WisdomTree, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and the related notes and the other financial information included elsewhere in this Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below. For a more complete description of the risks noted above and other risks that could cause our actual results to materially differ from our current expectations, please see Item 1A. “Risk Factors” of this Report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. Introduction We are a global financial innovator, offering a diverse suite of ETPs, models, solutions and products leveraging blockchain technology. Our offerings empower investors to shape their financial future and equip financial professionals to grow their businesses. Leveraging the latest financial infrastructure, we create products that emphasize access, transparency and provide an enhanced user experience. Building on our heritage of innovation, we have introduced next-generation digital products and services, including Digital Funds, tokenized assets, and our blockchain-native digital wallet, WisdomTree Prime, which is currently available in 45 U.S. states, covering approximately 80% of the U.S. population. Our institutional platform, WisdomTree Connect, further expands access to our products. As of December 31, 2024, we managed approximately $109.8 billion in AUM. Our ETPs span a broad range of strategies including equities, fixed income, commodities, leveraged-and-inverse, currency, alternatives and cryptocurrency exposures. We have launched many first-to-market products and pioneered a unique alternative-weighting approach called “Modern Alpha” that combines the outperformance potential of active management with the cost effective benefits of passive management. Our products are distributed across all major asset management industry channels, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers, primarily through our dedicated sales team. We believe technology is transforming how financial advisors conduct business, and through our Advisor and Portfolio Solutions programs we offer technology-enabled and research-driven solutions. These include portfolio construction, asset allocation, practice management services and digital tools to help advisors address technology challenges and scale their businesses. As pioneers in tokenization and blockchain technology, we view this as the next phase in the evolution in financial services. Through our digital assets strategy, we are committed to “responsible DeFi,” aligning with regulatory standards to foster growth in this rapidly evolving space. We believe that expanding into digital assets and blockchain-enabled finance complements not only complements our core competencies, but will diversify our revenue streams and further contribute to our growth. Executive Summary Our business continues to build positive momentum as we advance our long-term strategic initiatives. We closed 2024 with AUM of $109.8 billion, a year-over-year increase of 9.6%, a testament to the resilience of our business model and the strength of our product offering. Through disciplined execution and strategic management, we achieved record revenues and continued expanding our operating margins. For the year ended December 31, 2024, our revenues and operating income increased 22.5% and 56.9%, respectively, compared to the prior year, supported by scale efficiencies and effective cost control, delivering 700 basis points of operating margin expansion. This growth, along with recent strategic actions such as the retirement of our gold royalty obligation in 2023 and our repurchase of the Series A Preferred Stock from ETFS Capital in 2024, has meaningfully enhanced earnings per share. Our models strategy, offered through our Portfolio Solutions program, remains a strong growth driver, with our model portfolios accessible across a number of platforms. This program provides advisors with customized evaluations, a suite of off-the-shelf models, and Shared CIO services, where advisors collaborate with our models investment team to co-manage portfolios for their clients, with options for advisors to delegate trading, rebalancing, and tax optimization tasks leveraging third-party service providers or platforms, providing flexibility and strategic alignment. We continue to expand our reach with new clients and deepen partnerships with platforms such as Merrill Lynch, LPL Financial, UBS, Charles Schwab, Envestnet, Adhesion and others. The number of advisors utilizing at least one of our models surpassed 2,500, reflecting steady progress as we build deeper relationships, improve asset retention and create more stable, higher-quality revenue streams with significant growth potential. Beyond traditional ETPs, we are diversifying into blockchain and digital assets. Our blockchain-native wallet, WisdomTree Prime, provides direct-to-consumer access to digital assets, including bitcoin, ether, tokenized gold, U.S. dollar tokens and 13 Digital Funds, while also enabling spending functionality through a co-branded debit card. WisdomTree Connect supports institutional clients by offering direct access to our Digital Funds via self-hosted wallet or third-party custodial wallets. Our focus on “responsible DeFi,” ensures our offerings meet regulatory standards while delivering transparency, choice, and inclusivity. This expansion into digital assets complements our core strengths, will diversify our revenue streams and contribute further to our growth. 40 Table of Contents We remain committed to our long-term growth strategy, anticipating that organic inflows and AUM growth will continue to drive margin expansion and performance. Additionally, we believe our investments in digital assets are positioned to deliver further value for our stockholders over time. Additional business highlights include the following: ● We achieved strong product performance with over 80% of our U.S. listed AUM covered by Morningstar in the top quartile of peer performance on the 3-year timeframe and over 65% of our U.S. listed AUM covered by Morningstar in the top two quartiles of peer performance on the 10-year timeframe. In addition, approximately 59% of our U.S. listed AUM is rated 4- or 5-star by Morningstar (less than 5% in 1-and 2-star funds). ● We launched 14 new European listed ETPs and two new U.S. listed ETPs spanning all our major product categories. ● We celebrated the 10-year anniversary of WisdomTree in Europe. Since entering the region, we have been delivering differentiated and value-add solutions to European investors through a comprehensive range of ETPs. ● With respect to our digital assets business: in March 2024, we were granted a charter from the New York State Department of Financial Services to operate as a limited purpose trust company under the New York Banking Law; in September 2024, we launched WisdomTree Connect, a platform that offers businesses and institutional users direct access to our Digital Funds using their own self-hosted wallet or a third-party custodial wallet service; and in October 2024, WisdomTree Prime users became able to select the WisdomTree Government Money Market Digital Fund (WTGXX) as a spending source for their WisdomTree Prime Visa Debit Card. ● In August 2024, we completed a private offering of $345.0 million in aggregate principal amount of our 3.25% Convertible Senior Notes due 2029 and concurrently repurchased (i) $104.2 million aggregate principal amount of our 5.75% Convertible Senior Notes due 2028, (ii) approximately 5.7 million shares of our common stock in open market transactions and (iii) all 14,750 shares of Series A Preferred Stock (equivalent to 14.75 million shares of our common stock) from ETFS Capital. These transactions were accretive to earnings per share. ● In the U.S., we were named a “2024 Best Places to Work in Money Management” by Pensions & Investments for the fifth consecutive year and ranked second within the category for managers with 100-499 employees. In the U.K., we were also named Best Workplace for medium-sized companies for the fifth consecutive year and a 2024 Best Workplace for Women by Great Place to Work . ● We were named “Best Leveraged & Inverse ETF Issuers ($1bn+)” at the ETF Express European ETF Awards and “Best ETF Provider” at the Diaman Quant Awards in Italy. Our European business also won “Best ETF Issuer” at the Online Money Awards, marking the third consecutive year of winning the award. 41 Table of Contents Market Environment The following chart reflects the annual returns of the broad-based equity indexes and gold prices over the last three years. Source: FactSet U.S. Listed ETF Industry Flows U.S. listed ETF net flows for the year ended December 31, 2024 were $867.9 billion. U.S. equity and fixed income gathered the majority of those flows. Source: Morningstar 42 Table of Contents European Listed ETP Industry Flows European listed ETP net flows were $98.4 billion for the year ended December 31, 2024. Equities and fixed income gathered the majority of those flows. Source: Morningstar Industry Developments Asset Management – Consolidation In the recent past, a number of acquisitions in the asset management industry have either been announced or completed. These trends have accelerated, as fee compression, cost pressures and increased regulations have weighed on the industry, highlighting the importance of scale and operating efficiency to compete in today’s market. We have significant opportunities ahead in both ETPs and the Portfolio Solutions business and as an early mover in digital assets and blockchain-enabled financial services, which positions us well for success to grow in this competitive landscape. Components of Operating Revenue Advisory fees A significant portion of our revenues is comprised of advisory fees we earn from our ETPs. These advisory fees are calculated based on a percentage of the ETPs’ average daily net assets. As of the date of this Report, our weighted average fee rates by product category are as follows: Commodity & Currency: 35bps Leveraged & Inverse: 81bps International Developed Market Equity: 49bps Fixed Income: 16bps U.S. Equity: 30bps Alternatives: 50bps Emerging Market Equity: 61bps Cryptocurrency: 32bps We determine the appropriate advisory fee to charge for our ETPs based on the cost of operating each ETP considering the types of securities the ETPs will hold, fees third-party service providers will charge us for operating the ETPs and our competitors’ fees for similar ETPs. From time to time, we implement voluntary waivers of a portion of our advisory fee. In addition, we earn a fee based on daily aggregate AUM of our ETPs in exchange for bearing certain fund expenses. Our advisory fee revenues may fluctuate based on general stock market trends, which include market value appreciation or depreciation, currency fluctuations against the U.S. dollar, increased competition and level of inflows or outflows from our ETPs. 43 Table of Contents Other revenues Other revenues include rebates from swap providers to our European listed ETPs, creation/redemption fees earned on our European non-UCITS products and fees from licensing our indexes and index data to third parties. Components of Operating Expenses Our operating expenses consist primarily of costs related to selling, operating and marketing our ETPs as well as the infrastructure needed to run our business. Compensation and benefits Employee compensation and benefits expenses are expensed when incurred and include salaries, incentive compensation, and related benefit costs. To attract and retain qualified personnel, we must maintain competitive employee compensation and benefit plans and amounts we pay may be affected by inflation. Virtually all of our employees receive incentive compensation which is variable and will fluctuate taking into consideration our operating and financial results, as well as individual performance and discretion. Also included in compensation and benefits are costs related to equity awards granted to our employees. Our executive management and Board of Directors strongly believe that equity awards are an important part of our employees’ overall compensation package and that incentivizing our employees with equity in the Company aligns the interests of our employees with that of our stockholders. We use the fair value method in recording compensation expense for equity-based awards. Under the fair value method, compensation expense is measured at the grant date based on the estimated fair value of the award and is recognized as an expense over the vesting period. Fund management and administration Fund management and administration expenses are expensed when incurred and are comprised of the following costs we pay third-party service providers to operate our ETPs and Digital Funds: ● portfolio management of our ETPs (sub-advisory); ● fund accounting and administration; ● custodial and storage services; ● market making; ● transfer agency; ● accounting and tax services; ● printing and mailing of shareholder materials; ● index calculation; ● indicative values; ● distribution fees; ● legal and compliance services; ● exchange listing fees; ● trustee fees and expenses; ● preparation of regulatory reports and filings; ● insurance; ● certain local income taxes; and ● other administrative services. We are not responsible for extraordinary expenses, taxes and certain other expenses related to the funds. We depend on a number of parties to provide critical administrative, custody and portfolio management services to our ETPs. The fees we pay our sub-advisers generally are the higher of the fixed minimums per fund, which range from $25,000 to $180,000 per year, or the percentage fee, which ranges between 0.01% and 0.20% per annum of average daily AUM at various breakpoint levels depending on the nature of the ETP. In addition, we pay certain costs based on transactions in our ETPs or based on inflow levels. The fees we pay for accounting, tax, transfer agency, index calculation, indicative values and exchange listing are based on the number of ETPs we have. The remaining fees are based on a combination of both AUM and number of funds, or as incurred. Marketing and advertising Marketing and advertising expenses are recorded when incurred and include the following: ● advertising and product promotion campaigns that are initiated to promote our existing and new ETPs as well as brand awareness; ● marketing campaigns to attract WisdomTree Prime and WisdomTree Connect users; 44 Table of Contents ● development and maintenance of our website; and ● creation and preparation of marketing materials. Our discretionary advertising comprises the largest portion of this expense. In addition, we may incur expenditures in certain periods to attract inflows, the benefit of which may or may not be recognized from increases to our AUM in future periods. However, due to the discretionary nature of some of these costs, they can generally be reduced if there were a decline in the markets. Sales and business development Sales and business development expenses are recorded when incurred and include the following: ● travel and entertainment or conference related expenses for our sales force; ● market data services for our research team; ● sales related software tools; ● voluntary payment of certain costs associated with the creation or redemption of ETP shares, as we may elect from time to time; and ● legal and other advisory fees associated with the development of new funds or business initiatives. Contractual gold payments Contractual gold payments expense represented an obligation requiring us to pay 9,500 ounces of gold annually from the advisory fee income we earned for managing physically backed gold ETPs. Our obligation to continue making these payments was terminated on May 10, 2023. See Note 9 to our Consolidated Financial Statements for additional information. Professional fees Professional fees are expensed when incurred and consist of fees we pay to corporate advisers including accountants, tax advisers, legal counsel, investment bankers, human resources or other consultants. Professional fees also include expenses we pay third-party service providers related to WisdomTree Prime and expenses incurred in response to an activist campaign. These expenses fluctuate based on our needs or requirements at the time. Certain of these costs are at our discretion and can fluctuate year to year. Occupancy, communications and equipment Occupancy, communications and equipment expense includes costs for our corporate headquarters in New York City as well as office related costs in our other locations. Depreciation and amortization Depreciation and amortization expense results from amortization of internally-developed software as well as depreciation on fixed assets, which are depreciated/amortized over three to five years. Third-party distribution fees Third-party distribution fees, which are expensed as incurred, include payments made to enable our products and models to be included on certain third-party platforms in exchange for commission-free trading or other preferential access. These expenses also include payments to our third-party marketing agents in Latin America and Israel. Other Other expenses consist primarily of insurance premiums, general office related expenses, securities license fees for our sales force, public company related expenses, corporate related travel and entertainment and Board of Director fees, including stock-based compensation related to equity awards we granted to our directors. Components of Other Income/(Expenses) of a Recurring Nature Interest expense We recognize interest expense using the effective interest method which includes the amortization of discounts, premiums and issuance costs. Revaluation/termination of deferred consideration–gold payments Deferred consideration arose in connection with our acquisition of the European exchange-traded commodity, currency and leveraged-and-inverse business of ETFS Capital Limited, or the ETFS Acquisition, and was remeasured each reporting period using forward-looking gold prices observed on the CMX exchange, a selected discount rate and perpetual growth rate. This obligation was terminated on May 10, 2023 for approximately $137.0 million. See Note 9 to our Consolidated Financial Statements for additional information. 45 Table of Contents Interest income Interest income, which is recognized on an accrual basis, arises from investing our corporate cash into interest-bearing financial instruments. Other gains/(losses), net Included herein are gains and losses arising from our financial instruments owned and investments, the sale of gold earned from advisory fees paid by physically-backed gold ETPs, foreign exchange and other miscellaneous items. Also included are losses arising from the release of tax-related indemnification assets upon the expiration of the statute of limitations, for which an equal and offsetting benefit is recognized in income tax expense. Income Taxes Our income tax expense consists of taxes due to federal, various state and local and certain foreign authorities. Expense Guidance for the Year Ending December 31, 2025 Compensation to Revenue Ratio Our compensation to revenue ratio for the year ending December 31, 2025 is currently estimated to range from 28% to 30% and takes into consideration planned hires as well as year-end compensation adjustments and the annualization of hires made during 2024. The range also considers variability in incentive compensation with drivers including the magnitude of our flows, revenue and operating income growth, margin expansion and our stock price performance in relation to our peers. A range is provided in consideration of uncertain market conditions. Discretionary Spending Discretionary spending includes marketing, sales, professional fees, occupancy and equipment, depreciation and amortization and other expenses. We currently estimate our discretionary spending for the year ending December 31, 2025 to range from $68.0 million to $72.0 million. Not included in the guidance above are any potential non-recurring expenses we may incur in response to a potential proxy contest. Such expenses could be material to our results of operations for the year ending December 31, 2025. Gross Margin We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues. For the year ending December 31, 2025, we currently estimate that our gross margin percentage will be 81.0% to 82.0% taking into consideration current AUM and revenue levels, changes in service providers and anticipated fund launches. If AUM increases, we would anticipate further gross margin expansion. Third-Party Distribution Expense We currently estimate third-party distribution expense to be approximately $11.0 million to $12.0 million for the year ending December 31, 2025, which is dependent upon the AUM growth on our respective platforms. Interest Expense We currently estimate our interest expense for the year ending December 31, 2025 to be $22.0 million, which is inclusive of approximately $2.0 million of interest cost we are required to impute under U.S. GAAP related to our interest-free financing of the shares of Series C Non-Voting Convertible Preferred Stock (the “Series C Preferred Stock”) we repurchased from Gold Bullion Holdings (Jersey) Limited (“GBH”), a subsidiary of the World Gold Council, in November 2023. Interest Income We currently estimate our interest income for the year ending December 31, 2025 to be $7.0 million, based upon the magnitude of our forecasted interest earning assets. Income Tax Expense We currently estimate that our consolidated normalized effective tax rate will be approximately 24.0% to 25.0% for the year ending December 31, 2025, taking into consideration the current distribution of profits among our U.S. and European businesses. This estimated rate may change and is dependent upon our actual taxable income earned in relation to our forecasts as well as any other items which may arise that are not currently forecasted. Such items may include, but are not limited to, increases or decreases in valuation allowances and any stock-based compensation windfalls or shortfalls. Additional corporate tax legislation could also impact our normalized effective tax rate. 46 Table of Contents Weighted Average Diluted Shares We currently estimate our weighted average diluted shares to be between 149.0 million and 150.0 million during the year ending December 31, 2025. This guidance does not take into consideration any variability in shares associated with our Convertible Notes. While our Convertible Notes require principal to be paid in cash, our diluted shares would need to be increased for any incremental shares associated with an exercise of the conversion option if our stock price exceeds the applicable conversion price of our Convertible Notes of $9.54 per share for the 5.75% Convertible Senior Notes due 2028, $11.04 per share for the 3.25% Convertible Senior Notes due 2026 and $11.82 per share for the 3.25% Convertible Senior Notes due 2029. Factors that May Impact our Future Financial Results Our AUM is well diversified across the commodity, U.S. equity, international developed markets and emerging markets sectors. As a result, our operating results are particularly exposed to investor sentiment toward investing in these products’ strategies and our ability to maintain AUM of these products, as well as the performance of these products. Our revenues are also highly correlated to the level and relative mix of our AUM, as well as the fee rate associated with our ETPs. Changes in product mix have led to a decline in our average advisory fee, which for the years ended December 31, 2022, 2023 and 2024 were 0.38%, 0.36% and 0.36%, respectively. The chart below sets forth the asset mix of our ETPs at December 31, 2022, 2023 and 2024: 47 Table of Contents Key Operating Statistics The following table presents key operating statistics that serve as indicators for the performance of our business: Year Ended December 31, 2024 2023 2022 GLOBAL ETPs (in millions ) Beginning of period assets $ 100,124 $ 81,993 $ 77,479 (Outflows)/Inflows (348 ) 10,397 12,180 Market appreciation/(depreciation) 10,003 7,734 (7,666 ) End of period assets $ 109,779 $ 100,124 $ 81,993 Average assets during the period $ 108,417 $ 92,867 $ 76,969 Average advisory fee during the period 0.36% 0.36% 0.38% Number of ETPs—end of the period 353 337 339 US LISTED ETFs (in millions ) Beginning of period assets $ 72,486 $ 55,973 $ 48,210 Inflows 1,399 10,795 14,572 Market appreciation/(depreciation) 5,210 5,718 (6,809 ) End of period assets $ 79,095 $ 72,486 $ 55,973 Average assets during the period $ 78,588 $ 64,988 $ 49,723 Number of ETPs—end of the period 78 76 79 EUROPEAN LISTED ETPs (in millions ) Beginning of period assets $ 27,638 $ 26,020 $ 29,269 Outflows (1,747 ) (398 ) (2,392 ) Market appreciation/(depreciation) 4,793 2,016 (857 ) End of period assets $ 30,684 $ 27,638 $ 26,020 Average assets during the period $ 29,829 $ 27,879 $ 27,246 Number of ETPs—end of the period 275 261 260 PRODUCT CATEGORIES (in millions ) U.S. Equity Beginning of period assets $ 29,156 $ 24,112 $ 23,860 Inflows 2,184 1,616 3,345 Market appreciation/(depreciation) 4,074 3,428 (3,093 ) End of period assets $ 35,414 $ 29,156 $ 24,112 Average assets during the period $ 32,596 $ 25,721 $ 22,881 Commodity & Currency Beginning of period assets $ 21,336 $ 22,097 $ 24,599 Outflows (3,140 ) (1,774 ) (2,911 ) Market appreciation 3,710 1,013 409 End of period assets $ 21,906 $ 21,336 $ 22,097 Average assets during the period $ 22,070 $ 22,843 $ 23,406 Fixed Income Beginning of period assets $ 21,197 $ 15,273 $ 4,356 (Outflows)/inflows (1,062 ) 5,939 11,299 Market depreciation (92 ) (15 ) (382 ) End of period assets $ 20,043 $ 21,197 $ 15,273 Average assets during the period $ 20,973 $ 19,804 $ 9,039 48 Table of Contents Year Ended December 31, 2024 2023 2022 International Developed Market Equity Beginning of period assets $ 15,103 $ 10,195 $ 11,894 Inflows 1,522 2,852 101 Market appreciation/(depreciation) 977 2,056 (1,800 ) End of period assets $ 17,602 $ 15,103 $ 10,195 Average assets during the period $ 17,963 $ 12,824 $ 10,568 Emerging Market Equity Beginning of period assets $ 10,726 $ 8,116 $ 10,375 (Outflows)/inflows (654 ) 1,678 27 Market appreciation/(depreciation) 396 932 (2,286 ) End of period assets $ 10,468 $ 10,726 $ 8,116 Average assets during the period $ 11,460 $ 9,287 $ 8,843 Leveraged & Inverse Beginning of period assets $ 1,815 $ 1,754 $ 1,777 (Outflows)/inflows (66 ) (5 ) 192 Market appreciation/(depreciation) 175 66 (215 ) End of period assets $ 1,924 $ 1,815 $ 1,754 Average assets during the period $ 1,923 $ 1,813 $ 1,704 Cryptocurrency Beginning of period assets $ 414 $ 136 $ 357 Inflows 749 50 36 Market appreciation/(depreciation) 749 228 (257 ) End of period assets $ 1,912 $ 414 $ 136 Average assets during the period $ 997 $ 247 $ 230 Alternatives Beginning of period assets $ 377 $ 310 $ 261 Inflows 119 41 91 Market appreciation/(depreciation) 14 26 (42 ) End of period assets $ 510 $ 377 $ 310 Average assets during the period $ 435 $ 328 $ 298 Headcount 313 303 273 Note: Previously issued statistics may be restated due to fund closures and trade adjustments Source: WisdomTree 49 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Selected Operating and Financial Information Year Ended December 31, 2024 2023 Change Percent Change AUM (in millions) Average AUM $ 108,417 $ 92,867 $ 15,550 16.7 % Operating Revenues (in thousands) Advisory fees $ 395,362 $ 333,227 $ 62,135 18.6 % Other revenues 32,375 15,808 16,567 104.8 % Total revenues $ 427,737 $ 349,035 $ 78,702 22.5 % Operating Revenues Advisory fees Advisory fee revenues increased 18.6% from $333.2 million during the year ended December 31, 2023 to $395.4 million during the year ended December 31, 2024 due to higher average AUM. Our average advisory fee remained 0.36%, unchanged from the year ended December 31, 2023. Other revenues Other revenues increased 104.8% from $15.8 million during the year ended December 31, 2023 to $32.4 million during the year ended December 31, 2024 due to higher other revenues attributable to our European listed ETPs and $4.3 million of other revenues related to legal and other related expenses incurred in connection with the SEC ESG Settlement that are expected to be covered by insurance. Operating Expenses Year Ended December 31, Percent (in thousands) 2024 2023 Change Change Compensation and benefits $ 121,281 $ 109,532 $ 11,749 10.7 % Fund management and administration 83,963 71,348 12,615 17.7 % Marketing and advertising 20,532 17,256 3,276 19.0 % Sales and business development 14,817 13,584 1,233 9.1 % Contractual gold payments — 6,069 (6,069 ) n/a Professional fees 21,098 18,969 2,129 11.2 % Occupancy, communications and equipment 5,344 4,684 660 14.1 % Depreciation and amortization 1,752 872 880 100.9 % Third-party distribution fees 11,138 9,377 1,761 18.8 % Other 10,519 9,852 667 6.8 % Total operating expenses $ 290,444 $ 261,543 $ 28,901 11.1 % 50 Table of Contents Year Ended December 31, As a Percent of Revenues: 2024 2023 Compensation and benefits 28.4% 31.6% Fund management and administration 19.6% 20.4% Marketing and advertising 4.8% 4.9% Sales and business development 3.5% 3.9% Contractual gold payments — 1.7% Professional fees 4.9% 5.4% Occupancy, communications and equipment 1.2% 1.3% Depreciation and amortization 0.4% 0.2% Third-party distribution fees 2.6% 2.7% Other 2.5% 2.8% Total operating expenses 67.9% 74.9% Compensation and benefits Compensation and benefits expense increased 10.7% from $109.5 million during the year ended December 31, 2023 to $121.3 million during the year ended December 31, 2024 due to higher stock-based compensation, incentive compensation and headcount. Headcount was 303 and 313 at December 31, 2023 and 2024, respectively. Fund management and administration Fund management and administration expense increased 17.7% from $71.3 million during the year ended December 31, 2023 to $84.0 million during the year ended December 31, 2024 primarily due to higher average AUM. We had 76 U.S. listed ETFs and 261 European listed ETPs at December 31, 2023 compared to 78 U.S. listed ETFs and 275 European listed ETPs at December 31, 2024. Marketing and advertising Marketing and advertising expense increased 19.0% from $17.3 million during the year ended December 31, 2023 to $20.5 million during the year ended December 31, 2024 primarily resulting from higher spending related to our U.S. listed and digital products. Sales and business development Sales and business development expense increased 9.1% from $13.6 million during the year ended December 31, 2023 to $14.8 million during the year ended December 31, 2024 primarily resulting from increases in travel and events spending. Contractual gold payments There was no contractual gold payments expense recognized during the year ended December 31, 2024 due to the termination of our deferred consideration—gold payments obligation on May 10, 2023. See Note 9 to our Consolidated Financial Statements for additional information. Professional fees Professional fees increased 11.2% from $19.0 million during the year ended December 31, 2023 to $21.1 million during the year ended December 31, 2024 due to $4.3 million of legal and other related expenses expected to be covered by insurance that were incurred in connection with the SEC ESG Settlement, partly offset by lower expenses incurred in response to an activist campaign. Occupancy, communications and equipment Occupancy, communications and equipment expense increased 14.1% from $4.7 million during the year ended December 31, 2023 to $5.3 million during the year ended December 31, 2024 due to the increased cost of renewed office leases. Depreciation and amortization Depreciation and amortization expense increased 100.9% from $0.9 million during the year ended December 31, 2023 to $1.8 million during the year ended December 31, 2024 due to higher amortization of software development costs. Third-party distribution fees Third-party distribution fees increased 18.8% from $9.4 million during the year ended December 31, 2023 to $11.1 million during the year ended December 31, 2024 primarily due to growth in AUM across our various platforms, as well as new platform relationships that expanded our distribution reach. 51 Table of Contents Other Other expenses increased 6.8% from $9.9 million during the year ended December 31, 2023 to $10.5 million during the year ended December 31, 2024 primarily due to higher insurance and travel-related expenses. Other Income/(Expenses) Year Ended December 31, Percent (in thousands) 2024 2023 Change Change Interest expense $ (18,911 ) $ (15,242 ) $ (3,669 ) 24.1 % Gain on revaluation/termination of deferred consideration—gold payments — 61,953 (61,953 ) n/a Interest income 6,778 4,099 2,679 65.4 % Impairments — (7,942 ) 7,942 n/a Loss on extinguishment of convertible notes (30,632 ) (9,721 ) (20,911 ) 215.1 % Other gains/(losses), net 874 (1,631 ) 2,505 (153.6 %) Total other income/(expenses), net $ (41,891 ) $ 31,516 $ (73,407 ) (232.9 %) Year Ended December 31, As a Percent of Revenues: 2024 2023 Interest expense (4.4% ) (4.4% ) Gain on revaluation/termination of deferred consideration—gold payments — 17.8% Interest income 1.6% 1.2% Impairments — (2.3% ) Loss on extinguishment of convertible notes (7.2% ) (2.8% ) Other gains/(losses), net 0.2% (0.5% ) Total other income/(expenses), net (9.8% ) 9.0% Interest expense Interest expense increased 24.1% from $15.2 million during the year ended December 31, 2023 to $18.9 million during the year ended December 31, 2024 due to a higher level of debt outstanding, partly offset by a lower average interest rate. Our effective interest rate on our outstanding Convertible Notes during the years ended December 31, 2023 and 2024 was 4.9% and 4.5%, respectively. Gain on revaluation/termination of deferred consideration No gains or losses on revaluation/termination of deferred consideration—gold payments were recognized during the year ended December 31, 2024, as this obligation was terminated on May 10, 2023 for approximately $137.0 million. See Note 9 to our Consolidated Financial Statements for additional information. Interest income Interest income increased 65.4% from $4.1 million during the year ended December 31, 2023 to $6.8 million during the year ended December 31, 2024 due to a higher level of interest-bearing assets. Impairments No impairments were recognized during the year ended December 31, 2024, while during the year ended December 31, 2023, we recognized a non-cash impairment charge of $7.9 million primarily related to our investment in Securrency, Inc. upon the sale of Securrency, Inc. to an unrelated third party. (See Notes 7 and 26 to our Consolidated Financial Statements). Other losses, net Other gains/(losses), net were ($1.6) million and $0.9 million during the years ended December 31, 2023 and 2024, respectively. The current year includes a $4.0 million civil money penalty in connection with the SEC ESG Settlement. Also included are net gains of $4.9 million and net losses of $1.1 million on our financial instruments owned and our investments, respectively. Gains and losses also generally arise from the sale of gold earned from advisory fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items. 52 Table of Contents Income Taxes Our effective income tax rate for 2024 was 30.1%, resulting in an income tax expense of $28.7 million. Our tax rate differs from the federal statutory rate of 21.0% primarily due to a non-deductible loss on extinguishment of convertible notes, a non-deductible civil money penalty of $4.0 million in connection with the SEC ESG Settlement and non-deductible executive compensation. These items were partly offset by a lower tax rate on foreign earnings. Our effective income tax rate for 2023 was 13.8%, resulting in income tax expense of $16.5 million. The effective tax rate differs from the federal statutory rate of 21% primarily due to a non-taxable gain on revaluation/termination of deferred consideration, a reduction in unrecognized tax benefits associated with the release of a tax-related indemnification asset and a lower tax rate on foreign earnings. These items were partly offset by a non-deductible loss on extinguishment of our 4.25% Convertible Senior Notes due 2023 during the first quarter of 2023, an increase in the deferred tax asset valuation allowance on losses recognized on our investments and non-deductible executive compensation. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Selected Operating and Financial Information Year Ended December 31, Percent 2023 2022 Change Change AUM (in millions) Average AUM $ 92,867 $ 76,969 $ 15,898 20.7% Operating Revenues (in thousands) Advisory fees $ 333,227 $ 293,632 $ 39,595 13.5% Other revenues 15,808 7,713 8,095 105.0% Total revenues $ 349,035 $ 301,345 $ 47,690 15.8% Operating Revenues Advisory fees Advisory fee revenues increased 13.5% from $293.6 million during the year ended December 31, 2022 to $333.2 million during the year ended December 31, 2023 as higher average AUM was partially offset by a decline in our average advisory fee. Our average advisory fee declined from 0.38% during the year ended December 31, 2022 to 0.36% during the year ended December 31, 2023. Other revenues Other revenues increased 105.0% from $7.7 million during the year ended December 31, 2022 to $15.8 million during the year ended December 31, 2023 primarily due to higher other revenues attributable to our European listed ETPs. Operating Expenses Year Ended December 31, Percent (in thousands) 2023 2022 Change Change Compensation and benefits $ 109,532 $ 97,897 $ 11,635 11.9% Fund management and administration 71,348 64,761 6,587 10.2% Marketing and advertising 17,256 15,302 1,954 12.8% Sales and business development 13,584 11,871 1,713 14.4% Contractual gold payments 6,069 17,108 (11,039 ) (64.5% ) Professional fees 18,969 13,800 5,169 37.5% Occupancy, communications and equipment 4,684 3,898 786 20.2% Depreciation and amortization 872 262 610 232.8% Third-party distribution fees 9,377 7,656 1,721 22.5% Other 9,852 8,705 1,147 13.2% Total operating expenses $ 261,543 $ 241,260 $ 20,283 8.4% 53 Table of Contents Year Ended December 31, As a Percent of Revenues: 2023 2022 Compensation and benefits 31.6 % 32.5 % Fund management and administration 20.4 % 21.5 % Marketing and advertising 4.9 % 5.1 % Sales and business development 3.9 % 3.9 % Contractual gold payments 1.7 % 5.7 % Professional fees 5.4 % 4.6 % Occupancy, communications and equipment 1.3 % 1.3 % Depreciation and amortization 0.2 % 0.1 % Third-party distribution fees 2.7 % 2.5 % Other 2.8 % 2.9 % Total operating expenses 74.9 % 80.1 % Compensation and benefits Compensation and benefits expense increased 11.9% from $97.9 million during the year ended December 31, 2022 to $109.5 million during the year ended December 31, 2023 due to higher stock-based compensation and headcount. Headcount was 273 and 303 at December 31, 2022 and 2023, respectively. Fund management and administration Fund management and administration expense increased 10.2% from $64.8 million during the year ended December 31, 2022 to $71.3 million during the year ended December 31, 2023 primarily due to higher average AUM and inflows. We had 79 U.S. listed ETFs and 260 European listed ETPs at December 31, 2022 compared to 76 U.S. listed ETFs and 261 European listed ETPs at December 31, 2023. Marketing and advertising Marketing and advertising expense increased 12.8% from $15.3 million during the year ended December 31, 2022 to $17.3 million during the year ended December 31, 2023 primarily resulting from higher spending related to our U.S. listed products. Sales and business development Sales and business development expense increased 14.4% from $11.9 million during the year ended December 31, 2022 to $13.6 million during the year ended December 31, 2023 primarily resulting from increases in travel and events spending. Contractual gold payments Contractual gold payments expense decreased 64.5% from $17.1 million during the year ended December 31, 2022 to $6.1 million during the year ended December 31, 2023 due to the termination of our deferred consideration—gold payments obligation on May 10, 2023. See Note 9 to our Consolidated Financial Statements for additional information. Professional fees Professional fees increased 37.5% from $13.8 million during the year ended December 31, 2022 to $19.0 million during the year ended December 31, 2023 due to higher expenses related to our digital assets business, as well as expenses incurred to terminate our deferred consideration—gold payments obligation and higher expenses related to an activist campaign. Occupancy, communications and equipment Occupancy, communications and equipment expense increased 20.2% from $3.9 million during the year ended December 31, 2022 to $4.7 million during the year ended December 31, 2023 as our New York office lease became effective in May 2022. Depreciation and amortization Depreciation and amortization expense increased 232.8% from $0.3 million during the year ended December 31, 2022 to $0.9 million during the year ended December 31, 2023 due to amortization of software development costs. Third-party distribution fees Third-party distribution fees increased 22.5% from $7.7 million during the year ended December 31, 2022 to $9.4 million during the year ended December 31, 2023 primarily due to AUM growth we are experiencing in Latin America. 54 Table of Contents Other Other expenses increased 13.2% from $8.7 million during the year ended December 31, 2022 to $9.9 million during the year ended December 31, 2023 primarily due to higher travel, public relations and Board of Directors expenses. Other Income/(Expenses) Year Ended December 31, Percent (in thousands) 2023 2022 Change Change Interest expense $ (15,242 ) $ (14,935 ) $ (307 ) 2.1 % Gain on revaluation/termination of deferred consideration—gold payments 61,953 27,765 34,188 123.1 % Interest income 4,099 3,320 779 23.5 % Impairments (7,942 ) — (7,942 ) n/a Loss on extinguishment of convertible notes (9,721 ) — (9,721 ) n/a Other losses, net (1,631 ) (36,285 ) 34,654 95.5 % Total other income/(expenses), net $ 31,516 $ (20,135 ) $ 51,651 256.5 % Year Ended December 31, As a Percent of Revenues: 2023 2022 Interest expense (4.4 %) (5.0 %) Gain on revaluation/termination of deferred consideration—gold payments 17.8 % 9.2 % Interest income 1.2 % 1.1 % Impairments (2.3 %) — Loss on extinguishment of convertible notes (2.8 %) — Other losses, net (0.5 %) (12.0 %) Total other income/(expenses), net 9.0 % (6.7 %) Interest expense Interest expense was essentially unchanged during the year ended December 31, 2023. Our effective interest rate on our outstanding convertible notes during the years ended December 31, 2022 and 2023 was 4.6% and 4.9%, respectively. Gain on revaluation/termination of deferred consideration We recognized a gain on revaluation/termination of deferred consideration—gold payments of $27.8 million and $62.0 million during the years ended December 31, 2022 and 2023, respectively. This obligation was terminated on May 10, 2023 for approximately $137.0 million. See Note 9 to our Consolidated Financial Statements for additional information. Interest income Interest income increased 23.5% from $3.3 million during the year ended December 31, 2022 to $4.1 million during the year ended December 31, 2023 due to rising interest rates, partially offset by a decrease in our interest-bearing assets. Impairments During the year ended December 31, 2023, we recognized a non-cash impairment charge of $7.9 million primarily related to our investment in Securrency, Inc. upon the sale of Securrency, Inc. to an unrelated third party. (See Notes 7, 8, 13 and 26 to our Consolidated Financial Statements). Other losses, net Other losses, net were $36.3 million and $1.6 million during the years ended December 31, 2022 and 2023, respectively. This includes a charge of $19.9 million and $1.4 million during the years ended December 31, 2022 and 2023, respectively, arising from the release of a tax-related indemnification asset upon the expiration of the statute of limitations. An equal and offsetting benefit has been recognized in income tax expense. During the years ended December 31, 2022 and 2023, we also recognized losses on our financial instruments owned and investments of $16.9 million and $0.7 million, respectively. Gains and losses also generally arise from the sale of gold earned from advisory fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items. 55 Table of Contents Income Taxes Our effective income tax rate for 2023 was 13.8%, resulting in income tax expense of $16.5 million. The effective tax rate differs from the federal statutory rate of 21% primarily due to a non-taxable gain on revaluation/termination of deferred consideration, a reduction in unrecognized tax benefits associated with the release of the tax-related indemnification asset described above and a lower tax rate on foreign earnings. These items were partly offset by a non-deductible loss on extinguishment of our 4.25% Convertible Senior Notes due 2023 during the first quarter of 2023, an increase in the deferred tax asset valuation allowance on losses recognized on our investments and non-deductible executive compensation. Our effective income tax rate for the year ended December 31, 2022 was negative 26.9%, resulting in an income tax benefit of $10.7 million. Our tax rate differs from the federal statutory rate of 21% primarily due to a $19.9 million reduction in unrecognized tax benefits associated with the release of the tax-related indemnification asset described above, a reduction in the valuation allowance on foreign net operating losses, a non-taxable gain on revaluation of deferred consideration and a lower tax rate on foreign earnings. These items were partly offset by an increase in the deferred tax asset valuation allowance on losses recognized on financial instruments owned. 56 Table of Contents Quarterly Results The following tables set forth our unaudited consolidated quarterly statement of operations data, both in dollar amounts and as a percentage of total revenues, and our unaudited consolidated quarterly operating data for the quarters in 2024 and 2023. In our opinion, this unaudited information has been prepared on substantially the same basis as the consolidated financial statements appearing elsewhere in this Report and includes all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the unaudited consolidated quarterly data. The unaudited consolidated quarterly data should be read together with the consolidated financial statements and related notes included elsewhere in this Report. The results for any quarter are not necessarily indicative of results for any future period, and you should not rely on them as such. (in thousands, except per share amounts) Q4/24 Q3/24 Q2/24 Q1/24 Q4/23 Q3/23 Q2/23 Q1/23 Operating Revenues: Advisory fees $ 102,264 $ 101,659 $ 98,938 $ 92,501 $ 86,988 $ 86,598 $ 82,004 $ 77,637 Other revenues 8,433 11,509 8,096 4,337 3,856 3,825 3,720 4,407 Total revenues 110,697 113,168 107,034 96,838 90,844 90,423 85,724 82,044 Operating Expenses: Compensation and benefits 30,032 29,405 30,790 31,054 27,860 27,955 26,319 27,398 Fund management and administration 22,858 21,004 20,139 19,962 18,445 18,023 17,727 17,153 Marketing and advertising 6,117 4,897 5,110 4,408 4,951 3,833 4,465 4,007 Sales and business development 4,101 3,465 3,640 3,611 3,881 3,383 3,326 2,994 Contractual gold payments — — — — — — 1,583 4,486 Professional fees 4,559 6,315 6,594 3,630 3,201 3,719 8,334 3,715 Occupancy, communications and equipment 1,423 1,397 1,314 1,210 1,208 1,203 1,172 1,101 Depreciation and amortization 504 447 418 383 335 307 121 109 Third-party distribution fees 3,161 2,983 2,687 2,307 2,549 2,694 1,881 2,253 Other 2,902 2,463 2,831 2,323 2,379 2,601 2,615 2,257 Total operating expenses 75,657 72,376 73,523 68,888 64,809 63,718 67,543 65,473 Operating income 35,040 40,792 33,511 27,950 26,035 26,705 18,181 16,571 Other Income/(Expenses): Interest expense (5,616 ) (5,027 ) (4,140 ) (4,128 ) (3,758 ) (3,461 ) (4,021 ) (4,002 ) Gain on revaluation/termination of deferred consideration — — — — — — 41,361 20,592 Interest income 2,147 1,795 1,438 1,398 1,225 791 1,000 1,083 Impairments — — — — (339 ) (2,703 ) — (4,900 ) Loss on extinguishment of convertible notes — (30,632 ) — — — — — (9,721 ) Other gains and losses, net 2,627 (3,062 ) (1,283 ) 2,592 1,602 (2,512 ) 1,286 (2,007 ) Income before income taxes 34,198 3,866 29,526 27,812 24,765 18,820 57,807 17,616 Income tax expense 6,890 8,351 7,767 5,701 5,688 5,836 3,555 1,383 Net income/(loss) $ 27,308 $ (4,485 ) $ 21,759 $ 22,111 $ 19,077 $ 12,984 $ 54,252 $ 16,233 Earnings/(loss) per share—basic $ 0.19 $ (0.13 ) $ 0.13 $ 0.14 $ 0.16 $ 0.07 $ 0.32 $ 0.10 Earnings/(loss) per share—diluted $ 0.18 $ (0.13 ) $ 0.13 $ 0.13 $ 0.16 $ 0.07 $ 0.32 $ 0.10 Dividends per common share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03 57 Table of Contents Q4/24 Q3/24 Q2/24 Q1/24 Q4/23 Q3/23 Q2/23 Q1/23 Percent of Total Revenues Operating Revenues Advisory fees 92.4 % 89.8 % 92.4 % 95.5 % 95.8 % 95.8 % 95.7 % 94.6 % Other revenues 7.6 % 10.2 % 7.6 % 4.5 % 4.2 % 4.2 % 4.3 % 5.4 % Total revenues 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Operating Expenses Compensation and benefits 27.1 % 26.0 % 28.8 % 32.1 % 30.6 % 31.0 % 30.7 % 33.5 % Fund management and administration 20.6 % 18.6 % 18.8 % 20.6 % 20.3 % 20.0 % 20.7 % 20.9 % Marketing and advertising 5.5 % 4.3 % 4.8 % 4.6 % 5.5 % 4.2 % 5.2 % 4.9 % Sales and business development 3.7 % 3.1 % 3.4 % 3.7 % 4.3 % 3.7 % 3.9 % 3.6 % Contractual gold payments — — — — — n/a 1.8 % 5.5 % Professional fees 4.1 % 5.6 % 6.2 % 3.7 % 3.5 % 4.1 % 9.7 % 4.5 % Occupancy, communications and equipment 1.3 % 1.2 % 1.2 % 1.2 % 1.3 % 1.3 % 1.4 % 1.3 % Depreciation and amortization 0.5 % 0.4 % 0.4 % 0.4 % 0.4 % 0.3 % 0.1 % 0.1 % Third-party distribution fees 2.9 % 2.6 % 2.5 % 2.4 % 2.8 % 3.0 % 2.2 % 2.7 % Other 2.6 % 2.2 % 2.6 % 2.4 % 2.6 % 2.9 % 3.1 % 2.8 % Total operating expenses 68.3 % 64.0 % 68.7 % 71.1 % 71.3 % 70.5 % 78.8 % 79.8 % Operating income 31.7 % 36.0 % 31.3 % 28.9 % 28.7 % 29.5 % 21.2 % 20.2 % Other Income/(Expenses) Interest expense (5.1 %) (4.4 %) (3.8 %) (4.2 %) (4.1 %) (3.8 %) (4.7 %) (4.9 %) Gain on revaluation/termination of deferred consideration — — — — — — 48.2 % 25.1 % Interest income 1.9 % 1.6 % 1.3 % 1.4 % 1.3 % 0.9 % 1.2 % 1.3 % Impairments — — — — (0.4 %) (3.0 %) — (6.0 %) Loss on extinguishment of convertible notes — (27.1 %) — — — — — (11.8 %) Other gains and losses, net 2.4 % (2.7 %) (1.2 %) 2.7 % 1.8 % (2.8 %) 1.5 % (2.4 %) Income before income taxes 30.9 % 3.4 % 27.6 % 28.7 % 27.3 % 20.9 % 67.4 % 21.5 % Income tax expense 6.2 % 7.4 % 7.3 % 5.9 % 6.3 % 6.5 % 4.1 % 1.7 % Net income/(loss) 24.7 % (4.0 %) 20.3 % 22.8 % 21.0 % 14.4 % 63.3 % 19.8 % 58 Table of Contents Q4/24 Q3/24 Q2/24 Q1/24 Q4/23 Q3/23 Q2/23 Q1/23 Operating Statistics GLOBAL ETPs (in millions ) Beginning of period assets $ 112,577 $ 109,686 $ 107,230 $ 100,124 $ 93,735 $ 93,666 $ 90,740 $ 81,993 (Outflows)/inflows (281 ) (2,395 ) 340 1,988 (255 ) 1,983 2,328 6,341 Market (depreciation)/appreciation (2,517 ) 5,286 2,116 5,118 6,644 (1,914 ) 598 2,406 End of period assets $ 109,779 $ 112,577 $ 109,686 $ 107,230 $ 100,124 $ 93,735 $ 93,666 $ 90,740 Average assets during the period $ 112,349 $ 110,369 $ 108,479 $ 102,461 $ 96,641 $ 95,743 $ 91,578 $ 87,508 Average advisory fee during the period 0.36 % 0.37 % 0.37 % 0.36 % 0.36 % 0.36 % 0.36 % 0.36 % Number of ETPs—end of the period 353 352 350 338 337 344 344 341 U.S. LISTED ETFs (in millions ) Beginning of period assets $ 81,267 $ 79,722 $ 78,087 $ 72,486 $ 68,018 $ 65,903 $ 61,283 $ 55,973 (Outflows)/inflows (40 ) (1,650 ) 1,106 1,983 (67 ) 3,601 3,249 4,012 Market (depreciation)/appreciation (2,132 ) 3,195 529 3,618 4,535 (1,486 ) 1,371 1,298 End of period assets $ 79,095 $ 81,267 $ 79,722 $ 78,087 $ 72,486 $ 68,018 $ 65,903 $ 61,283 Average assets during the period $ 80,661 $ 80,335 $ 78,523 $ 74,831 $ 69,801 $ 68,008 $ 62,712 $ 59,430 Number of ETFs—end of the period 78 78 78 77 76 80 80 80 EUROPEAN LISTED ETPs ( in millions ) Beginning of period assets $ 31,310 $ 29,964 $ 29,143 $ 27,638 $ 25,717 $ 27,763 $ 29,457 $ 26,020 (Outflows)/inflows (241 ) (745 ) (766 ) 5 (188 ) (1,618 ) (921 ) 2,329 Market (depreciation)/appreciation (385 ) 2,091 1,587 1,500 2,109 (428 ) (773 ) 1,108 End of period assets $ 30,684 $ 31,310 $ 29,964 $ 29,143 $ 27,638 $ 25,717 $ 27,763 $ 29,457 Average assets during the period $ 31,688 $ 30,034 $ 29,956 $ 27,630 $ 26,840 $ 27,735 $ 28,866 $ 28,078 Number of ETPs—end of the period 275 274 272 261 261 264 264 261 PRODUCT CATEGORIES U.S. Equity Beginning of period assets $ 34,643 $ 31,834 $ 31,670 $ 29,156 $ 25,643 $ 26,001 $ 24,534 $ 24,112 Inflows/(outflows) 1,099 328 221 536 487 864 414 (149 ) Market (depreciation)/appreciation (328 ) 2,481 (57 ) 1,978 3,026 (1,222 ) 1,053 571 End of period assets $ 35,414 $ 34,643 $ 31,834 $ 31,670 $ 29,156 $ 25,643 $ 26,001 $ 24,534 Average assets during the period $ 35,714 $ 33,175 $ 31,339 $ 30,154 $ 26,928 $ 26,501 $ 24,732 $ 24,725 Commodity & Currency Beginning of period assets $ 23,034 $ 21,987 $ 21,944 $ 21,336 $ 20,466 $ 22,384 $ 24,924 $ 22,097 (Outflows)/inflows (440 ) (741 ) (1,499 ) (460 ) (449 ) (1,815 ) (1,513 ) 2,003 Market (depreciation)/appreciation (688 ) 1,788 1,542 1,068 1,319 (103 ) (1,027 ) 824 End of period assets $ 21,906 $ 23,034 $ 21,987 $ 21,944 $ 21,336 $ 20,466 $ 22,384 $ 24,924 Average assets during the period $ 22,989 $ 22,016 $ 22,437 $ 20,837 $ 21,254 $ 22,278 $ 24,033 $ 23,807 Fixed Income Beginning of period assets $ 20,767 $ 21,430 $ 21,218 $ 21,197 $ 21,797 $ 20,215 $ 18,708 $ 15,273 (Outflows)/inflows (387 ) (897 ) 236 (14 ) (715 ) 1,670 1,471 3,513 Market (depreciation)/appreciation (337 ) 234 (24 ) 35 115 (88 ) 36 (78 ) End of period assets $ 20,043 $ 20,767 $ 21,430 $ 21,218 $ 21,197 $ 21,797 $ 20,215 $ 18,708 Average assets during the period $ 20,398 $ 21,135 $ 21,277 $ 21,082 $ 21,889 $ 20,965 $ 19,185 $ 17,176 International Developed Market Equity Beginning of period assets $ 18,075 $ 19,385 $ 18,103 $ 15,103 $ 13,902 $ 13,423 $ 11,433 $ 10,195 Inflows/(outflows) 63 (1,391 ) 1,253 1,597 9 799 1,594 450 Market (depreciation)/appreciation (536 ) 81 29 1,403 1,192 (320 ) 396 788 End of period assets $ 17,602 $ 18,075 $ 19,385 $ 18,103 $ 15,103 $ 13,902 $ 13,423 $ 11,433 Average assets during the period $ 17,716 $ 18,636 $ 18,809 $ 16,691 $ 14,267 $ 13,873 $ 12,276 $ 10,879 59 Table of Contents Q4/24 Q3/24 Q2/24 Q1/24 Q4/23 Q3/23 Q2/23 Q1/23 Emerging Market Equity Beginning of period assets $ 12,452 $ 11,875 $ 11,189 $ 10,726 $ 9,569 $ 9,191 $ 8,811 $ 8,116 (Outflows)/inflows (908 ) (20 ) 57 217 412 451 329 486 Market (depreciation)/appreciation (1,076 ) 597 629 246 745 (73 ) 51 209 End of period assets $ 10,468 $ 12,452 $ 11,875 $ 11,189 $ 10,726 $ 9,569 $ 9,191 $ 8,811 Average assets during the period $ 11,407 $ 12,083 $ 11,448 $ 10,900 $ 9,833 $ 9,652 $ 8,998 $ 8,666 Leveraged & Inverse Beginning of period assets $ 2,082 $ 1,922 $ 1,828 $ 1,815 $ 1,781 $ 1,864 $ 1,785 $ 1,754 (Outflows)/inflows (69 ) 71 (18 ) (50 ) (59 ) (1 ) 12 43 Market (depreciation)/appreciation (89 ) 89 112 63 93 (82 ) 67 (12 ) End of period assets $ 1,924 $ 2,082 $ 1,922 $ 1,828 $ 1,815 $ 1,781 $ 1,864 $ 1,785 Average assets during the period $ 2,032 $ 1,962 $ 1,905 $ 1,792 $ 1,803 $ 1,894 $ 1,798 $ 1,757 Cryptocurrency Beginning of period assets $ 1,054 $ 838 $ 874 $ 414 $ 243 $ 248 $ 239 $ 136 Inflows/(outflows) 315 201 75 158 28 10 (1 ) 13 Market appreciation/(depreciation) 543 15 (111 ) 302 143 (15 ) 10 90 End of period assets $ 1,912 $ 1,054 $ 838 $ 874 $ 414 $ 243 $ 248 $ 239 Average assets during the period $ 1,599 $ 917 $ 856 $ 614 $ 325 $ 238 $ 236 $ 190 Alternatives Beginning of period assets $ 470 $ 415 $ 404 $ 377 $ 334 $ 340 $ 306 $ 310 Inflows/(outflows) 46 54 15 4 32 5 22 (18 ) Market (depreciation)/appreciation (6 ) 1 (4 ) 23 11 (11 ) 12 14 End of period assets $ 510 $ 470 $ 415 $ 404 $ 377 $ 334 $ 340 $ 306 Average assets during the period $ 494 $ 445 $ 408 $ 391 $ 342 $ 342 $ 320 $ 308 Headcount 313 314 304 300 303 299 291 279 Note: Previously issued statistics may be restated due to fund closures and trade adjustments Source: WisdomTree Non-GAAP Financial Measurements In an effort to provide additional information regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful information. Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations; therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective of management. Non-GAAP measurements do not have any standardized meaning, do not replace nor are superior to GAAP financial measurements and are unlikely to be comparable to similar measures presented by other companies. These non-GAAP financial measurements should be considered in the context with our GAAP results. The non-GAAP financial measurements contained in this Report include: Adjusted Net Income and Diluted Earnings per Share. We disclose adjusted net income and diluted earnings per share as non-GAAP financial measurements in order to report our results exclusive of items that are non-recurring or not core to our operating business. We believe presenting these non-GAAP financial measurements provides investors with a consistent way to analyze our performance. These non-GAAP financial measurements exclude the following: ● Unrealized gains or losses on revaluation/termination of deferred consideration—gold payments: Deferred consideration—gold payments was an obligation we assumed in connection with the ETFS Acquisition that was carried at fair value. This item represented the present value of an obligation to pay fixed ounces of gold into perpetuity and is measured using forward-looking gold prices. Changes in the forward-looking price of gold and changes in the discount rate used to compute the present value of the annual payment obligations have had a material impact on the carrying value of the deferred consideration and our reported financial results. We exclude this item when calculating our non-GAAP financial measurements as it was not core to our operating business. The item was not adjusted for income taxes as the obligation was assumed by a wholly-owned subsidiary of ours that is based in Jersey, a jurisdiction where we are subject to a zero percent tax rate. During the second quarter of 2023, we terminated this obligation for aggregate consideration totaling approximately $137.0 million. ● Gains or losses on financial instruments owned: We account for our financial instruments owned as trading securities, which requires these instruments to be measured at fair value with gains and losses reported in net income. We exclude these items when calculating our non-GAAP financial measurements as the gains and losses introduce volatility in earnings and are not core to our operating business. 60 Table of Contents ● Tax windfalls and shortfalls upon vesting and stock-based compensation awards: GAAP requires the recognition of tax windfalls and shortfalls within income tax expense. These items arise upon the vesting of stock-based compensation awards and the magnitude is directly correlated to the number of awards vesting as well as the difference between the price of our stock on the date the award was granted and the date the award vested. We exclude these items when calculating our non-GAAP financial measurements as they introduce volatility in earnings and are not core to our operating business. ● Imputed interest on our payable to GBH: During the fourth quarter of 2023, we repurchased our Series C Preferred Stock, which was convertible into approximately 13.1 million shares of our common stock, from GBH for aggregate cash consideration of approximately $84.4 million. Under the terms of the transaction, we paid GBH $40.0 million on the closing date, with the remainder of the purchase price payable in equal, interest-free installments on the first, second and third anniversaries of the closing date. Under U.S. GAAP, the obligation is recorded at its present value utilizing a market rate of interest on the closing date of 7.0% and the corresponding discount is amortized as interest expense pursuant to the effective interest method of accounting over the life of the obligation. We exclude this item when calculating our non-GAAP financial measurements as recognition of interest expense is non-cash and contrary to the stated terms of our obligation. ● Other items: Losses on extinguishment of convertible notes, a civil money penalty in connection with the SEC ESG Settlement, gains and losses recognized on our investments, changes in deferred tax asset valuation allowance, expenses incurred in response to an activist campaign, impairments, remeasurement of contingent consideration payable to us from the sale of our former Canadian ETF business and litigation expenses associated with certain provisions of our Stockholder Rights Agreement, dated as of March 17, 2023, as amended, are excluded when calculating our non-GAAP financial measurements. Years Ended December 31, Adjusted Net Income and Diluted Earnings per Share: 2024 2023 2022 Net income, as reported $ 66,693 $ 102,546 $ 50,684 Add back: Loss on extinguishment of convertible notes, net of income taxes 29,410 9,623 — Add back: Civil money penalty in connection with SEC ESG Settlement 4,000 — — Add back: Expenses incurred in response to an activist campaign, net of income taxes 3,760 4,452 3,376 (Deduct)/add back: (Gains)/Losses on financial instruments owned, at fair value, net of income taxes (3,671 ) 392 12,505 Add back: Imputed interest on payable to GBH, net of income taxes 1,996 224 — (Deduct)/add back: (Decrease)/increase in deferred tax valuation allowance on financial instruments owned and investments (903 ) 2,113 4,729 Add back: Unrealized loss recognized on our investments, net of income taxes 858 607 290 Deduct: Tax windfalls upon vesting and exercise of stock-based compensation awards (764 ) (176 ) (541 ) Deduct: Gain on revaluation/termination of deferred consideration — (61,953 ) (27,765 ) Add back: Impairments, net of income taxes — 6,013 — Deduct: Gain recognized from the sale of Canadian ETF business, including remeasurement of contingent consideration — (1,477 ) — Add back: Litigation expenses associated with certain provisions of the Stockholder Rights Agreement, net of income taxes — 367 — Deduct: Decrease in deferred tax valuation allowance on net operating losses of a European subsidiary — — (1,609 ) Adjusted net income $ 101,379 $ 62,731 $ 41,669 Deduct: Income distributed to participating securities (1,406 ) (2,770 ) (2,186 ) Deduct: Undistributed income allocable to participating securities (5,069 ) (5,868 ) (2,509 ) Adjusted net income available to common stockholders $ 94,904 $ 54,093 $ 36,974 Weighted average diluted shares, excluding participating securities (See Note 21 to our Consolidated Financial Statements) 149,253 147,827 143,295 Adjusted earnings per share—diluted $ 0.64 $ 0.37 $ 0.26 During the years ended December 31, 2024 and 2023, we recognized a loss of $13.2 million (which includes an excise tax of $1.8 million) and a gain of $8.0 million, respectively, related to the repurchase of the Series A Preferred Stock and the Series C Preferred Stock. These items are excluded from net income, but are required to be added to net income to arrive at income available to common stockholders in the calculation of earnings per share under U.S. GAAP. 61 Table of Contents Liquidity and Capital Resources The following table summarizes key data regarding our liquidity, capital resources and use of capital to fund our operations: December 31, 2024 December 31, 2023 Balance Sheet Data (in thousands): Cash and cash equivalents $ 181,191 $ 129,305 Financial instruments owned, at fair value 85,439 58,722 Accounts receivable 44,866 35,473 Securities held-to-maturity 206 230 Total: Liquid assets 311,702 223,730 Less: Total current liabilities (109,197 ) (103,216 ) Less: Other assets—seed capital (WisdomTree Digital Funds) (20,866 ) (18,308 ) Less: Regulatory capital requirements (39,423 ) (29,156 ) Total: Available liquidity $ 142,216 $ 73,050 Year Ended December 31, 2024 2023 2022 Cash Flow Data (in thousands): Operating cash flows $ 113,461 $ 85,600 $ 55,087 Investing cash flows (23,875 ) 82,049 (37,657 ) Financing cash flows (36,000 ) (171,636 ) (22,780 ) Foreign exchange rate effect (1,700 ) 1,191 (3,258 ) Increase/(decrease) in cash and cash equivalents $ 51,886 $ (2,796 ) $ (8,608 ) Liquidity We consider our available liquidity to be our liquid assets, less our current liabilities, seed capital in WisdomTree Digital Funds and regulatory capital requirements of certain of our subsidiaries. Liquid assets consist of cash and cash equivalents, financial instruments owned, at fair value, accounts receivable and securities held-to-maturity. Our financial instruments owned, at fair value are highly liquid investments. Accounts receivable are current assets and primarily represent receivables from advisory fees we earn from our ETPs. Our current liabilities consist primarily of payments owed to vendors and third parties in the normal course of business, deferred consideration and accrued incentive compensation for employees. Cash and cash equivalents increased $51.9 million during the year ended December 31, 2024 due to $345.0 million of proceeds from the issuance of the 3.25% Convertible Senior Notes due 2029, $113.5 million of net cash provided by operating activities and $48.1 million of proceeds from the sale of financial instruments owned, at fair value. These increases were partially offset by $143.8 million used to repurchase the Series A Preferred Stock, $132.7 million to repurchase a portion of our 5.75% Convertible Senior Notes due 2028, $69.4 million used to purchase financial instruments owned, at fair value, $62.9 million used to repurchase our common stock, $19.0 million used to pay dividends, $14.8 million paid to GBH, $7.7 million used to pay convertible notes issuance costs, $2.3 million used to pay for software development and $2.1 million used in other activities. Cash and cash equivalents decreased $2.8 million during the year ended December 31, 2023 due to $184.3 million used to repurchase and settle our 4.25% Convertible Senior Notes due 2023, $57.4 million used to purchase financial instruments owned, at fair value, $50.0 million used to terminate our deferred consideration—gold payments obligation, $40.0 million used to repurchase our Series C Preferred Stock, $20.1 million used to pay dividends on our common stock, $11.2 million used to purchase investments, $3.6 million used to repurchase our common stock, $3.5 million used to pay issuance costs in respect of our 5.75% Convertible Senior Notes due 2028, $2.1 million used for software development and $1.2 million used in other activities. These decreases were partly offset by $130.0 million of proceeds from the issuance of the 5.75% Convertible Senior Notes due 2028, $123.6 million of proceeds from the sale of financial instruments owned, at fair value, $85.6 million of net cash provided by operating activities, $28.8 million of proceeds from the exit from our investment in Securrency, Inc. in connection with the sale of Securrency, Inc. to an unaffiliated third party, $1.5 million from receipt of contingent consideration related to the sale of our Canadian ETF business, and $1.1 million from other activities. Cash and cash equivalents decreased $8.6 million during the year ended December 31, 2022 due to $55.1 million of net cash provided by operating activities and $52.1 million of proceeds from the sale of financial instruments owned, at fair value. These increases were partly offset by $67.7 million used to purchase financial instruments owned, at fair value, $21.9 million used to purchase investments, $19.4 million used to pay dividends, $3.4 million used to repurchase our common stock and $3.4 million from other activities. 62 Table of Contents Convertible Notes We have the following convertible notes outstanding as of December 31, 2024: ● $150.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2026 (the “2026 Notes”); ● $25.8 million in aggregate principal amount of 5.75% Convertible Senior Notes due 2028 (the “2028 Notes”); and ● $345.0 million 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 us and U.S. Bank Trust Company, National Association, as trustee (either initially or as successor to U.S. Bank National Association, 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, we repurchased $104.2 million in aggregate principal amount of 2028 Notes. As a result of this repurchase, we recognized a loss on extinguishment of approximately $30.6 million during the year ended December 31, 2024. As of December 31, 2024, we had an aggregate principal amount of $520.8 million 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 $150.0 $25.8 $345.0 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 our common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price set forth in the table above), subject to adjustment. ● Conversion: Holders may convert at their option at any time prior to the close of business on the business day immediately preceding May 15, 2029 and May 15, 2028 for the 2029 Notes and the 2028 Notes, respectively, and March 15, 2026 for the 2026 Notes, only under the following circumstances: (i) if the last reported sale price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the respective Convertible Notes on each applicable trading day; (ii) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sales price of our common stock and the conversion rate on each such trading day; (iii) upon a notice of redemption delivered by us in accordance with the terms of the indentures but only with respect to the Convertible Notes called (or deemed called) for redemption; 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. ● Cash settlement of principal amount: Upon conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted. At our election, we will also settle the conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted in either cash, shares of our common stock or a combination of cash and shares of common stock. ● Redemption price: We may redeem for cash all or any portion of the Convertible Notes, at our option, on or after August 20, 2026 and August 20, 2025 in respect of the 2029 Notes and the 2028 Notes, respectively, and June 20, 2023 in respect of the 2026 Notes and on or prior to the 55 th scheduled trading day immediately preceding the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price for the respective Convertible Notes then in effect for at least 20 trading days, including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date. No sinking fund is provided for the Convertible Notes. 63 Table of Contents ● Limited investor put rights: Holders of the Convertible Notes have the right to require us to repurchase for cash all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain change of control transactions or liquidation, dissolution or common stock delisting events. ● 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 our 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 our common stock based on the aggregate principal amount of Convertible Notes outstanding), subject to adjustment. ● Seniority and Security: The Convertible Notes rank equal in right of payment and are our 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. Capital Resources Our principal source of financing is our operating cash flow. We believe that current cash flows generated by our operating activities and existing cash balances should be sufficient for us to fund our operations for the foreseeable future. Our ability to satisfy our contractual obligations as they arise are discussed in the section titled “Contractual Obligations” below. Use of Capital Our business does not require us to maintain a significant cash position. However, certain of our subsidiaries are required to maintain a minimum level of regulatory capital, which at December 31, 2024 was approximately $39.4 million in the aggregate. Notwithstanding these regulatory capital requirements, we expect that our main uses of cash will be to fund the ongoing operations of our business. We also maintain a capital return program which includes a $0.03 per share quarterly cash dividend and authority to purchase our common stock through April 27, 2025, including purchases to offset future equity grants made under our equity plans and purchases made in open market or privately negotiated transactions. During the year ended December 31, 2024, we repurchased 6,800,301 shares of our common stock under the repurchase program for an aggregate cost of $62.9 million. Currently, $150.0 million remains under this program for future purchases. In addition, on August 13, 2024, we repurchased all of our then-outstanding Series A Preferred Stock, which was convertible into 14,750,000 shares of our common stock, from ETFS Capital for aggregate cash consideration of approximately $143.8 million. See Note 11 to our Consolidated Financial Statements for additional information. Contractual Obligations Convertible Notes We currently have $520.8 million in aggregate principal amount of Convertible Notes outstanding, of which $150.0 million, $25.8 million and $345.0 million are scheduled to mature on June 15, 2026, August 15, 2028 and August 15, 2029, in respect of the 2026 Notes, the 2028 Notes and the 2029 Notes, respectively, unless earlier converted, repurchased or redeemed. Conditional conversions or a requirement to repurchase the Convertible Notes upon the occurrence of a fundamental change may accelerate payment. The Convertible Notes require cash settlement of up to the principal amount, while settlement of the conversion obligation in excess of the aggregate principal amount may be satisfied in either cash, shares of our common stock or a combination of cash and shares of our common stock. We may settle and/or refinance these obligations when due See the section titled “Issuance of Convertible Notes” above for additional information. Deferred Consideration–Gold Payments On May 10, 2023, we entered into and closed on a Sale, Purchase and Assignment Deed to terminate our obligations relating to the contractual gold payments. Pursuant to that agreement, we paid consideration totaling $136.9 million, including an aggregate of $50.0 million in cash and the issuance of 13,087 shares of Series C Preferred Stock (valued at $86.9 million, based on the closing price of our common stock on May 9, 2023 of $6.64 per share), which was convertible into 13,087,000 shares of our common stock. The Series C Preferred Stock was subsequently repurchased on November 20, 2023 as described in “Payable to GBH” below. See Note 12 to our Consolidated Financial Statements for additional information. 64 Table of Contents Payable to GBH On November 20, 2023, we repurchased our Series C Preferred Stock from GBH for aggregate cash consideration of approximately $84.4 million. Under the terms of the transaction, we paid GBH $54.8 million to date, with the remainder of the purchase price payable in equal, interest-free installments on the 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. Operating Leases Total future minimum lease payments with respect to our operating lease liabilities were $1.0 million at December 31, 2024. Cash flows generated by our operating activities and existing cash balances should be sufficient to satisfy the future minimum lease payments. See Note 13 to our Consolidated Financial Statements for additional information. Off-Balance Sheet Arrangements We do not have any off-balance sheet financing or other arrangements and have neither created nor are party to any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. Critical Accounting Policies and Estimates Goodwill and Intangible Assets Goodwill is the excess of the purchase price over the fair values of the identifiable net assets at the acquisition date. We test goodwill for impairment at least annually and at the time of a triggering event requiring re-evaluation, if one were to occur. Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value. If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of 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 our U.S. business and European business components. For impairment testing purposes, these components are aggregated as a single reporting unit as they fall under the same operating segment and have similar economic characteristics. Goodwill is assessed for impairment annually on November 30 th . When performing our goodwill impairment test, we consider a qualitative assessment, when appropriate, and the market approach and its market capitalization when determining the fair value of the reporting unit. The results of our most recent analysis indicated no impairment based upon a quantitative assessment. Indefinite-lived intangible assets are tested for impairment at least annually and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Indefinite-lived intangible assets are impaired if their estimated fair value is less than their carrying value. We may rely on a qualitative assessment when performing our intangible asset impairment test. Otherwise, the impairment evaluation is performed at the lowest level of reasonably identifiable cash flows independent of other assets. The annual impairment testing date for our intangible assets is November 30 th . The results of our most recent analysis identified no indicators of impairment to be recognized based upon a quantitative assessment (discounted cash flow analysis) which relied upon significant unobservable inputs including projected revenue growth rates of 3.0% and a weighted average cost of capital of 10.3%. Investments We account for equity investments that do not have a readily determinable fair value under the measurement alternative prescribed within Accounting Standards Codification Topic 321, Investments – Equity Securities , 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. See Note 7 to our Consolidated Financial Statements for information. Investments in debt instruments are accounted for at fair value, with changes in fair value reported in other income/(expenses). Revenue Recognition We earn a significant portion of our revenues in the form of advisory fees from our ETPs and recognize this revenue over time, as the performance obligation is satisfied. Advisory fees are based on a percentage of the ETPs’ average daily net assets. Progress is measured using the practical expedient under the output method resulting in the recognition of revenue in the amount for which we have a right to invoice. 65 Table of Contents Other revenues are earned from swap providers associated with certain of our European listed ETPs, the nature of which are based on a percentage of the ETPs’ average daily net assets. We also earn 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 we have a right to invoice.