What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2024-11-07 · 471 added, 446 removed, 218 unchanged (81% of the section changed)

11 unchanged sentences

materially differ from our current expectations, please see Item 1A “Risk Factors” in our Annual Report on Form 10-K for the

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

We assume no obligation to update or

revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by

fiscal year ended December 31, 2024.

We assume no obligation to update or revise publicly any forward-looking statements, whether as a

result of new information, future events or otherwise, unless required by law.

Executive Summary

We are a global financial innovator, offering

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

We empower investors and consumers

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

We are leveraging the

latest financial infrastructure to create products that provide access, transparency and an enhanced user experience.

Building on our

heritage of innovation, we are also developing and have launched next-generation digital products, services and structures, including

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

WisdomTree Prime is available in the U.S.

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

We had approximately $112.6 billion in AUM as

of September 30, 2024.

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

cryptocurrency, currency and alternatives strategies.

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

we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management

to offer investors cost-effective funds that are built to perform.

Most of our equity-based funds employ a fundamentally weighted investment

methodology, which weights securities based on factors such as dividends, earnings or investment factors, whereas most other industry

indexes use a capitalization weighted methodology.

These products are distributed through all major channels in the asset management industry,

including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers

primarily through our sales force.

We believe technology is altering the way financial advisors conduct business and through our Advisor

and Portfolio Solutions programs we offer technology-enabled and research-driven solutions including portfolio construction, asset allocation,

practice management services and digital tools to help financial advisors address technology challenges and grow and scale their businesses.

We are at the forefront of innovation and believe

that tokenization and leveraging the utility of blockchain technology is the next evolution in financial services.

We are building the

foundation that we believe will allow us to lead in this coming evolution.

WisdomTree Prime, our blockchain-native digital wallet, positions

us to expand our blockchain-enabled financial product and services offerings with a new direct-to-consumer channel where spending, saving

and investing are united.

As we continue to pursue our digital assets strategy, we are embracing what we refer to as “responsible

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

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

and will diversify our revenue streams and contribute to our growth.

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 47 U.S.

states, covering approximately 85% of the U.S.

Our institutional

platform, WisdomTree Connect, further expands access to our products.

As of March 31, 2025, we managed approximately

$115.8 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 not only complements our core competencies, but will diversify our revenue streams and further contribute

to our growth.

We were incorporated under the laws of the state

2 unchanged sentences

on November 7, 2022.

leveraged-and-inverse,

cryptocurrency

alternatives.

respectively,

appreciation,

internationally

cross-listed)

appreciation,

income/(loss)

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

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

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

in connection with the SEC ESG Settlement.

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

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

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

and marketing expenses.

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

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

Assets Under Management

WisdomTree ETPs

We offer ETPs covering equity, fixed income,

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

The chart below sets forth the asset mix of our ETPs

at March 31, 2024, December 31, 2024 and March 31, 2025:

Market Environment

The first quarter of 2025 was characterized

by global volatility.

equities declined amid concerns over tariffs, while European markets outperformed, supported in part by Germany’s

announced fiscal stimulus measures.

Investor uncertainty surrounding the potential impact of tariffs on global economic growth contributed

to increased demand for safe haven assets, including gold, which experienced significant price appreciation during the quarter.

2025, the U.S.

Federal Reserve revised its 2025 U.S.

GDP growth forecast for 2025 downward to 1.7% from 2.1% and increased its inflation

outlook to 2.7% from 2.5%.

The federal funds target rate remained unchanged during the quarter, within a range of 4.25% to 4.50%.

While the volatility factors above have inevitably

impacted our overall AUM, our diverse and balanced AUM mix has provided relative stability, enabling us to mitigate the severity of declines

compared to broader market indices.

Our strategic emphasis on diversification, including exposure across asset classes, geographic regions

and investment strategies, has allowed us to maintain resilience during periods of elevated uncertainty, underscoring the strength and

effectiveness of our business model.

However, fluctuations in our AUM attributable to market conditions outside of our control have had,

and in the future could have, a negative impact on our revenues and operating margins.

During the quarter, the MSCI EAFE Index (local

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

dollar) and gold prices increased by 3.0%, 7.7%, 3.0% and

19.3%, respectively, while the S&P 500 and the MSCI Japan Index (local currency) decreased by 4.3% and 4.4%, respectively.

dollar weakened 2.5%, 1.8% and 0.1% versus the euro, British pound and Japanese yen, respectively, during the quarter.

Listed ETF Industry Flows

listed ETF industry net flows were $286.4

billion for the three months ended March 31, 2025.

equity and fixed income gathered the majority of those flows.

European Listed ETP Industry Flows

European listed ETP industry net flows were

$65.2 billion for the three months ended March 31, 2025.

Equity and fixed income gathered the majority of those flows.

Our Operating and Financial Results

We operate as an ETP sponsor and asset manager,

providing investment advisory services globally through our subsidiaries in the U.S.

The AUM of our U.S.

listed exchange traded funds,

listed ETFs, increased from $79.1 billion at December 31, 2024 to $80.5 billion at March 31, 2025 due to net inflows, partly offset

by market depreciation.

European Listed ETPs

The AUM of our European listed (including internationally

cross-listed) ETPs, or European listed ETPs, increased from $30.7 billion at December 31, 2024 to $35.1 billion at March 31, 2025 due

to market appreciation and net inflows.

Consolidated Operating Results

The following table sets forth our revenues

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

● Revenues – Total revenues increased 11.6% from the three months ended March 31, 2024 to $108.1 million in the comparable

period in 2025 due to higher average AUM and higher other revenues attributable to our European listed exchange-traded products.

● Expenses – Total operating expenses increased 7.3% from the three months ended March 31, 2024 to $73.9 million in the

comparable period in 2025 primarily due to higher stock-based compensation expense and increased headcount, as well as higher third-party

distribution fees, fund management and administration expenses, sales and business development expenses and marketing expenses.

increases were partly offset by lower professional fees.

● Other Income/(Expenses) – Other income/(expenses) includes interest income and interest expense , impairments and other

losses and gains.

Further information is provided herein.

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

September 30, 2024 and 2023, respectively.

● Net income – We reported net income of $24.6 million and $22.1 million during the three months ended March 31, 2025 and

2024, respectively.

Guidance Update for the Year Ending December 31, 2025

Compensation Expense

Compensation to Revenue Ratio

Our compensation to revenue ratio for the year

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

Our estimated compensation

to revenue ratio takes into consideration planned hires for 2024 and variability in incentive compensation, with drivers including the

magnitude of flows, revenues and operating income growth, margin expansion and share price performance in relation to our peers.

ending December 31, 2025 is currently estimated to range from 28% to 30% (unchanged from our guidance provided last quarter) and takes

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

also considers variability in incentive compensation with drivers including the magnitude of our flows, revenues 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

Discretionary Spending

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

During the nine months ended September 30,

2024, discretionary spending was $45.3 million.

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

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

Not included in the guidance above are non-recurring

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

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

During the three months ended March 31,

2025, our discretionary spending was $16.3 million.

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

2025 to range from $68.0 million to $72.0 million (unchanged from our guidance range provided last quarter).

We define gross margin as total operating revenues

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

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

We currently estimate our gross margin guidance for the year

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

other revenues going forward.

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

approximately

interest-free

consideration

non-deductible

extinguishment

non-deductible

consideration

(in millions )

Our gross margin was 80.8% during the three months ended March 31, 2025.

For the year ending December 31, 2025, we currently estimate

that our gross margin percentage will be 81.0% to 82.0% (unchanged from our guidance range provided last quarter).

We anticipate our gross

margin to be at the lower end of this range taking into consideration current AUM and revenue levels.

If AUM increases from continued

organic growth or favorable market conditions, we would anticipate trending toward the middle to upper end of this range.

Third-Party Distribution Fees

We currently estimate third-party distribution

expense to be approximately $11.0 million to $12.0 million for the year ending December 31, 2025 (unchanged from our guidance range provided

last quarter), which is dependent upon the AUM growth on our respective platforms.

Interest Expense

We currently estimate our interest expense for

the year ending December 31, 2025 to be $22.0 million (unchanged from our guidance range provided last quarter), 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 $8.0 million (previously $7.0 million), based upon the magnitude of our forecasted interest earning

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 (unchanged from the guidance

range provided last quarter), taking into consideration the current distribution of profits between the U.S.

This estimated rate may change and is dependent

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

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

or shortfalls.

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

Weighted Average Diluted Shares

We currently estimate our weighted average diluted

shares to be between 147.0 million and 149.0 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.

Key Operating Statistics

The following table presents key operating statistics

that serve as indicators for the performance of our business:

Three Months Ended

GLOBAL PRODUCTS ($ in millions )

Beginning of period assets

(Outflows)/inflows

Digital Assets—Jan.

Inflows/(outflows)

Market appreciation/(depreciation)

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Average advisory fee during the period

Number of ETPs—end of period

Number of products—end of the period

Three Months Ended

LISTED ETFs ($ in millions )

Beginning of period assets

(Outflows)/inflows

Market appreciation/(depreciation)

Inflows/(outflows)

Market (depreciation)/appreciation

End of period assets

1 unchanged sentence

Number of ETFs—end of the period

LISTED ETPs (in millions )

EUROPEAN LISTED ETPs ($ in millions )

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

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Average assets during the period

Number of ETPs—end of period

CATEGORIES (in millions )

Number of ETPs—end of the period

DIGITAL ASSETS ($ in millions )

Beginning of period assets

Market appreciation/(depreciation)

Digital Assets—Jan.

Market depreciation

End of period assets

Average assets during the period

Number of products—end of the period

PRODUCT CATEGORIES ($ in millions )

Beginning of period assets

Digital Assets—Jan.

Market (depreciation)/appreciation

End of period assets

Average assets during the period

Commodity & Currency

Beginning of period assets

Digital Assets—Jan.

Market appreciation/(depreciation)

2 unchanged sentences

Beginning of period assets

(Outflows)/inflows

Digital Assets—Jan.

Inflows/(outflows)

Market appreciation/(depreciation)

1 unchanged sentence

Average assets during the period

Three Months Ended

International Developed Market Equity

Beginning of period assets

(Outflows)/inflows

Market appreciation/(depreciation)

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(Outflows)/inflows

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

2 unchanged sentences

Beginning of period assets

(Outflows)/inflows

Inflows/(outflows)

Market appreciation/(depreciation)

3 unchanged sentences

Beginning of period assets

Market appreciation/(depreciation)

Digital Assets—Jan.

(Outflows)/inflows

Market (depreciation)/appreciation

End of period assets

1 unchanged sentence

Beginning of period assets

Market appreciation/(depreciation)

Market (depreciation)/appreciation

End of period assets

Average assets during the period

_____________________________

(1) Includes 17 digital assets products, which were launched prior to January 1, 2025.

Previously issued statistics may be restated

due to fund closures and trade adjustments.

Three Months Ended September 30, 2024 Compared to Three Months

Ended September 30, 2023

Three Months Ended March 31, 2025 Compared to Three Months Ended

March 31, 2024

Selected Operating and Financial Information

September 30,

Three Months Ended

AUM (in millions)

6 unchanged sentences

Advisory fee revenues increased 7.6% from $92.5

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

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

million during the three months ended March 31, 2024 to $99.5 million in the comparable period in 2025 due to higher average AUM.

average advisory fee was 0.35% during the three months ended March 31, 2025 and 0.36% during the three months ended March 31, 2024.

Other revenues

Other revenues increased 96.7% from $4.3 million

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

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

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

September 30,

during the three months ended March 31, 2024 to $8.5 million in the comparable period in 2025 due to higher other revenues attributable

to our European listed ETPs.

Operating Expenses

Three Months Ended

(in thousands)

Compensation and benefits

7 unchanged sentences

Total operating expenses

September 30,

Three Months Ended

As a Percent of Revenues:

10 unchanged sentences

Compensation and benefits expense increased

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

stock-based compensation expense and headcount.

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

8.8% from $31.1 million during the three months ended March 31, 2024 to $33.8 million in the comparable period in 2025 due to higher stock-based

compensation expense and increased headcount.

Headcount was 300 and 315 at March 31, 2024 and 2025, respectively.

Fund management and administration

Fund management and administration expense increased

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

due to higher average AUM.

3.8% from $20.0 million during the three months ended March 31, 2024 to $20.7 million in the comparable period in 2025 primarily due to

higher average AUM.

We had 78 U.S.

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

and 274 European listed ETPs at September 30, 2024.

listed ETFs and 275 European listed ETPs at March 31, 2024 compared to 78 U.S.

listed ETFs, 280 European

listed ETPs and 17 digital assets products at March 31, 2025.

Marketing and advertising

Marketing and advertising expense increased

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

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

listed products.

9.2% from $4.4 million during the three months ended March 31, 2024 to $4.8 million in the comparable period in 2025 primarily due to

higher spend related to our U.S.

Sales and business development

Sales and business development expense was essentially

unchanged from the three months ended September 30, 2023.

Sales and business development expense increased

14.6% from $3.6 million during the three months ended March 31, 2024 to $4.1 million in the comparable period in 2025 primarily due to

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

Professional fees

Professional fees expense increased 69.8% from

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

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

An equal and offsetting amount is recorded in

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

Professional fees expense decreased 23.4% from

$3.6 million during the three months ended March 31, 2024 to $2.8 million in the comparable period in 2025 as the prior period included

activist campaign expenses and expenses incurred in connection with a settlement with the U.S.

Securities and Exchange Commission regarding

certain statements about the ESG screening process for three ETFs advised by WisdomTree Asset Management, Inc.

(the “SEC ESG Settlement”).

Occupancy, communications and equipment

Occupancy, communications and equipment expense

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

relationships.

Income/(Expenses)

September 30,

increased 22.5% from $1.2 million during the three months ended March 31, 2024 to $1.5 million in the comparable period in 2025 primarily

due to higher internet and communications expenses.

Depreciation and amortization

Depreciation and amortization expense increased

41.0% from $0.4 million during the three months ended March 31, 2024 to $0.5 million in the comparable period in 2025 primarily due to

higher amortization of capitalized software.

Third-party distribution fees

Third-party distribution fees expense increased

34.9% from $2.3 million during the three months ended March 31, 2024 to $3.1 million in the comparable period in 2025 due to growth in

AUM across our various platforms.

Other expenses were essentially unchanged from

the three months ended March 31, 2024.

Other Income/(Expenses)

Three Months Ended

(in thousands)

1 unchanged sentence

Interest income

Loss on extinguishment of convertible notes

Other losses, net

Other losses and gains, net

Total other expenses, net

September 30,

Three Months Ended

As a Percent of Revenues:

1 unchanged sentence

Interest income

Loss on extinguishment of convertible notes

Other losses, net

Total other expenses,

Other losses and gains, net

Total other expenses, net

Interest expense

Interest expense increased 31.8% from $4.1 million

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

during the three months ended March 31, 2024 to $5.4 million in the comparable period in 2025 due to a higher level of debt outstanding,

partly offset by a lower average interest rate.

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

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

Our effective interest rate during the three

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

Interest income

Interest income increased 126.9% from $0.8 million

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

During the three months ended September 30,

2023, we recognized a non-cash impairment charge of $2.7 million, primarily related to our investment in Securrency, Inc., as we marked

our investment to its estimated realizable value in connection with Securrency entering into an agreement to be acquired by an unrelated

Loss on Extinguishment of Convertible Notes

During the three months ended September 30,

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

principal amount of our 2028 Notes.

Other losses, net

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

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

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

civil money penalty in connection with the SEC ESG Settlement.

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

instruments owned and investments, respectively.

Gains and losses also generally arise from the sale of gold earned from management fees

paid by our physically-backed gold ETPs, foreign exchange fluctuations and other miscellaneous items.

non-deductible

extinguishment

non-deductible

compensation.

non-deductible

compensation.

September 30,

AUM (in millions)

Operating Revenues (in thousands)

Advisory fees

Other revenues

Total revenues

Operating Revenues

Advisory fees

Advisory fee revenues increased 19.0% from $246.2

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

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

Other revenues

Other revenues increased 100.3% from $12.0 million

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

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

connection with the SEC ESG Settlement.

Operating Expenses

September 30,

(in thousands)

Compensation and benefits

Fund management and administration

Marketing and advertising

Sales and business development

Contractual gold payments

Professional fees

Occupancy, communications and equipment

Depreciation and amortization

Third-party distribution fees

Total operating expenses

September 30,

As a Percent of Revenues

Compensation and benefits

Fund management and administration

Marketing and advertising

Sales and business development

Contractual gold payments

Professional fees

Occupancy, communications and equipment

Depreciation and amortization

Third-party distribution fees

Total operating

Compensation and benefits

Compensation and benefits expense increased

11.7% from $81.7 million during the nine months ended September 30, 2023 to $91.2 million in the comparable period in 2024 due to higher

incentive and stock-based compensation expense and increased headcount.

Fund management and administration

Fund management and administration expense increased

15.5% from $52.9 million during the nine months ended September 30, 2023 to $61.1 million in the comparable period in 2024 primarily due

to higher average AUM and product launches.

Marketing and advertising

Marketing and advertising expense increased

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

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

listed products.

Sales and business development

Sales and business development expense increased

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

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

Contractual gold payments

Contractual gold payments expense decreased

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

deferred consideration—gold payments obligation on May 10, 2023.

See Note 9 to our Consolidated Financial Statements for additional

Professional fees

Professional fees increased 4.9% from $15.8 million

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

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

An equal and offsetting amount is recorded in other revenues

as these expenses are expected to be covered by insurance.

This increase was partly offset by lower activist campaign expenses and non-recurring

expenses incurred in the prior year to settle our deferred consideration—gold payments obligation and our acquisition of WisdomTree

Transfers, Inc.

Occupancy, communications and equipment

Occupancy, communications and equipment expense

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

due to higher spending on office equipment.

Depreciation and amortization

Depreciation and amortization expense increased

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

of software development costs.

relationships.

Income/(Expenses)

September 30,

Interest expense

Gain on revaluation/termination

of deferred consideration—gold payments

Interest income

Loss on extinguishment of convertible

Other losses,

income/(expenses), net

Nine Months Ended

September 30,

As a Percent of Revenues:

Interest expense

Gain on revaluation/termination

of deferred consideration—gold payments

Interest income

Loss on extinguishment of convertible

Other losses,

income/(expenses), net

Interest expense

Interest expense increased 15.8% from $11.5

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

outstanding, partly offset by a lower average interest rate.

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

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

Our effective interest rate during the nine

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

Gain on revaluation/termination of deferred consideration—gold

We recognized a gain on revaluation/termination

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

This obligation was settled

on May 10, 2023 for approximately $137.0 million.

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

Our effective interest rate during the three months ended March 31, 2024 and 2025 was

5.0% and 3.9%, respectively.

Interest income

Interest income increased 35.7% from $1.4 million

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

During the nine months ended September 30, 2023,

we recognized a non-cash impairment charge of $7.6 million primarily related to our investment in Securrency, Inc.

upon the sale of Securrency

to an unrelated third party.

Loss on Extinguishment of Convertible Notes

During the nine months ended September 30, 2024,

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

principal amount of our 2028 Notes.

During the nine months ended September 30, 2023, we recognized a loss on extinguishment of convertible

notes of $9.7 million, arising from the repurchase of $115.0 million in aggregate principal amount of our 4.25% Convertible Senior Notes

respectively.

physically-backed

miscellaneous

non-deductible

extinguishment

non-deductible

compensation.

revaluation/termination

consideration,

indemnification

non-deductible

extinguishment

non-deductible

compensation.

non-recurring

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.

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.

during the three months ended March 31, 2024 to $1.9 million in the comparable period in 2025 due to a

higher level of interest earning assets.

Other losses and gains, net

Other losses and gains, net were $2.6 million

and ($0.3) million during the three months ended March 31, 2024 and 2025, respectively.

The three months ended March 31, 2025 includes

net losses of $0.4 million on our financial instruments and net gains of $0.3 million on our investments.

Gains and losses also generally

arise from the sale of gold earned from management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations and other

miscellaneous items.

Our effective income tax rate during the three

months ended March 31, 2025 was 18.9%, resulting in income tax expense of $5.7 million.

The effective tax rate differs from the federal

statutory rate of 21.0% primarily due to tax windfalls associated with the vesting of stock-based compensation awards and a lower tax

rate on foreign earnings.

These items were partly offset by state and local income taxes and non-deductible executive compensation.

Our effective income tax rate during the three

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

The effective tax rate differs from the federal

statutory rate of 21% primarily due to the decrease in the deferred tax asset valuation allowance on losses recognized on our financial

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

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

Non-GAAP Financial Measurements

In an effort to provide additional information

regarding our results as determined by GAAP, we also disclose certain non-GAAP information which we believe provides useful and meaningful

Our management reviews these non-GAAP financial measurements when evaluating our financial performance and results of operations;

therefore, we believe it is useful to provide information with respect to these non-GAAP measurements so as to share this perspective

of management.

Non-GAAP measurements do not have any standardized meaning, do not replace nor are they 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:

● Legal and other related expenses covered by insurance:

During the year ended December 31, 2024, we incurred $4.3 million of

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

These expenses were covered by insurance and reimbursed on

April 7, 2025.

GAAP requires that such covered expenses be reported gross in the income statement such that revenues are recorded to offset

expenses incurred.

We offset the revenues and related expenses when calculating our non-GAAP financial measurements as the gross presentation

serves to overstate our revenues and expenses recognized in the ordinary course of business.

● Gains or losses on financial instruments owned:

7 unchanged sentences

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.

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

granted and the date the award vested or was exercised.

We exclude these items when calculating our non-GAAP financial measurements as

they introduce volatility in earnings and are not core to our operating business.

● 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

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

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

$84.4 million.

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

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

GAAP, the obligation

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

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

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

activist campaign, impairments, remeasurement of contingent consideration payable to us from the sale of our former Canadian ETF business

and litigation expenses associated with certain provisions of our Stockholder Rights Agreement, dated as of March 17, 2023, as amended,

are excluded when calculating our non-GAAP financial measurements.

Adjusted Net Income and

Diluted Earnings per Share:

Net (loss)/income,

extinguishment of convertible notes, net of income taxes

penalty in connection with the SEC ESG Settlement

(Deduct)/add back:

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

interest on payable to GBH, net of income taxes

(Deduct)/add back:

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

(Deduct)/add back:

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

Tax windfalls

upon vesting and exercise of stock-based compensation awards

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

Gain on revaluation/termination

of deferred consideration—gold payments

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

net of income taxes (where applicable)

Remeasurement of contingent consideration—sale of Canadian ETF business

payable in equal annual installments on the first, second and third anniversaries of the closing date, with no requirement to pay interest.

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:

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

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

Three Months Ended

Adjusted Net Income and Diluted Earnings per Share:

Net income, as reported

Tax windfalls upon vesting of stock-based compensation awards

Imputed interest on payable to GBH, net of income taxes

Add back/(deduct):

Losses/(gains) on financial instruments owned, net of income taxes

Gains recognized on investments, net of income taxes

Add back/(deduct):

Increase/(decrease) in deferred tax asset valuation allowance on financial instruments owned and investments

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

Adjusted net income

Income distributed

to participating securities

Income distributed to participating securities

Undistributed income allocable to participating securities

Adjusted net income

available to common stockholders

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

Adjusted earnings

per share – diluted

Adjusted net income, as reported on a non-GAAP

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

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

stock repurchase excise taxes.

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

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

September 30,

Balance Sheet

Data (in thousands):

Adjusted net income available to common stockholders

Weighted average diluted shares, excluding participating securities (in thousands) (See Note 17 to our Consolidated Financial Statements)

Adjusted earnings per share – diluted

Liquidity and Capital Resources

The following table summarizes key data regarding

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

Balance Sheet Data (in

Cash, cash equivalents and restricted cash

1 unchanged sentence

Accounts receivable

Securities held-to-maturity

Liquid assets

3 unchanged sentences

Available liquidity

Months Ended September 30,

Flow Data (in thousands):

Three Months Ended March 31,

Cash Flow Data (in thousands):

Operating cash flows

1 unchanged sentence

Financing cash flows

Foreign exchange

Increase/(decrease)

in cash, cash equivalents and restricted cash

Foreign exchange rate effect

Decrease in cash, cash equivalents and restricted cash

We consider our available liquidity to be our

7 unchanged sentences

Our current liabilities consist primarily

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

portion of our payable to GBH.

Cash, cash equivalents and restricted cash increased

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

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

value and $2.1 million provided by other activities.

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

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

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

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

Cash and cash equivalents decreased by $42.6

million during the nine months ended September 30, 2023 due to $184.3 million used to repurchase and settle at maturity our convertible

notes, $56.8 million used to purchase financial instruments owned, at fair value, $50.0 million used to settle our deferred consideration—gold

payments obligation, $14.9 million used to pay dividends, $10.0 million used to purchase investments, $3.6 million used to repurchase

our common stock, $3.5 million used for convertible notes issuance costs, $1.0 million used to acquire Securrency Transfers, Inc.

WisdomTree Transfers, Inc.) and $0.7 million used for other activities.

These decreases were partly offset by $130.0 million of proceeds

from the issuance of convertible notes, $102.3 million of proceeds from the sale of financial instruments owned, at fair value, $48.4

million provided by operating activities and $1.5 million from receipt of contingent consideration.

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

Cash, cash equivalents and restricted cash decreased

by $10.8 million during the three months ended March 31, 2025 due to $12.7 million used to repurchase our common stock, $4.6 million used

to pay dividends, $1.9 million of excise tax paid on common stock repurchased and $0.6 million used to pay for software development.

decreases were partly offset by $6.4 million provided from operating activities, $0.4 million of proceeds from the sale of financial instruments

owned, at fair value and $2.2 million from other activities.

Cash, cash equivalents and restricted cash decreased

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

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

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

These decreases were partly offset by $5.2

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

Convertible Notes

We have the following convertible notes outstanding

as of September 30, 2024:

as of March 31, 2025:

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

1 unchanged sentence

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

institutional

extinguishment

approximately

(collectively,

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.

As of March 31, 2025, 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:

Principal outstanding

12 unchanged sentences

● 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.

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.

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

17 unchanged sentences

Notes to be converted.

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

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

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:

9 unchanged sentences

● 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

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

In certain circumstances, conversions in connection with a “make-whole

fundamental change” (as defined in the indentures) or conversions of Convertible Notes called (or deemed called) for redemption may

result in an increase to the conversion rate, provided that the conversion rate will not exceed 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.

approximately

Notwithstanding

requirements,

transactions.

approximately

then-outstanding

consideration

approximately

respectively,

consideration

approximately

interest-free

anniversaries

special-purpose

re-evaluation,

characteristics.

capitalization

Indefinite-lived

circumstances

Indefinite-lived

Liabilities ,

consolidation

distributions

substantially

transaction-based

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

We believe that current cash flows generated by our operating activities and existing cash balances should be sufficient for

us to fund our operations for the foreseeable future.

Our ability to satisfy our contractual obligations

as they arise are discussed in the section titled “Contractual Obligations” below.

Use of Capital

Our business does not require us to maintain

a significant cash position.

However, certain of our subsidiaries are required to maintain a minimum level of regulatory capital, which

at March 31, 2025 was approximately $35.6 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, 2028, including purchases to offset

future equity grants made under our equity plans and purchases made in open market or privately negotiated transactions.

During the three months ended March 31, 2025,

we repurchased 1,282,498 shares of our common stock under the repurchase program for an aggregate cost of $12.7 million.

Currently, approximately

$150.0 million remains under this program for future purchases.

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 “Convertible Notes”

above for additional information.

Payable to GBH

On November 20, 2023, we repurchased our Series

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

Under the terms of the transaction, we have

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 $0.6 million at March 31, 2025.

Cash flows generated by our operating activities and existing

cash balances should be sufficient to satisfy the future minimum lease payments.

See Note 10 to our Consolidated Financial Statements

for additional information.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing

or other arrangements and have neither created nor are party to any special-purpose or off-balance sheet entities for the purpose of raising

capital, incurring debt or operating our business.

Critical Accounting Policies and Estimates

Goodwill and Intangible Assets

Goodwill is the excess of the purchase price

over the fair values of the identifiable net assets at the acquisition date.

We test goodwill for impairment at least annually and at

the time of a triggering event requiring re-evaluation, if one were to occur.

Goodwill is considered impaired when the estimated fair

value of the reporting unit that was allocated the goodwill is less than its carrying value.

If the estimated fair value of such reporting

unit is less than its carrying value, goodwill impairment is recognized based on that difference, not to exceed the carrying amount of

A reporting unit is an operating segment or a component of an operating segment provided that the component constitutes a business

for which discrete financial information is available and management regularly reviews the operating results of that component.

Goodwill is allocated to our U.S.

For impairment testing purposes, these components are aggregated as a single reporting unit as they fall under the same operating

segment and have similar economic characteristics.

Goodwill is assessed for impairment annually

on November 30 th .

When performing our goodwill impairment test, we consider a qualitative assessment, when appropriate, and

the market approach and its market capitalization when determining the fair value of the reporting unit.

The results of our most recent

analysis indicated no impairment based upon a quantitative assessment.

Indefinite-lived intangible assets are tested

for impairment at least annually and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount of an asset may not be recoverable.

Indefinite-lived intangible assets are impaired if their estimated fair value is less than

their carrying value.

We may rely on a qualitative assessment when performing our intangible asset impairment test.

Otherwise, the impairment

evaluation is performed at the lowest level of reasonably identifiable cash flows independent of other assets.

The annual impairment testing

date for our intangible assets is November 30 th .

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

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

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

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.

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.

addition, income is recognized when dividends are received only to the extent they are distributed from net accumulated earnings of the

Otherwise, such distributions are considered returns of investment and are recorded as a reduction of the cost of the investment.

See Note 6 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.

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.

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

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.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis