What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-02 · 300 added, 281 removed, 364 unchanged (61% 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 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

fiscal year ended December 31, 2023 and in subsequent reports filed with or furnished to the SEC.

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

Executive Summary

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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.

WisdomTree Prime is available in

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

WisdomTree Prime is available in the U.S.

in 45 states and to approximately 80% of the U.S.

We had approximately $112.6 billion in AUM as

of June 30, 2024.

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

currency, cryptocurrency and alternatives strategies.

of September 30, 2024.

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

cryptocurrency, currency and alternatives strategies.

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

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alternatives.

communication

respectively,

appreciation,

internationally

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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

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

income/(loss)

Revenues – Total revenues increased 25.2% from the three months ended September 30, 2023 to $113.2 million in the

comparable period in 2024 primarily due to higher average AUM, higher other revenues attributable to our European-listed ETPs and the

recognition of $3.7 million of other revenue related to legal and other related expenses, expected to be covered by insurance, incurred

in connection with the SEC ESG Settlement.

Expenses – Total operating expenses increased 13.6% from the three months ended September 30, 2023 to $72.4 million

in the comparable period in 2024 primarily due to higher professional fees, which is inclusive of the legal and other related expenses

expected to be covered by insurance described above, as well as higher fund management and administration costs, incentive compensation

and marketing expenses.

Other Income/(Expenses) – Other income/(expenses) includes interest income and interest expense, losses on extinguishment

of convertible notes, gains on revaluation/termination of deferred consideration–gold payments, impairments and other losses, net.

Further information is provided herein.

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.

Net (loss)/income – We reported net (loss)/income of ($4.5) million and $13.0 million during the three months ended

September 30, 2024 and 2023, respectively.

Guidance Update for the Year Ending December 31, 2024

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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.

ending December 31, 2024 is currently estimated to range from 28% to 29% (unchanged from the prior quarter).

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 six months ended June 30, 2024,

During the nine months ended September 30,

2024, discretionary spending was $45.3 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.

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

range from $62.0 million to $65.0 million (previously $64.0 million to $68.0 million).

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.

expenses in response to an activist campaign, including $5.0 million incurred during the nine months ended September 30, 2024, and $4.1

million of legal and other related expenses expected to be covered by insurance.

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 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

Our gross margin was 80.5% during the nine months ended September 30, 2024.

We currently estimate our gross margin guidance for the year

ending December 31, 2024 to be between 80% and 81% (unchanged from the prior quarter) considering current AUM levels and higher forecasted

other revenues going forward.

If AUM increases, we would anticipate further gross margin expansion.

approximately

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consideration

non-deductible

extinguishment

non-deductible

consideration

ETPs (in millions )

consideration

(in millions )

Beginning of period assets

Market appreciation

(Outflows)/inflows

Market appreciation/(depreciation)

End of period assets

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Beginning of period assets

Market appreciation

(Outflows)/inflows

Market appreciation/(depreciation)

End of period assets

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Beginning of period assets

(Outflows)/inflows

Market appreciation/(depreciation)

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Beginning of period assets

Market (depreciation)/appreciation

Market appreciation/(depreciation)

End of period assets

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Beginning of period assets

(Outflows)/inflows

Market appreciation/(depreciation)

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Beginning of period assets

Inflows/(outflows)

Market (depreciation)/appreciation

(Outflows)/inflows

Market appreciation/(depreciation)

End of period assets

Average assets during the period

International Developed

Market Equity

International Developed Market Equity

Beginning of period assets

Market appreciation

(Outflows)/inflows

Market appreciation/(depreciation)

End of period assets

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Beginning of period assets

Market appreciation

(Outflows)/inflows

Market appreciation/(depreciation)

End of period assets

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(Outflows)/inflows

Market appreciation

Market appreciation/(depreciation)

End of period assets

2 unchanged sentences

Beginning of period assets

Inflows/(outflows)

Market (depreciation)/appreciation

Market appreciation/(depreciation)

End of period assets

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Beginning of period assets

Market (depreciation)/appreciation

Market appreciation/(depreciation)

End of period assets

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due to fund closures and trade adjustments.

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

June 30, 2023

Three Months Ended September 30, 2024 Compared to Three Months

Ended September 30, 2023

Selected Operating and Financial Information

September 30,

AUM (in millions)

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Advisory fee revenues increased 17.4% from $86.6

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.

million during the three months ended September 30, 2023 to $101.7 million in the comparable period in 2024 primarily due to higher average

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

Other revenues

Other revenues increased 200.9% from $3.8 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.

during the three months ended September 30, 2023 to $11.5 million in the comparable period in 2024 due to higher other revenues attributable

to our European listed products and $3.7 million of legal and other related expenses, expected to be covered by insurance, incurred in

connection with the SEC ESG Settlement described in Note 14 to our Consolidated Financial Statements.

September 30,

Compensation and benefits

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Sales and business development

Contractual gold payments

Professional fees

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Total operating expenses

Three Months Ended

September 30,

As a Percent of Revenues:

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Sales and business development

Contractual gold payments

Professional fees

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Third-party distribution fees

Total operating

Total operating expenses

Compensation and benefits

Compensation and benefits expense increased

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.

5.2% from $28.0 million during the three months ended September 30, 2023 to $29.4 million in the comparable period in 2024 due to higher

stock-based compensation expense and headcount.

Headcount was 299 and 314 at September 30, 2023 and 2024, respectively.

Fund management and administration

Fund management and administration expense increased

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.

16.5% from $18.0 million during the three months ended September 30, 2023 to $21.0 million in the comparable period in 2024 primarily

due to higher average AUM.

We had 80 U.S.

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.

listed ETFs and 273 European listed ETPs at September 30, 2023 compared to 78 U.S.

and 274 European listed ETPs at September 30, 2024.

Marketing and advertising

Marketing and advertising expense increased

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.

27.8% from $3.8 million during the three months ended September 30, 2023 to $4.9 million in the comparable period in 2024 primarily due

to higher spending related to digital assets and our U.S.

listed products.

Sales and business development

Sales and business development expense increased

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

Sales and business development expense was essentially

unchanged from the three months ended September 30, 2023.

Professional fees

Professional fees expense increased 69.8% from

$3.7 million during the three months ended September 30, 2023 to $6.3 million in the comparable period in 2024 primarily due to $3.7 million

of legal and other related expenses incurred in connection with the SEC ESG Settlement.

An equal and offsetting amount is recorded in

other revenues as these expenses are expected to be covered by insurance.

Occupancy, communications and equipment

Occupancy, communications and equipment expense

was essentially unchanged from the three months ended September 30, 2023.

relationships.

Income/(Expenses)

September 30,

(in thousands)

Interest expense

Gain on revaluation/termination

of deferred consideration—gold payments

Interest income

and gains, net

Total other (expenses)/income, net

Loss on extinguishment of convertible notes

Other losses, net

Total other expenses, net

September 30,

As a Percent of Revenues:

Interest expense

Gain on revaluation/termination

of deferred consideration—gold payments

Interest income

and gains, net

(expenses)/income, net

Loss on extinguishment of convertible notes

Other losses, net

Total other expenses,

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 expense increased 45.2% from $3.5 million

during the three months ended September 30, 2023 to $5.0 million in the comparable period in 2024 due to a higher level of debt outstanding,

partly offset by a lower average interest rate.

The increase is also due to the recognition of imputed interest related to the interest-free

financing of our repurchase of the shares of Series C Preferred Stock from GBH in November 2023.

Our effective interest rate during the three

months ended September 30, 2023 and 2024 was 5.0% and 4.4%, respectively.

Interest income

Interest income increased 126.9% from $0.8 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

during the three months ended September 30, 2023 to $1.8 million in the comparable period in 2024 due to a higher level of interest-earning

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

Loss on Extinguishment of Convertible Notes

During the three months ended September 30,

2023, we recognized a loss on extinguishment of convertible notes of $30.6 million arising from the repurchase of $104.2 million in aggregate

principal amount of our 2028 Notes.

Other losses, net

Other losses, net were $1.3 million and $3.1 million

during the three months ended September 30, 2023 and 2024, respectively.

The three months ended September 30, 2024, includes a $4.0 million

civil money penalty in connection with the SEC ESG Settlement.

Also included are net gains of $0.8 million and $0.6 million on our financial

instruments owned and 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.

non-deductible

extinguishment

non-deductible

compensation.

revaluation/termination

consideration—gold

non-deductible

compensation.

September 30,

AUM (in millions)

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Advisory fee revenues increased 19.0% from $246.2

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.

million during the nine months ended September 30, 2023 to $293.1 million in the comparable period in 2024 primarily due to higher average

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

Other revenues

Other revenues increased 100.3% from $12.0 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.

during the nine months ended September 30, 2023 to $23.9 million in the comparable period in 2024 due to higher other revenues attributable

to our European listed products and $4.1 million of legal and other related expenses expected to be covered by insurance, incurred in

connection with the SEC ESG Settlement.

Operating Expenses

September 30,

(in thousands)

Compensation and benefits

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Third-party distribution fees

Total operating

Total operating expenses

September 30,

As a Percent of Revenues

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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.

11.7% from $81.7 million during the nine months ended September 30, 2023 to $91.2 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.

15.5% from $52.9 million during the nine months ended September 30, 2023 to $61.1 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.

17.1% from $12.3 million during the nine months ended September 30, 2023 to $14.4 million in the comparable period in 2024 primarily due

to higher spending related to digital assets and our U.S.

listed products.

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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.

10.4% from $9.7 million during the nine months ended September 30, 2023 to $10.7 million in the comparable period in 2024 primarily due

to increases in travel and events spending, as well as higher market data spending.

Contractual gold payments

Contractual gold payments expense decreased

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.

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

from $6.1 million during the nine months ended September 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

Professional fees

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.

Professional fees increased 4.9% from $15.8 million

during the nine months ended September 30, 2023 to $16.5 million in the comparable period in 2024 primarily due to $4.1 million of legal

and other related expenses incurred in connection with the SEC ESG Settlement.

An equal and offsetting amount is recorded in other revenues

as these expenses are expected to be covered by insurance.

This increase was partly offset by 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 six months ended June 30, 2023.

increased 12.8% from $3.5 million during the nine months ended September 30, 2023 to $3.9 million in the comparable period in 2024 primarily

due to higher spending on office equipment.

Depreciation and amortization

Depreciation and amortization expense increased

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

132.4% from $0.5 million during the nine months ended September 30, 2023 to $1.2 million in the comparable period in 2024 due to amortization

of software development costs.

Third-party distribution fees

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.

relationships.

Income/(Expenses)

September 30,

Interest expense

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Loss on extinguishment of convertible

and losses, net

Other losses,

income/(expenses), net

Months Ended June 30,

Nine Months Ended

September 30,

As a Percent of Revenues:

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Loss on extinguishment of convertible

and losses, net

Other losses,

income/(expenses), net

Interest expense

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.

Interest expense increased 15.8% from $11.5

million during the nine months ended September 30, 2023 to $13.3 million in the comparable period in 2024 due to a higher level of debt

outstanding, partly offset by a lower average interest rate.

The increase is also due to the recognition of imputed interest related to

the interest-free financing of our repurchase of the shares of Series C Preferred Stock from GBH in November 2023.

Our effective interest rate during the nine

months ended September 30, 2023 and 2024 was 4.9% and 4.8%, 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.

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

This obligation was settled

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Interest income increased 61.1% from $2.9 million

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.

during the nine months ended September 30, 2023 to $4.6 million in the comparable period in 2024 due to a higher level of interest-earning

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.

upon the sale of Securrency

to an unrelated third party.

Loss on Extinguishment of Convertible Notes

During the six months ended June 30, 2023, we

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

amount of our 2020 Notes.

Other gains and losses, net

Other gains and losses, net were ($0.7) million

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.

During the nine months ended September 30, 2024,

we recognized a loss on extinguishment of convertible notes of $30.6 million, arising from the repurchase of $104.2 million in aggregate

principal amount of our 2028 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 4.25% Convertible Senior Notes

respectively.

physically-backed

miscellaneous

non-deductible

extinguishment

non-deductible

compensation.

revaluation/termination

consideration—gold

consideration,

indemnification

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non-deductible

compensation.

non-recurring

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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

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.

Losses on extinguishment of convertible notes, a civil money penalty in connection with the SEC ESG Settlement,

gains and losses recognized on our investments, changes in deferred tax asset valuation allowance, expenses incurred in response to an

activist campaign, 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

Net (loss)/income,

extinguishment of convertible notes, net of income taxes

penalty in connection with the SEC ESG Settlement

(Deduct)/add back:

(Gains)/losses on financial instruments owned, net of income taxes

interest on payable to GBH, net of income taxes

(Deduct)/add back:

(Gains)/losses recognized on our investments, net of income taxes

(Deduct)/add back:

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

Tax windfalls

upon vesting and exercise of stock-based compensation awards

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

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

Impairments, net of

income taxes (where applicable)

Remeasurement

of contingent consideration—sale of Canadian ETF business

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

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

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

The following table summarizes key data regarding

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

Sheet Data (in thousands):

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

Adjusted net income, as reported on a non-GAAP

basis during the three and nine months ended September 30, 2024, also excludes a loss of $11.4 million recognized upon the repurchase

of our Series A Preferred Stock, which was convertible into 14.75 million shares of common stock from ETFS Capital and $1.9 million of

stock repurchase excise taxes.

GAAP, these amounts are excluded from net income but are required to be added to net income

to arrive at income available to common stockholders in the calculation of earnings per share.

September 30,

Balance Sheet

Data (in thousands):

Cash, cash equivalents and restricted cash

4 unchanged sentences

Total current liabilities

Other assets—seed capital (WisdomTree Digital

Regulatory capital

Other assets—seed capital (WisdomTree Digital Funds)

Regulatory capital requirements

Available liquidity

Months Ended June 30,

Cash Flow Data (in thousands):

Months Ended September 30,

Flow Data (in thousands):

Operating cash flows

16 unchanged sentences

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.

by $47.2 million during the nine months ended September 30, 2024 due to $345.0 million of proceeds from the issuance of convertible notes,

$78.9 million of cash provided by operating activities, $42.3 million of proceeds from the sale of financial instruments owned, at fair

value and $2.1 million provided by other activities.

These increases were partly offset by $143.8 million used to repurchase Series A

Preferred Stock, $132.7 million to repurchase a portion of our 2028 Notes, $62.9 million used to repurchase common stock, $57.9 million

used to purchase financial instruments owned, at fair value, $14.8 million used to pay dividends, $7.7 million used to pay convertible

notes issuance costs and $1.8 million used to pay for software development.

Cash and cash equivalents decreased by $42.6

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

As a result of this repurchase, we recognized a

loss on extinguishment of approximately $9.7 million during the 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.

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.

Convertible Notes

We have the following convertible notes outstanding

as of September 30, 2024:

$150.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2026 (the “2026 Notes”);

$25.8 million in aggregate principal amount of 5.75% Convertible Senior Notes due 2028 (the “2028 Notes”);

$345.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2029 (the “2029 Notes”).

institutional

extinguishment

approximately

(collectively,

Principal outstanding

Maturity date (unless earlier converted,

repurchased or redeemed)

Issuance date

June 14, 2021

February 14, 2023

August 13, 2024

Maturity date (unless earlier converted, repurchased or redeemed)

June 15, 2026

August 15, 2028

August 15, 2029

Interest rate

Conversion price

Conversion rate

Initial conversion price

Initial conversion rate

Redemption price

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 2029 Notes and the 2028

Notes and on June 15 and December 15 of each year for the 2026 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.

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

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

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

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

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

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

respective Convertible Notes on each applicable trading day;

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

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

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

conversion rate on each such trading day;

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

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

or (iv) upon the occurrence of specified corporate

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.

preceding May 15, 2029 and May 15, 2028 for the 2029 Notes and the 2028 Notes, respectively, and March 15, 2026 for the 2026 Notes, 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;

the occurrence of specified corporate events.

On or after May 15, 2029 and May 15, 2028 in respect of the 2029 Notes and the 2028 Notes,

respectively, and March 15, 2026 in respect of the 2026 Notes, 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:

1 unchanged sentence

Notes to be converted.

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

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

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

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

Redemption price:

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

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

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

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

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

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

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

No sinking fund is provided

for the Convertible Notes.

20, 2026 and August 20, 2025 in respect of the 2029 Notes and the 2028 Notes, respectively, and June 20, 2023 in respect of the 2026 Notes

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:

5 unchanged sentences

“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.

for redemption may result in an increase to the conversion rate, provided that the conversion rate will not exceed 103.6269 shares, 167.7853

shares and 144.9275 shares of our common stock per $1,000 principal amount of the 2029 Notes, the 2028 Notes and the 2026 Notes, respectively

(the equivalent of 69,880,434 shares of our common stock), subject to adjustment.

Seniority and Security:

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,

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

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

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

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

approximately

3 unchanged sentences

approximately

then-outstanding

consideration

approximately

respectively,

14 unchanged sentences

substantially

transaction-based

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