources

1 unchanged sentence

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

Balance Sheet Data (in thousands):

Cash, cash equivalents and restricted

Sheet Data (in thousands):

Cash, cash equivalents and restricted cash

Financial instruments owned, at fair value

3 unchanged sentences

Total current liabilities

Other assets — seed

capital (WisdomTree Digital Funds)

Other assets—seed capital (WisdomTree Digital

Regulatory capital

Three Months Ended March 31,

Available liquidity

Months Ended June 30,

Cash Flow Data (in thousands):

Operating cash

Operating cash flows

Investing cash flows

Financing cash flows

exchange rate effect

Foreign exchange

Increase/(decrease)

in cash, cash equivalents and restricted cash

8 unchanged sentences

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.

of payments owed to vendors and third parties in the normal course of business, accrued incentive compensation for employees and the current

portion of our payable to GBH.

Cash, cash equivalents and restricted cash increased

by $3.2 million during the six months ended June 30, 2024 due to $14.2 million used to purchase financial instruments owned, at fair value,

$9.9 million used to pay dividends, $7.8 million used to repurchase our common stock, $1.2 million used to pay for software development

and $0.7 million used for other activities.

These decreases were partly offset by $31.2 million provided by operating activities, $5.3

million of proceeds from the sale of financial instruments owned, at fair value, and $0.5 million of proceeds from the exit from our investment

in Securrency, Inc.

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.

Issuance of Convertible Notes

22 unchanged sentences

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

5 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 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.

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:

(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:

5 unchanged sentences

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

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.

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 in the aggregate), 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 in the aggregate), subject to adjustment.

Seniority and Security:

6 unchanged sentences

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

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 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

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 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.

Currently, approximately

$88.6 million remains under this program for future purchases.

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

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.

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 $0.3 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 13 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

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.

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 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

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.

approximately

Notwithstanding

requirements,

transactions.

approximately

respectively,

consideration

approximately

interest-free

anniversaries

special-purpose

re-evaluation,

characteristics.

capitalization

Indefinite-lived

circumstances

Indefinite-lived

Liabilities ,

consolidation

distributions

substantially

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