WisdomTree, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS WisdomTree, Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Per Share Amounts) September 30, 2024 December 31, 2023 Assets (unaudited) Current assets: Cash, cash equivalents and restricted cash (including $ 11,192 and $ 5,007 invested in the WisdomTree Government Money Market Digital Fund at September 30, 2024 and December 31, 2023, respectively) $ 176,483 $ 129,305 Financial instruments owned, at fair value (including $ 70,010 and $ 47,559 invested in WisdomTree products at September 30, 2024 and December 31, 2023, respectively) (Note 5) 77,341 58,722 Accounts receivable (including $33,764 and $28,511 due from related parties at September 30, 2024 and December 31, 2023, respectively) 45,200 35,473 Prepaid expenses 6,968 5,258 Other current assets 1,173 1,036 Total current assets 307,165 229,794 Fixed assets, net 389 427 Securities held-to-maturity 212 230 Deferred tax assets, net (Note 21) 8,568 11,057 Investments (Note 7) 8,764 9,684 Right of use assets—operating leases (Note 13) 1,220 563 Goodwill (Note 23) 86,841 86,841 Intangible assets, net (Note 23) 605,802 605,082 Other noncurrent assets 474 459 Total assets $ 1,019,435 $ 944,137 Liabilities and stockholders’ equity Liabilities Current liabilities: Fund management and administration payable $ 30,200 $ 30,085 Compensation and benefits payable 30,087 38,111 Payable to Gold Bullion Holdings (Jersey) Limited (“GBH”) (Note 12) 14,804 14,804 Income taxes payable 5,798 3,866 Operating lease liabilities (Note 13) 950 578 Accounts payable and other liabilities 24,634 15,772 Total current liabilities 106,473 103,216 Convertible notes (Note 10) 511,406 274,888 Payable to GBH (Note 12) 26,368 24,328 Operating lease liabilities—long term 270 — Total liabilities 644,517 402,432 Preferred stock—Series A Non-Voting Convertible, par value $ 0.01 ; Zero and 14.750 shares authorized, issued and outstanding at September 30, 2024 and December 31, 2023, respectively; redemption value of $0 and $ 96,869 at September 30, 2024 and December 31, 2023, respectively) (Note 11) — 132,569 Contingencies (Note 14) Stockholders’ equity Preferred stock, par value $ 0.01 ; 2,000 shares authorized — — Common stock, par value $ 0.01 ; 400,000 shares authorized; issued and outstanding: 146,104 and 150,330 at September 30, 2024 and December 31, 2023, respectively 1,461 1,503 Additional paid-in capital 265,564 312,440 Accumulated other comprehensive income/(loss) 995 ( 548 ) Retained earnings 106,898 95,741 Total stockholders’ equity 374,918 409,136 Total liabilities and stockholders’ equity $ 1,019,435 $ 944,137 The accompanying notes are an integral part of these consolidated financial statements. 4 Table of Contents WisdomTree, Inc. and Subsidiaries Consolidated Statements of Operations (In Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Operating Revenues: Advisory fees $ 101,659 $ 86,598 $ 293,098 $ 246,239 Other revenues 11,509 3,825 23,942 11,952 Total revenues 113,168 90,423 317,040 258,191 Operating Expenses: Compensation and benefits 29,405 27,955 91,249 81,672 Fund management and administration 21,004 18,023 61,105 52,903 Marketing and advertising 4,897 3,833 14,415 12,305 Sales and business development 3,465 3,383 10,716 9,703 Contractual gold payments (Note 9) — — — 6,069 Professional fees 6,315 3,719 16,539 15,768 Occupancy, communications and equipment 1,397 1,203 3,921 3,476 Depreciation and amortization 447 307 1,248 537 Third-party distribution fees 2,983 2,694 7,977 6,828 Other 2,463 2,601 7,617 7,473 Total operating expenses 72,376 63,718 214,787 196,734 Operating income 40,792 26,705 102,253 61,457 Other Income/(Expenses): Interest expense ( 5,027 ) ( 3,461 ) ( 13,295 ) ( 11,484 ) Gain on revaluation/termination of deferred consideration—gold payments (Note 9) — — — 61,953 Interest income 1,795 791 4,631 2,874 Impairments (Note 25) — ( 2,703 ) — ( 7,603 ) Loss on extinguishment of convertible notes (Note 10) ( 30,632 ) — ( 30,632 ) ( 9,721 ) Other losses, net ( 3,062 ) ( 2,512 ) ( 1,753 ) ( 3,233 ) Income before income taxes 3,866 18,820 61,204 94,243 Income tax expense 8,351 5,836 21,819 10,774 Net (loss)/income $ ( 4,485 ) $ 12,984 $ 39,385 $ 83,469 (Loss)/earnings per share—basic $ ( 0.13 ) $ 0.07 $ 0.16 $ 0.50 (Loss)/earnings per share—diluted $ ( 0.13 ) $ 0.07 $ 0.16 $ 0.49 Weighted-average common shares—basic 143,929 145,284 145,756 144,505 Weighted-average common shares—diluted 143,929 177,140 162,691 169,997 Cash dividends declared per common share $ 0.03 $ 0.03 $ 0.09 $ 0.09 The accompanying notes are an integral part of these consolidated financial statements. 5 Table of Contents WisdomTree, Inc. and Subsidiaries Consolidated Statements of Comprehensive (Loss)/Income (In Thousands) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net (loss)/income $ ( 4,485 ) $ 12,984 $ 39,385 $ 83,469 Other comprehensive income/(loss) Foreign currency translation adjustment, net of income taxes 1,926 ( 944 ) 1,543 ( 217 ) Other comprehensive income/(loss) 1,926 ( 944 ) 1,543 ( 217 ) Comprehensive (loss)/income $ ( 2,559 ) $ 12,040 $ 40,928 $ 83,252 The accompanying notes are an integral part of these consolidated financial statements. 6 Table of Contents WisdomTree, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity (In Thousands) (Unaudited) Three Months Ended September 30, 2024 Series C Preferred Stock Common Stock Additional Accumulated Other Shares Issued Par Value Shares Issued Par Value Paid-In Capital Comprehensive (Loss)/Income Retained Earnings Total Balance—July 1, 2024 — $ — 151,857 $ 1,519 $ 315,359 $ ( 931 ) $ 129,617 $ 445,564 Shares repurchased — — ( 5,704 ) ( 57 ) ( 54,993 ) — — ( 55,050 ) Restricted stock issued and vesting of restricted stock units, net — — ( 49 ) ( 1 ) 1 — — — Stock-based compensation — — — — 5,197 — — 5,197 Repurchase of Series A Preferred Stock (Note 11) — — — — — — ( 11,375 ) ( 11,375 ) Excise taxes – stock repurchases — — — — — — ( 1,868 ) ( 1,868 ) Other comprehensive income — — — — — 1,926 — 1,926 Dividends — — — — — — ( 4,991 ) ( 4,991 ) Net loss — — — — — — ( 4,485 ) ( 4,485 ) Balance—September 30, 2024 — $ — 146,104 $ 1,461 $ 265,564 $ 995 $ 106,898 $ 374,918 Three Months Ended September 30, 2023 Series C Preferred Stock Common Stock Additional Accumulated Other Shares Issued Par Value Shares Issued Par Value Paid-In Capital Comprehensive Loss Retained Earnings Total Balance—July 1, 2023 13 $ — 150,343 $ 1,503 $ 383,621 $ ( 693 ) $ 74,356 $ 458,787 Shares repurchased — — ( 5 ) — ( 30 ) — — ( 30 ) Restricted stock issued and vesting of restricted stock units, net — — ( 3 ) — — — — — Stock-based compensation — — — — 3,916 — — 3,916 Other comprehensive loss — — — — — ( 944 ) — ( 944 ) Dividends — — — — — — ( 5,333 ) ( 5,333 ) Net income — — — — — — 12,984 12,984 Balance—September 30, 2023 13 $ — 150,335 $ 1,503 $ 387,507 $ ( 1,637 ) $ 82,007 $ 469,380 The accompanying notes are an integral part of these consolidated financial statements. 7 Table of Contents WisdomTree, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity (In Thousands) (Unaudited) Nine Months Ended September 30, 2024 Series C Preferred Stock Common Stock Additional Accumulated Other Shares Issued Par Value Shares Issued Par Value Paid-In Capital Comprehensive (Loss)/Income Retained Earnings Total Balance—January 1, 2024 — $ — 150,330 $ 1,503 $ 312,440 $ ( 548 ) $ 95,741 $ 409,136 Restricted stock issued and vesting of restricted stock units, net — — 2,574 26 ( 26 ) — — — Shares repurchased — — ( 6,800 ) ( 68 ) ( 62,802 ) — — ( 62,870 ) Stock-based compensation — — — — 15,952 — — 15,952 Repurchase of Series A Preferred Stock (Note 11) — — — — — — ( 11,375 ) ( 11,375 ) Excise taxes – Stock repurchases — — — — — — ( 1,868 ) ( 1,868 ) Other comprehensive income — — — — — 1,543 — 1,543 Dividends — — — — — — ( 14,985 ) ( 14,985 ) Net income — — — — — — 39,385 39,385 Balance—September 30, 2024 — $ — 146,104 $ 1,461 $ 265,564 $ 995 $ 106,898 $ 374,918 Nine Months Ended September 30, 2023 Series C Preferred Stock Common Stock Additional Accumulated Other Shares Issued Par Value Shares Issued Par Value Paid-In Capital Comprehensive Loss Retained Earnings Total Balance—January 1, 2023 — $ — 146,517 $ 1,465 $ 291,847 $ ( 1,420 ) $ 13,719 $ 305,611 Shares issued in connection with termination of the deferred consideration—gold payments obligation, net of issuance costs (Note 9) 13 — — — 86,801 — — 86,801 Restricted stock issued and vesting of restricted stock units, net — — 3,417 34 ( 34 ) — — — Shares issued in connection with convertible notes that matured on June 15, 2023 (Note 10) — — 1,037 10 35 — — 45 Shares repurchased — — ( 636 ) ( 6 ) ( 3,564 ) — — ( 3,570 ) Stock-based compensation — — — — 12,422 — — 12,422 Other comprehensive loss — — — — — ( 217 ) — ( 217 ) Dividends — — — — — — ( 15,181 ) ( 15,181 ) Net income — — — — — — 83,469 83,469 Balance—September 30, 2023 13 $ — 150,335 $ 1,503 $ 387,507 $ ( 1,637 ) $ 82,007 $ 469,380 The accompanying notes are an integral part of these consolidated financial statements. 8 Table of Contents WisdomTree, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In Thousands) (Unaudited) Nine Months Ended September 30, 2024 2023 Cash flows from operating activities: Net income $ 39,385 $ 83,469 Adjustments to reconcile net income to net cash provided by operating activities: Advisory and license fees paid in gold, other precious metals and cryptocurrency ( 39,028 ) ( 37,632 ) Loss on extinguishment of convertible notes 30,632 9,721 Stock-based compensation 15,952 12,422 (Gains)/losses on financial instruments owned, at fair value ( 2,575 ) 1,006 Deferred income taxes 2,103 1,282 Imputed interest on payable to GBH 2,039 — Amortization of issuance costs—convertible notes 1,266 1,443 Depreciation and amortization 1,248 537 Amortization of right of use asset 976 963 Losses on investments 619 1,245 Gain on revaluation/termination of deferred consideration—gold payments — ( 61,953 ) Impairments — 7,603 Contractual gold payments — 6,069 Other — ( 1,569 ) Changes in operating assets and liabilities: Accounts receivable ( 9,344 ) ( 7,346 ) Prepaid expenses ( 1,635 ) ( 1,826 ) Gold and other precious metals 38,603 30,629 Other assets ( 150 ) 356 Fund management and administration payable ( 6 ) 3,577 Compensation and benefits payable ( 8,251 ) ( 8,786 ) Income taxes payable 1,919 2,802 Operating lease liabilities ( 991 ) ( 955 ) Accounts payable and other liabilities 6,124 5,293 Net cash provided by operating activities 78,886 48,350 Cash flows from investing activities: Purchase of financial instruments owned, at fair value ( 57,855 ) ( 56,837 ) Purchase of investments — ( 10,000 ) Cash paid—software development ( 1,790 ) — Purchase of fixed assets ( 128 ) ( 93 ) Proceeds from the sale of financial instruments owned, at fair value 42,388 102,276 Proceeds from the exit from investment in Securrency, Inc. 465 — Proceeds from held-to-maturity securities maturing or called prior to maturity 18 22 Receipt of contingent consideration—Sale of Canadian ETF business — 1,477 Acquisition of Securrency Transfers, Inc. (net of cash acquired) — ( 985 ) Net cash (used in)/provided by investing activities ( 16,902 ) 35,860 Cash flows from financing activities: Repurchase of Series A Preferred Stock ( 143,812 ) — Repurchase and maturity of convertible notes (Note 10) ( 132,713 ) ( 184,272 ) Shares repurchased ( 62,870 ) ( 3,570 ) Dividends paid ( 14,745 ) ( 14,897 ) Issuance costs—convertible notes ( 7,667 ) ( 3,548 ) Repurchase costs—Series A Preferred Stock ( 132 ) — Proceeds from the issuance of convertible notes (Note 10) 345,000 130,000 Termination of deferred consideration—gold payments — ( 50,005 ) Issuance costs—Series C Preferred Stock — ( 97 ) Net cash used in financing activities ( 16,939 ) ( 126,389 ) Increase/(decrease) in cash flow due to changes in foreign exchange rate 2,133 ( 441 ) Net increase/(decrease) in cash, cash equivalents and restricted cash 47,178 ( 42,620 ) Cash, cash equivalents and restricted cash—beginning of year 129,305 132,101 Cash, cash equivalents and restricted cash—end of period $ 176,483 $ 89,481 Supplemental disclosure of cash flow information: Cash paid for income taxes $ 17,807 $ 8,069 Cash paid for interest $ 9,913 $ 8,272 9 Table of Contents WisdomTree, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Continued) (In Thousands) (Unaudited) NON-CASH INVESTING AND FINANCING ACTIVITIES On May 10, 2023, the Company issued 13.087 shares of Series C Non-Voting Convertible Preferred Stock (valued at $86,898) in connection with the termination of its deferred consideration—gold payments obligation. See Note 9 for additional information. On June 15, 2023, the Company issued 1,037 shares of common stock (as the conversion option was in the money) in connection with the maturity of $60,000 aggregate principal amount of 4.25% Convertible Senior Notes. The accompanying notes are an integral part of these consolidated financial statements. 10 Table of Contents WisdomTree, Inc. and Subsidiaries Notes to Consolidated Financial Statements (In Thousands, Except Share and Per Share Amounts) 1. Organization and Description of Business WisdomTree, Inc., through its global subsidiaries (collectively, “WisdomTree” or the “Company”), is a global financial innovator, offering a well-diversified suite of exchange-traded products (“ETPs”), models, solutions and products leveraging blockchain technology. Building on its heritage of innovation, the Company is developing and has launched next-generation digital products, services and structures, including digital or blockchain-enabled mutual funds (“Digital Funds”) and tokenized assets, as well as its blockchain-native digital wallet, WisdomTree Prime and institutional platform, WisdomTree Connect. The Company has the following wholly-owned operating subsidiaries: ● WisdomTree Asset Management, Inc. (“WTAM”) is a New York based investment adviser registered with the SEC, providing investment advisory and other management services to the WisdomTree Trust (“WTT”) and WisdomTree exchange-traded funds (“ETFs”). The WisdomTree ETFs are issued in the U.S. by WTT. WTT is a non-consolidated Delaware statutory trust registered with the SEC as an open-end management investment company. The Company has licensed to WTT the use of certain of its own indexes on an exclusive basis for the WisdomTree ETFs in the U.S. ● WisdomTree Management Jersey Limited (“ManJer”) is a Jersey based management company providing management services to seven issuers (the “ManJer Issuers”) in respect of the ETPs issued and listed by the ManJer Issuers covering commodity, currency, cryptocurrency and leveraged-and-inverse strategies. ● WisdomTree Multi Asset Management Limited (“WTMAML”) is a Jersey based management company providing management services to WisdomTree Multi Asset Issuer PLC (“WMAI”) in respect of the ETPs issued by WMAI. WMAI is a non-consolidated public limited company domiciled in Ireland. ● WisdomTree Management Limited (“WML”) is an Ireland based management company providing management services to WisdomTree Issuer ICAV (“WTICAV”) in respect of the WisdomTree UCITS ETFs issued by WTICAV. WTICAV is a non-consolidated public limited company domiciled in Ireland. ● WisdomTree UK Limited (“WTUK”) is a U.K. based company registered with the Financial Conduct Authority currently providing distribution and support services to ManJer, WTMAML and WML. ● WisdomTree Europe Limited is a U.K. based company which is the legacy distributor of the WMAI ETPs and WisdomTree UCITS ETFs. These services are now provided directly by WTUK. WisdomTree Europe Limited is no longer regulated and does not provide any regulated services. ● WisdomTree Ireland Limited is an Ireland based company authorized by the Central Bank of Ireland providing distribution services to ManJer, WTMAML and WML. ● WisdomTree Digital Commodity Services, LLC is a New York based company that serves as the sponsor of the WisdomTree Bitcoin Fund, which is currently effective with the SEC. The WisdomTree Bitcoin Fund is an exchange-traded fund that issues common shares of beneficial interest and is listed on the Cboe BZX Exchange, Inc. The WisdomTree Bitcoin Fund provides exposure to the spot price of bitcoin. ● WisdomTree Digital Management, Inc. (“WT Digital Management”) is a New York based investment adviser registered with the SEC, providing investment advisory and other management services to the WisdomTree Digital Trust (“WTDT”) and WisdomTree Digital Funds. The WisdomTree Digital Funds are issued in the U.S. by WTDT. WTDT is a non-consolidated Delaware statutory trust registered with the SEC as an open-end management investment company. Each Digital Fund uses blockchain technology to maintain a secondary record of its shares on one or more blockchains (e.g., Stellar or Ethereum), but does not directly or indirectly invest in any assets that rely on blockchain technology, such as cryptocurrencies. ● WisdomTree Digital Movement, Inc. (“WT Digital Movement”) is a New York based company operating as a money services business registered with the Financial Crimes Enforcement Network. WT Digital Movement has obtained and is seeking additional state money transmitter licenses to operate a platform for the purchase, sale and exchange of tokenized assets, while also providing blockchain-native digital wallet services through WisdomTree Prime to facilitate such activity. ● WisdomTree Securities, Inc. is a New York based limited purpose broker-dealer (i.e., mutual fund retailer), facilitating transactions in WisdomTree Digital Funds. 11 Table of Contents ● WisdomTree Transfers, Inc. is a New York based transfer agent registered with the SEC, providing transfer agency and registrar services for the WisdomTree Digital Funds. The transfer agent maintains the official record of share ownership in book entry form and reconciles the official record with the secondary record of ownership of shares on one or more blockchains. ● WisdomTree Digital Trust Company, LLC is a New York based limited liability trust company chartered by the New York State Department of Financial Services to provide certain digital asset products and services (e.g., custody) via WisdomTree Prime. 2. Significant Accounting Policies Basis of Presentation These consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and in the opinion of management reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial statements. The consolidated financial statements include the accounts of the Company’s wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Consolidation The Company consolidates entities in which it has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity (“VOE”) or a variable interest entity (“VIE”). The usual condition for a controlling financial interest in a VOE is ownership of a majority voting interest. If the Company has a majority voting interest in a VOE, the entity is consolidated. The Company has a controlling financial interest in a VIE when the Company has a variable interest that provides it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company reassesses its evaluation of whether an entity is a VOE or VIE when certain reconsideration events occur. Segment and Geographic Information The Company, through its subsidiaries in the U.S. and Europe, is a global financial innovator, offering a well-diversified suite of ETPs, models, solutions and products leveraging blockchain technology. The Company conducts business as a single operating segment as an ETP sponsor and asset manager, which is based upon the Company’s current organizational and management structure, as well as information used by the Company’s Chief Executive Officer (the chief operating decision maker, or CODM) to allocate resources and other factors. Foreign Currency Translation Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar are translated based on the end of period exchange rates from local currency to U.S. dollars. Results of operations are translated at the average exchange rates in effect during the period. The impact of the foreign currency translation adjustment is included in the Consolidated Statements of Comprehensive Income as a component of other comprehensive (loss)/income. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses for the periods presented. Actual results could differ materially from those estimates. Revenue Recognition The Company earns a significant portion of its revenues in the form of advisory fees from its ETPs and recognizes 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 the Company has a right to invoice. Other revenues are earned from swap providers associated with certain of the Company’s European listed ETPs, the nature of which are based on a percentage of the ETPs’ average daily net assets. The Company also earns transaction-based income on flows associated with certain European listed ETPs. There is no significant judgment in calculating amounts due, which are invoiced monthly or quarterly in arrears and are not subject to any potential reversal. Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which the Company has a right to invoice. Contractual Gold Payments Contractual gold payments were measured and paid monthly based upon the average daily spot price of gold. The Company’s obligation to continue making these payments terminated on May 10, 2023. 12 Table of Contents Marketing and Advertising Marketing and advertising costs, including media advertising and production costs, are expensed when incurred. Depreciation and Amortization Depreciation and amortization is provided for using the straight-line method over the estimated useful lives of the related assets as follows: Equipment 3 to 5 years Internally-developed software 3 years The assets listed above are recorded at cost less accumulated depreciation and amortization. Stock-Based Awards Accounting for stock-based compensation requires the measurement and recognition of compensation expense for all equity awards based on estimated fair values. Stock-based compensation is measured based on the grant-date fair value of the award and is amortized over the relevant service period. Forfeitures are recognized when they occur. Third-Party Distribution Fees The Company pays a percentage of its advisory fee revenues based on incremental growth in assets under management (“AUM”), subject to caps or minimums, to marketing agents to sell WisdomTree ETPs and for including WisdomTree ETPs on third-party customer platforms and recognizes these expenses as incurred. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be classified as cash equivalents. The Company maintains deposits with financial institutions in an amount that is in excess of federally insured limits. Restricted cash is required to be maintained in a separate account with withdrawal and usage restrictions. Accounts Receivable Accounts receivable are customer and other obligations due under normal trade terms. The Company measures credit losses, if any, by applying historical loss rates, adjusted for current conditions and reasonable and supportable forecasts to amounts outstanding using the aging method. Impairment of Long-Lived Assets The Company performs a review for the impairment of long-lived assets when events or changes in circumstances indicate that the estimated undiscounted future cash flows expected to be generated by the assets are less than their carrying amounts or when other events occur which may indicate that the carrying amount of an asset may not be recoverable. Financial Instruments Owned and Financial Instruments Sold, but Not yet Purchased (at Fair Value) Financial instruments owned and financial instruments sold, but not yet purchased are financial instruments classified as either trading or available-for-sale (“AFS”). These financial instruments are recorded on their trade date and are measured at fair value. All equity instruments that have readily determinable fair values are classified by the Company as trading. Debt instruments are classified based primarily on the Company’s intent to hold or sell the instrument. Changes in the fair value of debt instruments classified as trading and AFS are reported in other income/(expenses) and other comprehensive income, respectively, in the period the change occurs. Debt instruments classified as AFS are assessed for impairment on a quarterly basis and an estimate for credit loss is provided when the fair value of the AFS debt instrument is below its amortized cost basis. Credit-related impairments are recognized in earnings with a corresponding adjustment to the instrument’s amortized cost basis if the Company intends to sell the impaired AFS debt instrument or it is more likely than not the Company will be required to sell the instrument before recovering its amortized cost basis. Other credit-related impairments are recognized as an allowance with a corresponding adjustment to earnings. Impairments resulting from noncredit-related factors are recognized in other comprehensive income. Amounts recorded in other comprehensive income are reclassified into earnings upon sale of the AFS debt instrument using the specific identification method. Securities Held-to-Maturity The Company accounts for certain of its securities as held-to-maturity on a trade date basis, which are recorded at amortized cost. For held-to-maturity securities, the Company has the intent and ability to hold these securities to maturity and it is not more-likely-than-not that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be maturity. Held-to-maturity securities are placed on non-accrual status when the Company is in receipt of information indicating collection of interest is doubtful. Cash received on held-to-maturity securities placed on non-accrual status is recognized on a cash basis as interest income if and when received. 13 Table of Contents The Company reviews its portfolio of held-to-maturity securities for impairment on a quarterly basis, recognizing an allowance, if any, by applying an estimated loss rate after consideration for the nature of collateral securing the financial asset as well as potential future changes in collateral values and historical loss information for financial assets secured with similar collateral. Investments in pass-through government-sponsored enterprises (“GSEs”) are determined to have an estimated loss rate of zero due to an implicit U.S. government guarantee. Investments The Company accounts for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed in Accounting Standards Codification (“ASC”) Topic 321, Investments – Equity Securities (“ASC 321”), to the extent such investments are not subject to consolidation or the equity method. Under the measurement alternative, these financial instruments are carried at cost, less any impairment (assessed quarterly), plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. In addition, income is recognized when dividends are received only to the extent they are distributed from net accumulated earnings of the investee. Otherwise, such distributions are considered returns of investment and are recorded as a reduction of the cost of the investment. Investments in debt instruments are accounted for at fair value, with changes in fair value reported in other income/(expenses). Goodwill Goodwill is the excess of the purchase price over the fair values of the identifiable net assets at the acquisition date. The Company tests goodwill for impairment at least annually and at the time of a triggering event requiring re-evaluation, if one were to occur. Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value. If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of goodwill. A reporting unit is an operating segment or a component of an operating segment provided that the component constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component. Goodwill is allocated to the Company’s U.S. business and European business components. For impairment testing purposes, these components are aggregated as a single reporting unit as they fall under the same operating segment and have similar economic characteristics. Goodwill is assessed for impairment annually on November 30 th . When performing its goodwill impairment test, the Company considers a qualitative assessment, when appropriate, and a quantitative assessment using the market approach and its market capitalization when determining the fair value of the reporting unit. Intangible Assets Indefinite-lived intangible assets are tested for impairment at least annually and are also 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 values are less than their carrying values. Finite-lived intangible assets, if any, are amortized over their estimated useful life, which is the period over which the assets are expected to contribute directly or indirectly to the future cash flows of the Company. These intangible assets are tested for impairment at the time of a triggering event, if one were to occur. Finite-lived intangible assets may be impaired when the estimated undiscounted future cash flows generated from the assets are less than their carrying amounts. The Company may rely on a qualitative assessment when performing its 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 all of the Company’s intangible assets is November 30 th . Software Development Costs Software development costs incurred after the preliminary project stage is complete are capitalized if it is probable that the project will be completed and the software will be used as intended. Capitalized costs consist of employee compensation costs and fees paid to third parties who are directly involved in the application development efforts and are included in intangible assets, net in the Consolidated Balance Sheets. Such costs are amortized over the estimated useful life of the software on a straight-line basis and are included in depreciation and amortization in the Consolidated Statements of Operations. Once the application development stage is complete, additional costs are expensed as incurred. Leases The Company accounts for its lease obligations in accordance with ASC Topic 842, Leases (“ASC 842”), which requires the recognition of both (i) a lease liability equal to the present value of the remaining lease payments and (ii) an offsetting right-of-use asset. The remaining lease payments are discounted using the rate implicit in the lease, if known, or otherwise the Company’s incremental borrowing rate. After lease commencement, right-of-use assets are assessed for impairment and otherwise are amortized over the remaining lease term on a straight-line basis. These recognition requirements are not applied to short-term leases, which are those with a lease term of 12 months or less. Instead, lease payments associated with short-term leases are recognized as an expense on a straight-line basis over the lease term. 14 Table of Contents ASC 842 also provides a practical expedient which allows for consideration in a contract to be accounted for as a single lease component rather than allocated between lease and non-lease components. The Company has elected to apply this practical expedient to all lease contracts, where applicable. Deferred Consideration—Gold Payments Deferred consideration—gold payments represented the present value of an obligation to pay gold to a third party into perpetuity and was measured using forward-looking gold prices observed on the CMX exchange, a selected discount rate and perpetual growth rate (Note 9). Changes in the fair value and settlement of this obligation were reported as gain on revaluation/termination of deferred consideration—gold payments in the Consolidated Statements of Operations. Convertible Notes Convertible notes are carried at amortized cost, net of issuance costs. The Company accounts for convertible instruments as a single liability (applicable to the convertible notes) or equity with no separate accounting for embedded conversion features unless the conversion feature meets the criteria for accounting under the substantial premium model or does not qualify for a derivative scope exception. Interest expense is recognized using the effective interest method and includes amortization of issuance costs over the life of the debt. Contingencies The Company may be subject to reviews, inspections and investigations by regulatory authorities as well as legal proceedings arising in the ordinary course of business. The Company evaluates the likelihood of an unfavorable outcome of all legal or regulatory proceedings to which it is a party and accrues a loss contingency when the loss is probable and reasonably estimable. Contingent Payments The Company recognizes a gain on contingent payments when the contingency is resolved and the gain is realized. Earnings per Share Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Net income available to common stockholders represents net income of the Company reduced by an allocation of earnings to participating securities, as well as the loss related to the repurchase of the Series A non-voting convertible preferred stock and excise tax on stock repurchases. The Series A non-voting convertible preferred stock and Series C non-voting convertible preferred stock (Notes 9 and 11) and unvested share-based payment awards that contained non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) were participating securities while they were outstanding and were included in the computation of EPS pursuant to the two-class method. Share-based payment awards that do not contain such rights are not deemed participating securities and are included in diluted shares outstanding (if dilutive). Diluted EPS is calculated under the treasury stock method and the two-class method. The calculation that results in the lowest diluted EPS amount for the common stock is reported in the Company’s consolidated financial statements. The treasury stock method includes the dilutive effect of potential common shares including unvested stock-based awards, the Series A non-voting convertible preferred stock, the Series C non-voting convertible preferred stock and the convertible notes, if any. Potential common shares associated with the Series A non-voting convertible preferred stock, the Series C non-voting convertible preferred stock and the convertible notes were computed under the if-converted method. Potential common shares associated with the conversion option embedded in the convertible notes are dilutive when the Company’s average stock price exceeds the conversion price. Income Taxes The Company accounts for income taxes using the liability method, which requires the determination of deferred tax assets and liabilities based on the differences between the financial and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not that some portion or all the deferred tax assets will not be realized. Tax positions are evaluated utilizing a two-step process. The Company first determines whether any of its tax positions are more-likely-than-not to be sustained upon examination, based solely on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured as the largest amount of benefit that is greater than 50 % likely of being realized upon ultimate settlement. The Company records interest expense and penalties related to tax expenses as income tax expense. The Global Intangible Low-Taxed Income (“GILTI”) provisions of the Tax Reform Act requires the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. An accounting policy election is available to either account for the tax effects of GILTI in the period that is subject to such taxes or to provide deferred taxes for book and tax basis differences that upon reversal may be subject to such taxes. The Company accounts for the tax effects of these provisions in the period that is subject to such tax. 15 Table of Contents Non-income based taxes are recorded as part of other liabilities and other expenses. Excise taxes on stock repurchases are accounted for as a direct cost of the share repurchase transaction and reported as a reduction of stockholders’ equity. Recently Issued Accounting Pronouncements On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Improvements to Income Tax Disclosures , which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. The standard is intended to benefit stockholders by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The guidance applies to all entities subject to income taxes and is effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is considering early adoption of this standard in connection with the filing of its Annual Report on Form 10-K for the year ending December 31, 2024. Recently Adopted Accounting Pronouncements On January 1, 2024, the Company adopted ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures , which requires public entities to provide disclosures of significant segment expenses and other segment items. The guidance requires public entities to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually and also applies to public entities with a single reportable segment. Entities are permitted to disclose more than one measure of a segment’s profit or loss if such measures are used by the CODM to allocate resources and assess performance, as long as at least one of those measures is determined in a way that is most consistent with the measurement principles used to measure the corresponding amounts in the consolidated financial statements. The guidance is applied retrospectively to all periods presented in financial statements, unless it is impracticable, and is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. See Note 26 for additional information. On January 1, 2024, the Company early adopted ASU 2023-08, Accounting for and Disclosure of Crypto Assets , which contains final guidance requiring all entities to measure certain crypto assets at fair value each reporting period and to reflect changes from remeasurement in net income. Entities are required to present crypto assets measured at fair value separately from other intangible assets on the balance sheet and present changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement. Entities are required to provide interim and annual disclosures about the types of crypto assets they hold and any changes in their holdings of crypto assets. The guidance is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company’s financial statements. 3. Cash, Cash Equivalents and Restricted Cash Of the total cash, cash equivalents and restricted cash of $ 176,483 and $ 129,305 at September 30, 2024 and December 31, 2023, respectively, $ 148,707 and $ 116,895 were held at three financial institutions. At September 30, 2024 and December 31, 2023, cash equivalents were approximately $ 58,371 and $ 50,226 , respectively. Certain of the Company’s subsidiaries are required to maintain a minimum level of regulatory capital, generally satisfied by cash on hand, which was $ 35,120 and $ 29,156 at September 30, 2024 and December 31, 2023, respectively. Of these amounts, $ 13,576 and $ 0 , at September 30, 2024 and December 31, 2023, respectively, was restricted cash, which is required to be maintained in a separate account with withdrawal and usage restrictions in compliance with regulatory obligations. 4. Fair Value Measurements The fair value of financial instruments is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. ASC 820, Fair Value Measurement , establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs reflect assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the transparency of inputs as follows: Level 1 – Quoted prices for identical instruments in active markets. Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. 16 Table of Contents Level 3 – Instruments whose significant drivers are unobservable. The availability of observable inputs can vary from product to product and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The tables below summarize the categorization of the Company’s assets and liabilities measured at fair value. During the three and nine months ended September 30, 2024 and 2023, there were no transfers between Levels 2 and 3. September 30, 2024 Total Level 1 Level 2 Level 3 Assets: Recurring fair value measurements: Cash equivalents $ 58,371 $ 58,371 $ — $ — Financial instruments owned, at fair value: ETFs 54,677 54,677 — — Pass-through GSEs 7,332 — 7,332 — Other assets—seed capital (WisdomTree Digital Funds): U.S. treasuries 5,364 — 5,364 — Equities 8,022 8,022 — — Fixed income 1,946 1,033 913 — Total $ 135,712 $ 122,103 $ 13,609 $ — Non-recurring fair value measurements: Fnality International Limited—Series B-1 Preference Shares (1) $ 8,288 $ — $ — $ 8,288 _____________________________ (1) Fair value determined on June 17, 2024. Not included above are prospective changes in value due to fluctuations in the British pound to U.S. dollar exchange rate. December 31, 2023 Total Level 1 Level 2 Level 3 Assets: Recurring fair value measurements: Cash equivalents $ 50,226 $ 50,226 $ — $ — Financial instruments owned, at fair value: ETFs 35,181 35,181 — — Pass-through GSEs 10,240 — 10,240 — Other assets—seed capital (WisdomTree Digital Funds): U.S. treasuries 5,007 — 5,007 — Equities 6,337 6,337 — — Fixed income 1,957 1,008 949 — Total $ 108,948 $ 92,752 $ 16,196 $ — Non-recurring fair value measurements: Fnality International Limited—Series B-1 Preference Shares (1) 9,684 — — 9,684 Other investments (2) — — — — Total $ 9,684 $ — $ — $ 9,684 _____________________________ (1) Fair value determined on October 31, 2023. (2) Fair value determined on September 30, 2023. 17 Table of Contents Recurring Fair Value Measurements – Methodology Cash Equivalents (Note 3) – These financial assets represent cash invested in highly liquid investments with original maturities of less than 90 days. These investments are valued at par, which approximates fair value, and are classified as Level 1 in the fair value hierarchy. Financial instruments owned (Note 5) – Financial instruments owned are investments in ETFs, pass-through GSEs, U.S. treasuries, equities and fixed income. ETFs and equities are generally traded in active, quoted and highly liquid markets and are therefore classified as Level 1 in the fair value hierarchy. Pricing of U.S. treasuries, pass-through GSEs and fixed income includes consideration given to date of issuance, collateral characteristics and market assumptions related to yields, credit risk and timing of prepayments and may be classified as either Level 1 or Level 2. 5. Financial instruments owned These instruments consist of the following: September 30, 2024 December 31, 2023 Financial instruments owned Trading securities $ 62,009 $ 45,421 Other assets—seed capital (WisdomTree Digital Funds) 15,332 13,301 Total $ 77,341 $ 58,722 The Company recognized net trading gains on financial instruments owned that were still held at the reporting dates of $ 680 and $ 1,958 during the three months ended September 30, 2024 and 2023, respectively, and $ 3,023 and $ 648 during the nine months ended September 30, 2024 and 2023, respectively, which were recorded in other losses, net, in the Consolidated Statements of Operations. 6. Securities Held-to-Maturity The following table is a summary of the Company’s securities held-to-maturity: September 30, 2024 December 31, 2023 Debt instruments: Pass-through GSEs (amortized cost) $ 212 $ 230 During the nine months ended September 30, 2024 and 2023, the Company received proceeds of $ 18 and $ 22 , respectively, from held-to-maturity securities maturing or being called prior to maturity. The following table summarizes unrealized losses and fair value (classified as Level 2 within the fair value hierarchy) of securities held-to-maturity: September 30, 2024 December 31, 2023 Cost/amortized cost $ 212 $ 230 Gross unrealized losses ( 13 ) ( 15 ) Fair value $ 199 $ 215 An allowance for credit losses was not provided on the Company’s held-to-maturity securities as all securities are investments in pass-through GSEs which are determined to have an estimated loss rate of zero due to an implicit U.S. government guarantee. The following table sets forth the maturity profile of the securities held-to-maturity; however, these securities may be called prior to the maturity date: September 30, 2024 December 31, 2023 Due within one year $ — $ — Due one year through five years — — Due five years through ten years 19 22 Due over ten years 193 208 Total $ 212 $ 230 18 Table of Contents 7. Investments The following table sets forth the Company’s investments: September 30, 2024 December 31, 2023 Carrying Value Cost Carrying Value Cost Fnality International Limited—Series B-1 Preference Shares $ 8,764 $ 8,091 $ 9,684 $ 8,091 Total $ 8,764 $ 8,091 $ 9,684 $ 8,091 Fnality International Limited The Company owns approximately 5.4 % (or 4.8 % on a fully-diluted basis) of capital stock of Fnality International Limited (“Fnality”), a company incorporated in England and Wales and focused on creating a peer-to-peer digital wholesale settlement ecosystem comprised of a consortium of financial institutions, offering real time cross-border payments from a single pool of liquidity. The Company’s ownership interest is represented by 2,340,378 Series B-1 Preference Shares, resulting from the conversion of its investment of £ 6,000 ($ 8,091 ) in convertible notes upon Fnality’s qualified equity financing which occurred in October 2023. The Series B-1 Preference Shares carry a 1.0x liquidation preference, are convertible into ordinary shares at the option of the Company and contain various rights and protections. This investment is accounted for under the measurement alternative prescribed in ASC 321, as it does not have a readily determinable fair value and is otherwise not subject to the equity method of accounting. The investment is assessed for impairment and similar observable transactions on a quarterly basis. This investment was re-measured to fair value upon the conversion of Fnality’s Series B-2 Preference Shares held by other investors into Series B-1 Preference Shares, which occurred in June 2024. Fair value was determined using the backsolve method, a valuation approach that determines the value of shares for companies with complex capital structures based upon the price paid for shares recently issued. Fair value was allocated across the capital structure using the Black-Scholes option pricing model. The table below presents the inputs used in the backsolve valuation approach (classified as Level 3 in the fair value hierarchy): Inputs June 17, 2024 December 31, 2023 Expected volatility 60 % 60 % Time to exit (in years) 4.35 5.00 Probability that Series B-2 Preference Shares convert into Series B-1 Preference Shares N/A 75 % Net unrealized gains/(losses) recognized on this investment were $ 476 and ($ 920 ) during the three and nine months ended September 30, 2024, respectively, inclusive of changes in the British pound to U.S. dollar exchange rate. These results are recorded in other losses, net on the Consolidated Statements of Operations. There was no impairment recognized on this investment during the three and nine months ended September 30, 2024 based upon a qualitative assessment. 8. Fixed Assets, net The following table summarizes fixed assets: September 30, 2024 December 31, 2023 Equipment $ 1,081 $ 1,097 Less: accumulated depreciation ( 692 ) ( 670 ) Total $ 389 $ 427 9. Deferred Consideration—Gold Payments Deferred consideration—gold payments represented an obligation the Company assumed in connection with its acquisition of the European exchange-traded commodity, currency and leveraged-and-inverse business of ETFS Capital Limited (“ETFS Capital”) which occurred on April 11, 2018. The obligation was for fixed payments to ETFS Capital of physical gold bullion equating to 9,500 ounces of gold per year through March 31, 2058 and then subsequently reduced to 6,333 ounces of gold per year continuing into perpetuity (“contractual gold payments”). ETFS Capital continued to pass through the payments to other parties to meet its payment obligations under prior royalty agreements, including to Gold Bullion Holdings (Jersey) Limited (“GBH”), a subsidiary of the World Gold Council (“WGC”), Graham Tuckwell (“GT”), and Rodber Investments Limited (“RIL”), an entity controlled by GT, who is also the Chairman of ETFS Capital. 19 Table of Contents On May 10, 2023, the Company terminated its contractual gold payments obligation for aggregate consideration totaling $ 136,903 pursuant to a Sale, Purchase and Assignment Deed (the “SPA Agreement”) with WisdomTree International Holdings Ltd, Electra Target HoldCo Limited, ETFS Capital, WGC, GBH, GT and RIL. Under the terms of the transaction, GBH received approximately $ 4,371 in cash and 13,087 shares of Series C Non-Voting Convertible Preferred Stock of the Company, $ 0.01 par value per share, convertible into 13,087,000 shares of the Company’s common stock (see Note 12 for additional information), and RIL received approximately $ 45,634 in cash. During the three and nine months ended September 30, 2023, the Company recognized the following in respect of deferred consideration—gold payments: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Contractual gold payments $ — $ — $ — $ 6,069 Contractual gold payments — gold ounces paid — — — 3,167 Gain on revaluation/termination of deferred consideration — gold payments $ — $ — $ — $ 61,953 10. Convertible Notes The Company has the following convertible notes outstanding as of September 30, 2024: ● $ 150,000 in aggregate principal amount of 3.25 % Convertible Senior Notes due 2026 (the “2026 Notes”); ● $ 25,845 in aggregate principal amount of 5.75 % Convertible Senior Notes due 2028 (the “2028 Notes”); and ● $ 345,000 in aggregate principal amount of 3.25 % Convertible Senior Notes due 2029 (the “2029 Notes”). Each class of notes were issued pursuant to indentures dated as of the issuance dates between the Company and either U.S. Bank National Association or U.S Bank Trust Company, National Association, as trustee (or its successor in interest, the “Trustee”), in private offerings to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. In connection with the issuance of the 2029 Notes, the Company repurchased $ 104,155 in aggregate principal amount of the 2028 Notes. As a result of this repurchase, the Company recognized a loss on extinguishment of $ 30,632 during the three and nine months ended September 30, 2024. As of September 30, 2024, the Company had an aggregate principal amount of $ 520,845 outstanding of the 2026 Notes, the 2028 Notes and the 2029 Notes (collectively, the “Convertible Notes”). Key terms of the Convertible Notes are as follows: 2026 Notes 2028 Notes 2029 Notes Principal outstanding $ 150,000 $ 25,845 $ 345,000 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 3.25 % 5.75 % 3.25 % Initial conversion price $ 11.04 $ 9.54 $ 11.82 Initial conversion rate 90.5797 104.8658 84.5934 Redemption price $ 14.35 $ 12.40 $ 15.37 ● Interest rate: 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 into shares of the Company’s common stock, per $ 1,000 principal amount of notes (equivalent to an initial conversion price set forth in the table above), subject to adjustment. ● Conversion: Holders may convert at their option at any time prior to the close of business on the business day immediately preceding May 15, 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 the Company’s 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 the Company’s common stock and the conversion rate on each such trading day; (iii) upon a notice of redemption delivered by the Company 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, 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. 20 Table of Contents ● Cash settlement of principal amount: Upon conversion, the Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted. At its election, the Company 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: The Company may redeem for cash all or any portion of the Convertible Notes, at its option, on or after August 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 the Company’s 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 the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides 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 the Company 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 103.6269 shares, 167.7853 shares and 144.9275 shares of the Company’s common stock per $ 1,000 principal amount of the 2029 Notes, the 2028 Notes and the 2026 Notes, respectively (the equivalent of 61,826,817 shares of the Company’s common stock), subject to adjustment. ● Seniority and Security: The Convertible Notes rank equal in right of payment and are the Company’s senior unsecured obligations. 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 following table provides a summary of the Convertible Notes at September 30, 2024 and December 31, 2023: September 30, 2024 December 31, 2023 2026 Notes 2028 Notes 2029 Notes Total 2026 Notes 2028 Notes Total Principal amount $ 150,000 $ 25,845 $ 345,000 $ 520,845 $ 150,000 $ 130,000 $ 280,000 Less: Unamortized issuance costs ( 1,479 ) ( 498 ) ( 7,462 ) ( 9,439 ) ( 2,125 ) ( 2,987 ) ( 5,112 ) Carrying amount $ 148,521 $ 25,347 $ 337,538 $ 511,406 $ 147,875 $ 127,013 $ 274,888 Effective interest rate (1) 3.83 % 6.25 % 3.70 % 3.86 % 6.25 % 3.83 % 4.96 % _____________________________ (1) Includes amortization of the issuance costs and premium. Interest expense on the Convertible Notes was $ 4,330 and $ 11,256 respectively, during the three and nine months ended September 30, 2024 and $ 3,461 and $ 11,484 , respectively, during the comparable periods in 2023. Interest payable of $ 3,151 and $ 2,391 at September 30, 2024 and December 31, 2023, respectively, is included in accounts payable and other liabilities on the Consolidated Balance Sheets. The fair value of the Convertible Notes (classified as Level 2 in the fair value hierarchy) was $ 553,602 and $ 281,897 at September 30, 2024 and December 31, 2023, respectively. The if-converted value of the 2028 Notes was $ 27,064 at September 30, 2024. The if-converted value of the 2026 Notes and the 2029 Notes did not exceed the principal amount at September 30, 2024. The if-converted value of the Convertible Notes did not exceed the principal amount at December 31, 2023. 21 Table of Contents 11. Series A Preferred Stock On August 13, 2024, the Company repurchased all of its then-outstanding Series A Non-Voting Convertible Preferred Stock (the “Series A Preferred Stock”), which was convertible into 14,750,000 shares of the Company’s common stock from ETFS Capital for aggregate cash consideration of $ 143,812 (or $ 9.75 per share). These shares were previously issued in April 2018, in connection with the completion of the acquisition by the Company of the European exchange-traded commodity, currency and leveraged-and-inverse business of ETFS Capital (the “ETFS Acquisition”) and were carried at $ 132,750 , which was based on the closing price of the Company’s common stock on April 10, 2018 of $ 9.00 per share, the trading day prior to the closing of the transaction. Under U.S. GAAP, the premium paid on repurchase represents a return similar to a dividend to the preferred stockholder and is required to be recorded to retained earnings along with the related transaction costs. During the three and nine months ended September 30, 2024, the Company recorded a $ 11,375 reduction to retained earnings in connection with this repurchase. The following is a summary of the Series A Preferred Stock balance: September 30, 2024 December 31, 2023 Issuance of Series A Preferred Stock $ — $ 132,750 Less: Issuance costs — ( 181 ) Series A Preferred Stock—carrying value $ — $ 132,569 Cash dividends declared per share (quarterly) $ — $ 0.03 The Company previously classified the Series A Preferred Stock as temporary equity which is required for redeemable instruments for which redemption triggers are outside of the issuer’s control. ETFS Capital had the right to redeem all the Series A Preferred Stock specified to be converted during the period of time specified in the Series A Certificate of Designations in the event that: (a) the number of shares of the Company’s common stock authorized by its certificate of incorporation was insufficient to permit the Company to convert all of the Series A Preferred Stock requested by ETFS Capital to be converted; or (b) ETFS Capital did not, upon completion of a change of control of the Company, receive the same amount per share of Series A Preferred Stock as it would have received had each outstanding share of Series A Preferred Stock been converted into common stock immediately prior to the change of control. However, the Company would not have been obligated to make any such redemption payments to the extent such payments would have been a breach of any covenant or obligation the Company owed to any of its secured creditors or is otherwise prohibited by applicable law. Any such redemption would have been at a price per share of Series A Preferred Stock equal to the dollar volume-weighted average price for a share of common stock for the 30-trading day period ending on the date of such attempted conversion or change of control, as applicable, multiplied by 1,000. Such redemption payment would have been made in one payment no later than 10 business days following the last day of the Company’s first fiscal quarter that began on a date following the date ETFS Capital exercised such redemption right. The redemption value of the Series A Preferred Stock was $ 96,869 at December 31, 2023. 12. Payable to Gold Bullion Holdings (Jersey) Limited (“GBH”) On November 20, 2023, the Company repurchased its Series C Non-Voting Convertible Preferred Stock, par value $ 0.01 per share (the “Series C Preferred Stock”) which was convertible into 13,087,000 shares of the Company’s common stock, from GBH, a subsidiary of WGC, for aggregate cash consideration of approximately $ 84,411 . Under the terms of the transaction, the Company paid GBH $ 40,000 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. The implied price per share was $ 6.02 when considering the interest-free financing element of the transaction. The investor rights agreement that the Company and GBH entered into in May 2023 in connection with the issuance of the Series C Preferred Stock, which provided GBH with certain rights and obligations with respect to the shares, including registration rights, was terminated in this transaction. Under U.S. GAAP, the obligation was recorded at its present value utilizing a market rate of interest on the closing date of 7.0 % and the corresponding discount is being amortized as interest expense pursuant to the effective interest method of accounting over the life of the obligation. The aggregate consideration payable was valued at $ 38,835 on the closing date and the carrying value of this obligation is as follows: September 30, 2024 December 31, 2023 Current: $ 14,804 $ 14,804 Long-term 26,368 24,328 Total $ 41,172 $ 39,132 22 Table of Contents Interest expense recognized was $ 697 and $ 2,039 , respectively, during the three and nine months ended September 30, 2024 and $0 during the comparable periods in 2023 and is included as a component of total interest expense recognized on the Consolidated Statements of Operations. 13. Leases The Company has entered into operating leases for its office facilities (including its corporate headquarters) and equipment. The Company has no finance leases. The following table provides additional information regarding the Company’s leases: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Lease cost: Operating lease cost $ 328 $ 324 $ 976 $ 963 Short-term lease cost 65 70 205 191 Total lease cost $ 393 $ 394 $ 1,181 $ 1,154 Other information: Cash paid for amounts included in the measurement of operating liabilities (operating leases) $ 328 $ 301 $ 991 $ 955 Right-of-use assets obtained in exchange for new operating lease liabilities n/a n/a n/a n/a Weighted-average remaining lease term (in years) — operating leases 1.1 0.7 1.1 0.7 Weighted-average discount rate — operating leases 5.7 % 6.0 % 5.7 % 6.0 % None of the Company’s leases include variable payments, residual value guarantees or any restrictions or covenants relating to the Company’s ability to pay dividends or incur additional financing obligations. The following table discloses future minimum lease payments at September 30, 2024 with respect to the Company’s operating lease liabilities: Remainder of 2024 $ 662 2025 769 2026 186 Total future minimum lease payments (undiscounted) $ 1,617 The following table reconciles the future minimum lease payments (disclosed above) at September 30, 2024 to the operating lease liabilities recognized in the Company’s Consolidated Balance Sheets: Amounts recognized in the Company’s Consolidated Balance Sheets Lease liability — short term $ 950 Lease liability — long term 270 Subtotal 1,220 Difference between undiscounted and discounted cash flows 397 Total future minimum lease payments (undiscounted) $ 1,617 14. Contingencies The Company may be subject to reviews, inspections and investigations by regulatory authorities as well as legal proceedings arising in the ordinary course of business. SEC ESG Settlement On August 5, 2024, WTAM received a Wells Notice from the staff (the “Staff”) of the SEC advising WTAM that the Staff had made a preliminary determination to recommend that the SEC file an enforcement action against WTAM alleging violations of certain provisions of the U.S. federal securities laws relating to three exchange-traded series of WisdomTree Trust managed by WTAM that pursued ESG-focused strategies (collectively, the “Funds”). The Funds, which were launched in March 2020 and were liquidated in February 2024, collectively had monthly average cumulative assets under management of approximately $ 119 million throughout their lifetime as ESG-named funds. Without admitting or denying the SEC’s allegations, WTAM agreed to resolve the matter by consenting to the entry of an Order by the SEC, which was announced publicly on October 21, 2024, in which WTAM agreed to cease and desist from committing or causing any violations and any future violations of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940, as amended, Rules 206(4)-7 and 206(4)-8 thereunder, and Section 34(b) of the Investment Company Act of 1940, as amended, and to pay a civil money penalty of $ 4,000 (the “SEC ESG Settlement”). This amount has been reported in other losses, net on the Consolidated Statements of Operations during the three and nine months ended September 30, 2024. 23 Table of Contents Excluding the penalty, the Company expects that all legal and other related expenses incurred by WTAM in connection with the matter will be covered by insurance, less a $ 1,000 deductible. These expected covered expenses totaled $ 3,661 and $ 4,114 , respectively, during the three and nine months ended September 30, 2024 and have been reported in other revenue on the Consolidated Statements of Operations. Closure of the WisdomTree WTI Crude Oil 3x Daily Leveraged ETP Between December 2020 and March 2022, WMAI, WTMAML, WTUK and/or WisdomTree Ireland Limited (“WT Ireland”) were served with seven separate writs of summons to appear before the Courts of Milan, Udine or Turin, Italy by investors seeking damages resulting from the closure of the WisdomTree WTI Crude Oil 3x Daily Leveraged ETP (“3OIL”) in March 2020. The product was dependent on the receipt of payments from a swap provider to satisfy payment obligations to the investors. Due to an extreme adverse move in oil futures relative to the oil futures’ closing price, the swap contract underlying 3OIL was terminated by the swap provider, which resulted in the compulsory redemption of 3OIL, all in accordance with the prospectus. Since February 2022, five of the seven actions have been resolved in the Company’s favor, of which two are subject to appeal. Total damages sought by all investors related to the two remaining open and two appealed claims, including an appealed claim for total damages of € 7,830 ($ 8,740 ), were approximately € 19,130 ($ 21,360 ) at September 30, 2024. Additionally, in July 2023, WT Ireland received a letter from counsel on behalf of additional investors seeking damages of up to approximately € 8,350 ($ 9,320 ) resulting from the closure of 3OIL. The claim is in its preliminary stages and a writ of summons has not been served. The Company continues to assess the open claims with its external counsel. The Company expects that losses, if any, arising from these claims will be covered under its insurance policies, less a $ 500 deductible. An accrual has not been made with respect to these matters at September 30, 2024 and December 31, 2023. 15. Variable Interest Entities VIEs are entities with any of the following characteristics: (i) the entity does not have enough equity to finance its activities without additional financial support; (ii) the equity holders, as a group, lack the characteristics of a controlling financial interest; or (iii) the entity is structured with non-substantive voting rights. Consolidation of a VIE is required for the party deemed to be the primary beneficiary, if any. The primary beneficiary is the party who has both (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. The Company is not the primary beneficiary of any entities in which it has a variable interest as it does not have the power to direct the activities that most significantly impact the entities’ economic performance. Such power is conveyed through the entities’ boards of directors and the Company does not have control over the boards. The following table presents information about the Company’s variable interests in non-consolidated VIEs: September 30, 2024 December 31, 2023 Carrying Amount — Assets: Fnality Series B-1 Preference Shares (Note 7) $ 8,764 $ 9,684 Maximum exposure to loss $ 8,764 $ 9,684 24 Table of Contents 16. Revenues from Contracts with Customers The following table presents the Company’s total revenues from contracts with customers: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenues from contracts with customers: Advisory fees $ 101,659 $ 86,598 $ 293,098 $ 246,239 Other revenues 11,509 3,825 23,942 11,952 Total operating revenues $ 113,168 $ 90,423 $ 317,040 $ 258,191 The Company recognizes revenues from contracts with customers when the performance obligation is satisfied, which is when the promised services are transferred to the customer. A service is considered to be transferred when the customer obtains control, which is represented by the transfer of rights with regard to the service. Transfer of control happens either over time or at a point in time. When a performance obligation is satisfied over time, an entity is required to select a single method of measuring progress for each performance obligation that depicts the entity’s performance in transferring control of services to the customer. A significant portion of the Company’s revenues from contracts with customers are derived primarily from investment advisory agreements with related parties (Note 17). These advisory fees are recognized over time, are earned from the Company’s ETPs and are calculated based on a percentage of the ETPs’ average daily net assets. There is no significant judgment in calculating amounts due which are invoiced monthly in arrears and are not subject to any potential reversal. Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which the Company has a right to invoice. There are no contract assets or liabilities that arise in connection with the recognition of advisory fee revenue. In addition, there are no costs incurred to obtain or fulfill the contracts with customers, all of which are investment advisory agreements with related parties. Other revenues includes revenues the Company earns from swap providers associated with certain of the Company’s European listed ETPs, the nature of which are based on a percentage of the ETPs’ average daily net assets. The Company also earns transaction-based income on flows associated with certain European listed ETPs. There is no significant judgment in calculating amounts due, which are invoiced monthly or quarterly in arrears and are not subject to any potential reversal. Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which the Company has a right to invoice. Geographic Distribution of Revenues The following table presents the Company’s total revenues geographically as determined by where the respective management companies reside: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenues from contracts with customers: United States $ 76,312 $ 57,988 $ 212,024 $ 160,477 Jersey 30,965 28,196 88,692 86,407 Ireland 5,891 4,239 16,324 11,307 Total operating revenues $ 113,168 $ 90,423 $ 317,040 $ 258,191 17. Related Party Transactions Investment Advisory Agreements The Company’s revenues are derived primarily from investment advisory agreements with related parties. Under these agreements, the Company has licensed to related parties the use of certain of its own indexes for the U.S. WisdomTree ETFs, WisdomTree Digital Funds and WisdomTree UCITS ETFs. The relevant boards of trustees or boards of directors (including certain officers of the Company) of each of the related parties is primarily responsible for overseeing the management and affairs of the entities for the benefit of their respective stakeholders and have contracted with the Company to provide for general management and administration services. The Company is also responsible for certain expenses of the related parties, including the cost of transfer agency, custody, fund administration and accounting, legal, audit, and other non-distribution services, excluding extraordinary expenses, taxes and certain other expenses, which are included in fund management and administration in the Consolidated Statements of Operations. In exchange, the Company receives fees based on a percentage of the ETPs’ and the Digital Funds’ average daily net assets. A majority of the independent members of the respective board of trustees or board of directors are required to initially and annually (after the first two years) approve the advisory agreements of the U.S. WisdomTree ETFs and the WisdomTree Digital Funds and these agreements may be terminated by such board of trustees or board of directors upon notice. 25 Table of Contents The following table summarizes accounts receivable from related parties which are included as a component of accounts receivable in the Consolidated Balance Sheets: September 30, 2024 December 31, 2023 Receivable from WTT $ 23,986 $ 21,226 Receivable from ManJer Issuers 5,013 4,411 Receivable from WMAI and WTICAV 4,765 2,874 Total $ 33,764 $ 28,511 The allowance for credit losses on accounts receivable from related parties is insignificant when applying historical loss rates, adjusted for current conditions and supportable forecasts, to the amounts outstanding in the table above. Amounts outstanding are all invoiced in arrears, are less than 30 days aged and are collected shortly after the applicable reporting period. The following table summarizes revenues from advisory services provided to related parties: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Advisory services provided to WTT $ 72,201 $ 57,656 $ 206,478 $ 159,595 Advisory services provided to ManJer Issuers 23,567 24,703 70,296 75,337 Advisory services provided to WMAI and WTICAV 5,891 4,239 16,324 11,307 Total $ 101,659 $ 86,598 $ 293,098 $ 246,239 Investments in WisdomTree Products The Company also has investments in certain WisdomTree products of approximately $ 81,202 and $ 52,566 at September 30, 2024 and December 31, 2023, respectively. This includes $ 20,524 and $ 18,308 , respectively, of seed investments in certain affiliated Digital Funds advised by WT Digital Management, referred to herein as “other assets–seed capital.” The Company also has invested an additional $ 6,000 in the WisdomTree Government Money Market Digital Fund at September 30, 2024. Net unrealized and realized gains related to trading WisdomTree products were $ 554 and $ 2,278 , respectively, during the three and nine months ended September 30, 2024 and ($ 591 ) and $ 250 , respectively, during the comparable periods in 2023. Such gains are recorded in other losses, net on the Consolidated Statements of Operations. 18. Stock-Based Awards On July 15, 2022, the Company’s stockholders approved the 2022 Equity Plan under which the Company may issue up to 16,000,000 shares of common stock (less one share for every share granted under the 2016 Equity Plan since March 31, 2022 and inclusive of shares available under the 2016 Equity Plan as of March 31, 2022) in the form of stock options and other stock-based awards. The Company grants equity awards to employees and directors, which include restricted stock awards (“RSAs”), restricted stock units (“RSUs”), including deferred RSUs to non-employee directors, performance-based restricted stock units (“PRSUs”) and stock options. Certain awards described below are subject to acceleration under certain conditions. Stock options: Generally issued for terms of ten years and may vest after at least one year of service and have an exercise price equal to the Company’s stock price on the grant date. The Company estimates the fair value of stock options (when granted) using the Black-Scholes option pricing model. RSAs/RSUs: Awards are valued based on the Company’s stock price on grant date and generally vest ratably, on an annual basis, over three years. For non-employee directors, such awards generally vest on the one-year anniversary of the grant date. Deferred RSUs: Awards are valued based on the Company’s stock price on grant date and generally vest on the one-year anniversary of the grant date. The awards are issued pursuant to the Company’s Non-Employee Director Deferred Compensation Program, and are settled based on timing elected by the recipient in advance. PRSUs: These awards cliff vest three years from the grant date and contain a market condition whereby the number of PRSUs ultimately vesting is tied to how the Company’s total shareholder return (“TSR”) compares to a peer group of other publicly traded asset managers over the three-year period. A Monte Carlo simulation is used to value these awards. 26 Table of Contents The number of PRSUs vesting ranges from 0% to 200% of the target number of PRSUs granted, as follows: ● If the relative TSR is below the 25 th percentile, then 0% of the target number of PRSUs granted will vest; ● If the relative TSR is at the 25 th percentile, then 50% of the target number of PRSUs granted will vest; ● If the relative TSR is above the 25 th percentile, then linear scaling is applied such that the percent of the target number of PRSUs vesting is 100% at the 50 th percentile and capped at 200% of the target number of PRSUs granted for performance at the 85 th percentile; and ● If the Company’s TSR is negative, the target number of PRSUs vesting is capped at 100% regardless of the relative TSR percentile. Stock-based compensation expense was $ 5,197 and $ 15,952 , respectively, during the three and nine months ended September 30, 2024 and $ 3,916 and $ 12,422 , respectively, during the comparable periods in 2023. A summary of unrecognized stock-based compensation expense and average remaining vesting period is as follows: September 30, 2024 Unrecognized Stock-Based Compensation Weighted-Average Remaining Vesting Period (Years) Employees and directors $ 22,861 1.03 A summary of stock-based compensation award activity (shares) during the three months ended September 30, 2024 is as follows: RSA RSU PRSU Balance at July 1, 2024 4,906,159 268,384 1,398,289 Granted — 444 4,395 Vested ( 27,625 ) — — Forfeited ( 49,111 ) ( 1,140 ) — Balance at September 30, 2024 4,829,423 267,688 (1) 1,402,684 _____________________________ (1) Includes 103,228 deferred RSUs that have vested. 19. Stockholder Rights Plan On March 17, 2023, the Board of Directors of the Company adopted a stockholder rights plan, as set forth in the Stockholder Rights Agreement, dated March 17, 2023, between the Company and Continental Stock Transfer & Trust Company, as Rights Agent, as amended by Amendment No. 1 thereto, dated May 4, 2023 (“Amendment No. 1”), Amendment No. 2 thereto, dated May 10, 2023 (“Amendment No. 2”), Amendment No. 3 thereto, dated March 18, 2024 (“Amendment No. 3”), Amendment No. 4 thereto, dated March 25, 2024 (“Amendment No. 4”), and Amendment No. 5 thereto, dated April 30, 2024 (“Amendment No. 5”) (as amended, the “Stockholder Rights Agreement”). At the Company’s 2024 annual meeting of stockholders held on June 12, 2024, the Company’s stockholders ratified the adoption by the Board of Directors of the extension of the Stockholder Rights Agreement. On March 18, 2024, the Company entered into Amendment No. 3, which extended the Stockholder Rights Agreement, such that the Rights will now expire on the close of business on March 17, 2025. Amendment No. 3 also changed the definition of “Exercise Price” in the Stockholder Rights Agreement from $ 32.00 to $ 45.00 per Unit (as defined below) to account for the difference in share price between when the Stockholder Rights Agreement was originally adopted and when it was extended. Pursuant to the terms of the Stockholder Rights Agreement, the Board of Directors declared a dividend distribution of (i) one Right (as defined below) for each outstanding share of common stock, par value $ 0.01 per share, of the Company’s common stock and (ii) 1,000 Rights for each outstanding share of the Company’s Series A Preferred Stock, to stockholders of record as of the close of business on March 28, 2023 (the “Record Date”). In addition, one Right will automatically attach to each share of common stock and 1,000 Rights will automatically attach to each share of Series A Preferred Stock, in each case, issued between the Record Date and the earlier of the Distribution Date (as defined below) and the expiration date of the Rights. Each “Right” entitles the registered holder thereof to purchase from the Company a unit consisting of one ten-thousandth of a share (a “Unit”) of Series B Junior Participating Cumulative Preferred Stock, par value $ 0.01 per share, of the Company (the “Series B Preferred Stock”) at a cash exercise price of $ 45.00 per Unit (the “Exercise Price”), subject to adjustment, under certain conditions specified in the Stockholder Rights Agreement and summarized below. 27 Table of Contents Initially, the Rights are not exercisable and are attached to and trade with all shares of common stock and Series A Preferred Stock outstanding as of, and issued subsequent to, the Record Date. The Rights will separate from the common stock and Series A Preferred Stock and will become exercisable upon the earlier of (i) the close of business on the tenth calendar day following the first public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired beneficial ownership of 10 % (or 20 % in the case of passive stockholders or “13G Investors,” as defined in the Stockholder Rights Agreement) or more of the outstanding shares of common stock, other than as a result of repurchases of stock by the Company or certain inadvertent actions by a stockholder (the date of such announcement being referred to as the “Stock Acquisition Date”), or (ii) the close of business on the tenth business day (or such later day as the Board of Directors may determine) following the commencement of a tender offer or exchange offer that could result upon its consummation in a person or group becoming an Acquiring Person (the earlier of such dates being herein referred to as the “Distribution Date”). A person or group who beneficially owned 10% or more (or 20% or more in the case of 13G Investors) of the Company’s outstanding common stock prior to the first public announcement by the Company of the adoption of the Stockholder Rights Agreement will not trigger the Stockholder Rights Agreement so long as they do not acquire beneficial ownership of any additional shares of common stock at a time when they still beneficially own 10% or more (or 20% or more in the case of 13G Investors) of such common stock, subject to certain exceptions as set forth in the Stockholder Rights Agreement. For purposes of the Stockholder Rights Agreement, beneficial ownership is defined to include ownership of securities that are subject to a derivative transaction and acquired derivative securities. Swaps dealers unassociated with any control intent or intent to evade the purposes of the Stockholder Rights Agreement are excepted from such imputed beneficial ownership. Pursuant to Amendment No. 1, beneficial ownership did not include the right to vote pursuant to any agreement, arrangement or understanding with respect to voting on the proposal to approve and ratify the Stockholder Rights Agreement presented to the Company’s stockholders at the Company’s 2023 annual meeting of stockholders. Pursuant to Amendment No. 2, the parties to the SPA Agreement are not deemed to be “Acquiring Persons” solely by virtue of, or as a result of, the parties’ entry into the SPA Agreement, the issuance of the Series C Preferred Stock to GBH, and the performance or consummation of any of the other transactions contemplated by the SPA Agreement, among other conditions, under the terms and conditions set forth in Amendment No. 2. Pursuant to Amendment No. 4, beneficial ownership excludes the right to vote pursuant to any agreement, arrangement or understanding with respect to voting (i) arising solely from a revocable proxy or consent given in response to a public proxy or consent solicitation, or exempt solicitation, made pursuant to a written proxy or consent solicitation statement filed with the SEC and that is not also then reportable on Schedule 13D under the Exchange Act, or (ii) on a proposal to approve and ratify the Stockholder Rights Agreement (as amended from time to time), including any amendment thereto or extension thereof, presented to the Company’s stockholders at any annual or special meeting of the Company’s stockholders (including any adjournments or postponements thereof). Pursuant to Amendment No. 5, the Stockholder Rights Agreement was amended to (a) remove language stating that (i) the Company has the “exclusive” power and authority to administer the Stockholder Rights Agreement and (ii) all actions, calculations, interpretations and determinations necessary or advisable for the administration of the Stockholder Rights Agreement done or made by the Board of Directors of the Company in good faith are final, conclusive and binding on all parties, and (b) provide that nothing in the Stockholder Rights Agreement shall be deemed to limit or eliminate the fiduciary duties of the Board of Directors under applicable law. In the event that a Stock Acquisition Date occurs, proper provision will be made so that each holder of a Right (other than an Acquiring Person or its associates or affiliates, whose Rights shall become null and void) will thereafter have the right to receive upon exercise, in lieu of a number of shares of Series B Preferred Stock, that number of shares of common stock of the Company (or, in certain circumstances, including if there are insufficient shares of common stock to permit the exercise in full of the Rights, Units of Series B Preferred Stock, other securities, cash or property, or any combination of the foregoing) having a market value of two times the Exercise Price of the Right (such right being referred to as the “Subscription Right”). In the event that, at any time following the Stock Acquisition Date, (i) the Company consolidates with, or merges with and into, any other person, and the Company is not the continuing or surviving corporation, (ii) any person consolidates with the Company, or merges with and into the Company and the Company is the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the shares of common stock are changed into or exchanged for stock or other securities of any other person or cash or any other property, or (iii) 50 % or more of the Company’s assets or earning power is sold, mortgaged or otherwise transferred, each holder of a Right (other than an Acquiring Person or its associates or affiliates, whose Rights shall become null and void) will thereafter have the right to receive, upon exercise, common stock of the acquiring company having a market value equal to two times the Exercise Price of the Right (such right being referred to as the “Merger Right”). The holder of a Right will continue to have the Merger Right whether or not such holder has exercised the Subscription Right. Rights that are or were beneficially owned by an Acquiring Person may (under certain circumstances specified in the Stockholder Rights Agreement) become null and void. The Rights may be redeemed in whole, but not in part, at a price of $ 0.01 per Right (payable in cash, common stock or other consideration deemed appropriate by the Board of Directors) by the Board of Directors only until the earlier of (i) the time at which any person becomes an Acquiring Person or (ii) the expiration date of the Stockholder Rights Agreement. Immediately upon the action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and thereafter the only right of the holders of Rights will be to receive the redemption price. The Stockholder Rights Agreement may be amended by the Board of Directors in its sole discretion at any time prior to the time at which any person becomes an Acquiring Person. After such time the Board of Directors may, subject to certain limitations set forth in the Stockholder Rights Agreement, amend the Stockholder Rights Agreement only to cure any ambiguity, defect or inconsistency, to shorten or lengthen any time period, or to make changes that do not adversely affect the interests of Rights holders (excluding the interests of an Acquiring Person or its associates or affiliates). 28 Table of Contents Until a Right is exercised, the holder will have no rights as a stockholder of the Company (beyond those as an existing stockholder), including the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for shares of common stock, other securities of the Company, other consideration or for common stock of an acquiring company. The Stockholder Rights Agreement provides the holders of the common stock with the ability to exempt an offer to acquire, or engage in another business combination transaction involving, the Company that is deemed a “Qualifying Offer” (as defined in the Stockholder Rights Agreement) from the terms of the Stockholder Rights Agreement. A Qualifying Offer is, in summary, an offer determined by a majority of the independent members of the Board to have specific characteristics that are generally intended to preclude offers that are coercive, abusive or highly contingent. Among those characteristics are that it be: (i) a fully financed all-cash tender offer or an exchange offer offering shares of common stock of the offeror, or a combination thereof, for any and all of the common stock; and (ii) an offer that is otherwise in the best interests of the Company’s stockholders. The Stockholder Rights Agreement provides additional characteristics necessary for an acquisition offer to be deemed a “Qualifying Offer,” including if the consideration offered in a proposed transaction is stock of the acquiror. Pursuant to the Stockholder Rights Agreement, if the Company receives a Qualifying Offer and the Board of Directors has not redeemed the outstanding Rights or exempted such Qualifying Offer from the terms of the Stockholder Rights Agreement or called a special meeting of stockholders (the “Special Meeting”) for the purpose of voting on whether to exempt such Qualifying Offer from the terms of the Stockholder Rights Agreement, in each case by the end of the 90 business day period following the commencement of such Qualifying Offer, provided such offer remains a Qualifying Offer during such period, the holders of 10 % of the common stock may request that the Board call a Special Meeting to vote on a resolution authorizing the exemption of the Qualifying Offer from the terms of the Stockholder Rights Agreement. If such a Special Meeting is not held by the 90th business day following the receipt of such a request from stockholders to call a Special Meeting, the Qualifying Offer will be deemed exempt from the terms of the Stockholder Rights Agreement on the 10th business day thereafter. 20. Earnings Per Share The following tables set forth reconciliations of the basic and diluted (loss)/earnings per share computations for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, Basic Earnings per Share 2024 2023 2024 2023 Net (loss)/income $ ( 4,485 ) $ 12,984 $ 39,385 $ 83,469 Less: Loss on repurchase of Series A Preferred Stock ( 11,375 ) — ( 11,375 ) — Less: Income distributed to participating securities ( 2,331 ) ( 889 ) ( 3,255 ) ( 1,884 ) Less: Undistributed income allocable to participating securities — ( 1,309 ) ( 1,096 ) ( 9,619 ) Net (loss)/income available to common stockholders — Basic EPS $ ( 18,191 ) $ 10,786 $ 23,659 $ 71,966 Weighted average common shares (in thousands) 143,929 145,284 145,756 144,505 Basic (loss)/earnings per share $ ( 0.13 ) $ 0.07 $ 0.16 $ 0.50 29 Table of Contents Three Months Ended September 30, Nine Months Ended September 30, Diluted Earnings per Share 2024 2023 2024 2023 Net (loss)/income available to common stockholders $ ( 18,191 ) $ 10,786 $ 23,659 $ 71,966 Add back: Undistributed income allocable to participating securities — 1,309 1,096 9,619 Less: Reallocation of undistributed income allocable to participating securities considered potentially dilutive — ( 1,286 ) ( 900 ) ( 9,446 ) Net (loss)/income available to common stockholders — Diluted EPS $ ( 18,191 ) $ 10,809 $ 23,855 $ 72,139 Weighted Average Diluted Shares (in thousands): Weighted average common shares 143,929 145,284 145,756 144,505 Dilutive effect of common stock equivalents, excluding participating securities — 3,148 4,324 3,067 Weighted average diluted shares, excluding participating securities (in thousands) 143,929 148,432 150,080 147,572 Diluted (loss)/earnings per share $ ( 0.13 ) $ 0.07 $ 0.16 $ 0.49 Diluted (loss)/earnings per share presented above is calculated using the two-class method as this method results in the lowest diluted earnings per share amount for common stock. There were no antidilutive non-participating common stock equivalents for the three months ended September 30, 2024 and 2023 and the nine months ended September 30, 2024. Total antidilutive non-participating common stock equivalents were 2 for the nine months ended September 30, 2023 (shares herein are reported in thousands). There were no potential common shares associated with the conversion options embedded in the Convertible Notes included in weighted average diluted shares for the three months ended September 30, 2024 as the Company reported a net loss. There were also no potential common shares during the nine months ended September 30, 2024 and the three and nine months ended September, 30, 2023 as the Company’s average stock price was lower than the conversion price. The following table reconciles weighted average diluted shares as reported on the Company’s Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023, which are determined pursuant to the treasury stock method, to the weighted average diluted shares used to calculate diluted (loss)/earnings per share as disclosed in the table above: Three Months Ended September 30, Nine Months Ended September 30, Reconciliation of Weighted Average Diluted Shares (in thousands) 2024 2023 2024 2023 Weighted average diluted shares as disclosed on the Consolidated Statements of Operations 143,929 (1) 177,140 162,691 169,997 Less: Participating securities Weighted average shares of common stock issuable upon conversion of the Series A Preferred Stock (Note 11) — ( 14,750 ) ( 12,112 ) ( 14,750 ) Weighted average shares of common stock issuable upon conversion of the Series C Preferred Stock (Note 9) — ( 13,087 ) — ( 6,903 ) Potentially dilutive restricted stock awards — ( 871 ) ( 499 ) ( 772 ) Weighted average diluted shares used to calculate diluted earnings per share as disclosed in the table above 143,929 148,432 150,080 147,572 _______________________________________ (1) Excludes 7,540 participating securities and 5,276 potentially dilutive non-participating common stock equivalents for the three months ended September 30, 2024, as the Company reported a net loss for the period (shares herein are reported in thousands). 21. Income Taxes Effective Income Tax Rate – Three and Nine Months Ended September 30, 2024 The Company’s effective income tax rate during the three months ended September 30, 2024 was 216.0 %, resulting in income tax expense of $ 8,351 . The effective income tax rate differs from the federal statutory tax rate of 21 % primarily due to non-deductible loss on extinguishment of convertible notes, a non-deductible civil money penalty of $ 4,000 relating to the SEC ESG Settlement and non-deductible executive compensation. These items were partly offset by a lower tax rate on foreign earnings. The Company’s effective income tax rate during the nine months ended September 30, 2024 was 35.6 % resulting in income tax expense of $ 21,819 . The effective income tax rate differs from the federal statutory tax rate of 21 % primarily due to non-deductible loss on extinguishment of convertible notes, a non-deductible civil money penalty of $ 4,000 relating to the SEC ESG Settlement and non-deductible executive compensation. These items were partly offset by a lower tax rate on foreign earnings. 30 Table of Contents Effective Income Tax Rate – Three and Nine Months Ended September 30, 2023 The Company’s effective income tax rate during the three months ended September 30, 2023 was 31.0 %, resulting in income tax expense of $ 5,836 . The effective income tax rate differs from the federal statutory tax rate of 21 % primarily due to an increase in the deferred tax asset valuation allowance on losses recognized on the Company’s investments and non-deductible executive compensation. The Company’s effective income tax rate during the nine months ended September 30, 2023 was 11.4 %, resulting in income tax expense of $ 10,774 . The effective income tax rate differs from the federal statutory tax rate of 21 % primarily due to a non-taxable gain on revaluation/termination of deferred consideration—gold payments, a $ 1,353 reduction in unrecognized tax benefits (including interest and penalties) and a lower tax rate on foreign earnings. These items were partly offset by a non-deductible loss on extinguishment of our convertible notes, an increase in the deferred tax asset valuation allowance on losses recognized on our investments and non-deductible executive compensation. Deferred Tax Assets A summary of the components of the Company’s deferred tax assets at September 30, 2024 and December 31, 2023 is as follows: September 30, 2024 December 31, 2023 Deferred tax assets: Capital losses $ 22,825 $ 22,489 Accrued expenses 4,693 6,000 Stock-based compensation 2,097 2,468 NOLs—Foreign 1,261 1,502 Goodwill and intangible assets 752 895 Software capitalization 162 52 Operating lease liabilities 151 96 Unrealized losses — 335 Foreign currency translation adjustment — 146 NOLs—U.S. — 127 Other 337 349 Total deferred tax assets 32,278 34,459 Deferred tax liabilities: Unrealized gains 466 — Fixed assets and prepaid assets 390 296 Foreign currency translation adjustment 264 — Right of use assets—operating leases 151 96 Unremitted earnings—European subsidiaries 80 186 Total deferred tax liabilities: 1,351 578 Total deferred tax assets less deferred tax liabilities 30,927 33,881 Less: Valuation allowance ( 22,359 ) ( 22,824 ) Deferred tax assets, net $ 8,568 $ 11,057 Capital Losses – U.S. The Company’s tax effected capital losses at September 30, 2024 were $ 22,825 . These capital losses expire between the years 2024 and 2029. Net Operating Losses – Europe One of the Company’s European subsidiaries generated net operating losses (“NOLs”) outside the U.S. These tax effected NOLs, all of which are carried forward indefinitely, were $ 1,261 at September 30, 2024. Valuation Allowance The Company’s valuation allowance has been established on its net capital losses, as it is more-likely-than-not that these deferred tax assets will not be realized. 31 Table of Contents Income Tax Examinations The Company is subject to U.S. federal income tax as well as income tax of multiple state, local and certain foreign jurisdictions. As of September 30, 2024, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for the years before 2019. Undistributed Earnings of Foreign Subsidiaries ASC 740-30 Income Taxes provides guidance that U.S. companies do not need to recognize tax effects on foreign earnings that are indefinitely reinvested. The Company repatriates earnings of its foreign subsidiaries and therefore has recognized a deferred tax liability of $ 80 and $ 186 at September 30, 2024 and December 31, 2023, respectively. 22. Shares Repurchased On February 22, 2022, the Company’s Board of Directors approved an increase of $ 85,709 to the Company’s share repurchase program to $ 100,000 and extended the term for three years through April 27, 2025 . Included under the Company’s share repurchase program are purchases to offset future equity grants made under the Company’s equity plans and purchases made in open market or privately negotiated transactions. This authority may be exercised from time to time, subject to regulatory considerations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The repurchase program may be suspended or terminated at any time without prior notice. Shares repurchased under this program are returned to the status of authorized and unissued on the Company’s books and records. The Company repurchased 5,704,023 and 6,800,301 shares, respectively, of its common stock under this program during the three and nine months ended September 30, 2024 and 4,566 and 635,653 shares, respectively, during the comparable periods in 2023. The aggregate cost of the shares repurchased during the three and nine months ended September 30, 2024 was $ 55,050 and $ 62,870 , respectively, and the aggregate cost of the shares repurchased during the comparable periods in 2023 was $ 30 and $ 3,570 , respectively. Shares repurchased under this program were returned to the status of authorized and unissued on the Company’s books and records. As of September 30, 2024, $ 33,535 remained under this program for future purchases. 23. Goodwill and Intangible Assets Goodwill The table below sets forth goodwill which is tested annually for impairment on November 30 th : Total Balance at January 1, 2024 $ 86,841 Changes — Balance at September 30, 2024 $ 86,841 Of the total goodwill of $ 86,841 at September 30, 2024, $ 85,042 is not deductible for tax purposes as the acquisitions that gave rise to the goodwill were structured as stock acquisitions. The remainder of the goodwill is deductible for U.S. tax purposes. Intangible Assets The table below sets forth the Company’s intangible assets which are tested annually for impairment on November 30 th : Balance at September 30, 2024 Item Gross Asset Accumulated Amortization Net Asset ETFS Acquisition $ 601,247 $ — $ 601,247 Software development 6,309 ( 1,754 ) 4,555 Balance at September 30, 2024 $ 607,556 $ ( 1,754 ) $ 605,802 Balance at December 31, 2023 Item Gross Asset Accumulated Amortization Net Asset ETFS Acquisition $ 601,247 $ — $ 601,247 Software development 4,519 ( 684 ) 3,835 Balance at December 31, 2023 $ 605,766 $ ( 684 ) $ 605,082 32 Table of Contents ETFS Acquisition (Indefinite-Lived) In connection with the ETFS Acquisition, which was completed on April 11, 2018 , the Company identified intangible assets valued at $ 601,247 related to the right to manage AUM through customary advisory agreements. These intangible assets were determined to have indefinite useful lives and are not deductible for tax purposes. Software Development (Finite-Lived) Internally-developed software is amortized over a useful life of three years . The Company recognized amortization expense on internally-developed software of $ 384 and $ 1,070 , respectively, during the three and nine months ended September 30, 2024 and $ 249 and $ 355 , respectively, during the comparable periods in 2023. As of September 30, 2024, expected amortization expense for the unamortized finite-lived intangible assets for the next five years and thereafter is as follows: Remainder of 2024 $ 483 2025 2,068 2026 1,486 2027 518 2028 and thereafter — Total expected amortization expense $ 4,555 The weighted-average remaining useful life of the finite-lived intangible assets is 2.1 years. 24. Contingent Payments Sale of Canadian ETF Business During the three and nine months ended September 30, 2023, the Company recognized a gain of $ 0 and $ 1,477 , respectively, from remeasuring a contingent payment to its realizable value. This gain was recorded in other losses, net. 25. Impairments During the three and nine months ending September, 30, 2023, the Company recognized an impairment of $ 2,391 and $ 7,291 , respectively, on its investment in Securrency, Inc. to reduce the carrying value of its investment to fair value. During the three and nine months ended September 30, 2023, the Company recognized an impairment of $ 312 on its other investments. 26. Segment Information The Company, through its subsidiaries in the U.S. and Europe, is a global financial innovator, offering a well-diversified suite of ETPs, models, solutions and products leveraging blockchain technology. The Company conducts business as a single operating segment as an ETP sponsor and asset manager, which is based upon the Company’s current organizational and management structure, as well as information used by the CODM to allocate resources and other factors. The accounting policies of the segment are the same as those described in Note 2. The key measures of segment profit or loss that the CODM uses to allocate resources and assess performance are the Company’s consolidated net income, as reported on the Consolidated Statements of Operations, as well as adjusted operating income and adjusted operating income margin, which are exclusive of items that are non-recurring or not core to the Company’s operating business. 33 Table of Contents The table below discloses these key measures and is inclusive of a reconciliation of the Company’s operating income and operating income margin as computed under U.S. GAAP to the Company’s Non-GAAP adjusted operating income and adjusted operating income margin utilized by the CODM: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net (loss)/income $ ( 4,485 ) $ 12,984 $ 39,385 $ 83,469 Adjusted Operating Income Margin Operating revenues $ 113,168 $ 90,423 $ 317,040 $ 258,191 Less: Legal expenses expected to be covered by insurance ( 3,661 ) — ( 4,114 ) — Operating revenues, as adjusted $ 109,507 $ 90,423 $ 312,926 $ 258,191 Operating income $ 40,792 $ 26,705 $ 102,253 $ 61,457 Add back: Expenses incurred in response to an activist campaign — — 4,966 5,880 Adjusted operating income $ 40,792 $ 26,705 $ 107,219 $ 67,337 Operating income margin 36.0 % 29.5 % 32.3 % 23.8 % Adjusted operating income margin 37.3 % 29.5 % 34.3 % 26.1 % Expenses incurred in response to an activist campaign for the nine months ended September 30, 2024 and 2023 include $ 4,857 and $ 5,733 , respectively, of professional fees, and $ 109 and $ 147 , respectively, of other expenses. All expense categories on the Consolidated Statements of Operations are significant and there are no other significant segment expenses that would require disclosure. Assets provided to the CODM are consistent with those reported on the Consolidated Balance Sheets with particular emphasis on the Company’s available liquidity, including its cash, cash equivalents and restricted cash, financial instruments owned, accounts receivable and securities held-to-maturity, reduced by current liabilities, seed capital and regulatory capital requirements. There are no intra-entity sales or transfers and no significant expense categories regularly provided to the CODM beyond those disclosed in the Consolidated Statements of Operations. The CODM manages the business using consolidated expense information, adjusted for items that are non-recurring or not core to the Company’s operating business as disclosed in the table above, as well as regularly provided budgeted or forecasted expense information for the single operating segment. Information related to the Company’s products and services and geographical distribution of revenues is disclosed in Note 16. 27. Subsequent Events The Company evaluated subsequent events through the date of issuance of the accompanying consolidated financial statements. There were no events requiring disclosure. 34 Table of Contents