What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-09 · 322 added, 177 removed, 512 unchanged (49% of the section changed)

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We are a global financial innovator, offering

a diverse suite of ETPs, models, solutions and products leveraging blockchain technology.

a diverse suite of ETPs, models, solutions, as well as digital asset-related products.

Our offerings empower investors to shape their

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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

Building on our heritage of innovation, we offer

next-generation digital products and services related to tokenized real world assets and stablecoins, including Digital Funds, as well

as our blockchain-native digital wallet, WisdomTree Prime, and institutional platform, WisdomTree Connect.

As of June 30, 2025, we managed approximately

$126.1 billion in AUM.

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on November 7, 2022.

Pending Acquisition of Ceres Partners, LLC (“Ceres”)

On July 31, 2025, we entered

into an Equity Purchase Agreement (the “Purchase Agreement”) with Ceres, pursuant to which we agreed to acquire all of the

issued and outstanding equity interests of Ceres (the “Ceres Acquisition”), a leading U.S.-based alternative asset manager

specializing in farmland investments.

The Ceres Acquisition is expected to close in the fourth quarter of 2025, subject to the satisfaction

or waiver of customary closing conditions, including, among others, obtaining regulatory approvals, required consents and financing.

Pursuant to the Purchase Agreement,

we will acquire Ceres for aggregate consideration consisting of (i) $275.0 million in cash payable at closing and subject to customary

post-closing adjustments, including adjustments to cash, indebtedness and working capital, and (ii) earnout consideration of up to $225.0

million, payable in 2030, contingent upon Ceres achieving a compound annual growth rate in revenue of 12% to 22% during the earnout measurement

period of January 1, 2025 through December 31, 2029.

For additional information about the Ceres Acquisition, see Note 21 to our Consolidated

Financial Statements.

Assets Under Management

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The chart below sets forth the asset mix of our ETPs

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

at June 30, 2025, March 31, 2025, and June 30, 2024:

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.

The second quarter of 2025 was dominated by

uncertainty over U.S.

trade tariffs.

However, equities made gains as the initially announced tariffs were later suspended and recession

fears receded.

In fixed income markets, the focus began to turn from interest rate cuts to worries over debt sustainability.

In commodities,

the S&P GSCI Index declined in the quarter and both the energy and agriculture components were weak.

Digital asset markets were shaped by major regulatory

and institutional developments amid macroeconomic uncertainty.

Both Bitcoin and Ethereum returned more than 30% during the quarter.

Senate passed the GENIUS Act, providing long-awaited clarity for stablecoin regulation.

Stablecoins are now being implemented by some of the largest financial institutions, fintech firms and crypto

native issuers globally.

During the quarter, the S&P 500, the MSCI

EAFE Index (local currency), the MSCI EMU Index (local currency), the MSCI Japan Index (local currency), the MSCI Emerging Markets Index

dollar) and gold prices increased by 10.9%, 5.1%, 5.5% 7.6%, 12.2% and 5.5%, respectively.

dollar weakened 8.2%, 6.0% and

3.7%, respectively, versus the euro, British pound and Japanese yen during the quarter.

Listed ETF Industry Flows

listed ETF industry net flows were $241.5

billion for the three months ended March 31, 2025.

billion for the three months ended June 30, 2025.

equity and fixed income gathered the majority of those flows.

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European listed ETP industry net flows were

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

$54.9 billion for the three months ended June 30, 2025.

Equity and fixed income gathered the majority of those flows.

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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.

listed ETFs, increased from $80.5 billion at March 31, 2025 to $85.2 billion at June 30, 2025 due to market appreciation and net

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.

cross-listed) ETPs, or European listed ETPs, increased from $35.1 billion at March 31, 2025 to $40.5 billion at June 30, 2025 due to market

appreciation and net inflows.

Consolidated Operating Results

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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.

● Revenues – Total revenues increased 5.2% from the three months ended June 30, 2024 to $112.6 million in the comparable

period in 2025 due to higher average AUM, partly offset by a lower average advisory fee.

● Expenses – Total operating expenses increased 6.1% from the three months ended June 30, 2024 to $78.0 million in the

comparable period in 2025 primarily due to acquisition-related costs and higher compensation expense arising from increased headcount,

as well as higher third-party distribution fees and fund management and administration expenses.

These increases were partly offset by

lower professional fees.

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

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Further information is provided herein.

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

● Net income – We reported net income of $24.8 million and $21.8 million during the three months ended June 30, 2025 and

2024, respectively.

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

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).

During the six months ended June 30, 2025,

our discretionary spending was $34.2 million, exclusive of acquisition-related costs incurred to date.

We currently estimate our discretionary

spending (exclusive of acquisition-related costs) 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 estimate the impact of foreign exchange rates to adversely impact our forecasted expenses

by approximately $3.0 million if British pound and euro foreign exchange rates at June 30, 2025 were to remain constant during the remainder

This is offset by incremental revenues earned on foreign denominated revenues such that the overall impact of foreign exchange

rates to our overall net operating results is immaterial.

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 80.8% 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.

Our gross margin was 81.0% during the six months ended June 30, 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).

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.

expense to be approximately $14.0 million to $15.0 million (previously $11.0 million to $12.0 million) for the year ending December 31,

2025, due to strong organic growth and AUM expansion across our distribution platforms.

Interest Expense

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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

the year ending December 31, 2025 to be $8.0 million (unchanged from the guidance range provided last quarter), based upon the magnitude

of our forecasted interest-earning assets.

Income Tax Expense

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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.

shares to be between 147.0 million and 148.0 million (previously 147.0 million and 149.0 million) during the year ending December 31,

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

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Three Months Ended

GLOBAL PRODUCTS ($ in millions )

Six Months Ended

GLOBAL ETPs (in millions )

Beginning of period assets

Digital Assets—Jan.

Inflows/(outflows)

Market appreciation/(depreciation)

Market appreciation

End of period assets

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Number of products—end of the period

Three Months Ended

LISTED ETFs (in millions )

Beginning of period assets

Inflows/(outflows)

Market (depreciation)/appreciation

Market appreciation/(depreciation)

End of period assets

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Inflows/(outflows)

Market appreciation/(depreciation)

Market appreciation

End of period assets

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Digital Assets—Jan.

Market depreciation

Market appreciation/(depreciation)

End of period assets

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Digital Assets—Jan.

Market (depreciation)/appreciation

Market appreciation/(depreciation)

End of period assets

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Digital Assets—Jan.

Market appreciation/(depreciation)

Market appreciation

End of period assets

Average assets during the period

Three Months Ended

Six Months Ended

Beginning of period assets

Digital Assets—Jan.

Inflows/(outflows)

Market appreciation/(depreciation)

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Average assets during the period

Three Months Ended

International Developed Market Equity

Beginning of period assets

Market appreciation/(depreciation)

Market appreciation

End of period assets

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Beginning of period assets

(Outflows)/inflows

Market (depreciation)/appreciation

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

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Inflows/(outflows)

Market appreciation/(depreciation)

Market appreciation

End of period assets

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Digital Assets—Jan.

(Outflows)/inflows

Market (depreciation)/appreciation

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

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Beginning of period assets

Market (depreciation)/appreciation

Market appreciation/(depreciation)

End of period assets

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 March 31, 2025 Compared to Three Months Ended

March 31, 2024

_____________________________

(1) Includes 17 digital assets products, which were

launched prior to January 1, 2025.

Three Months Ended June 30, 2025 Compared to Three Months Ended

June 30, 2024

Selected Operating and Financial Information

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Advisory fee revenues increased 4.3% from $98.9

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.

million during the three months ended June 30, 2024 to $103.2 million in the comparable period in 2025 due to higher average AUM, partly

offset by a lower average advisory fee.

Our average advisory fee was 0.37% during the three months ended June 30, 2024 and 0.35% during

the three months ended June 30, 2025.

Other revenues

Other revenues increased 15.9% from $8.1 million

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

during the three months ended June 30, 2024 to $9.4 million in the comparable period in 2025 due to higher other revenues attributable

to our European listed ETPs.

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Third-party distribution fees

Acquisition-related costs

Total operating expenses

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Third-party distribution fees

Acquisition-related costs

Total operating expenses

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Compensation and benefits expense increased

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.

6.6% from $30.8 million during the three months ended June 30, 2024 to $32.8 million in the comparable period in 2025 due to increased

Headcount was 304 and 321 at June 30, 2024 and 2025, respectively.

Fund management and administration

Fund management and administration expense increased

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

5.5% from $20.1 million during the three months ended June 30, 2024 to $21.3 million in the comparable period in 2025 primarily due to

higher average AUM.

We had 78 U.S.

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

listed ETFs and 272 European listed ETPs at June 30, 2024 compared to 81 U.S.

listed ETFs, 285 European

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

listed ETPs and 17 digital assets products at June 30, 2025.

Marketing and advertising

Marketing and advertising expense increased

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.

4.3% from $5.1 million during the three months ended June 30, 2024 to $5.3 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 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.

16.3% from $3.6 million during the three months ended June 30, 2024 to $4.2 million in the comparable period in 2025 primarily due to

increases in travel and events spending.

Professional fees

Professional fees expense decreased 51.8% 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”).

$6.6 million during the three months ended June 30, 2024 to $3.2 million in the comparable period in 2025 as the prior period included

expenses incurred in response to an activist campaign and in connection with a settlement with the SEC regarding certain statements about the ESG screening process for three ETFs advised by WisdomTree Asset Management, Inc.

ESG Settlement”).

Occupancy, communications and equipment

Occupancy, communications and equipment expense

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

increased 18.6% from $1.3 million during the three months ended June 30, 2024 to $1.6 million in the comparable period in 2025 primarily

due to higher internet and communications expenses.

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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

38.8% from $0.4 million during the three months ended June 30, 2024 to $0.6 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.

Third-party distribution fees increased 52.0%

from $2.7 million during the three months ended June 30, 2024 to $4.1 million in the comparable period in 2025 due to our strong organic

growth and AUM expansion across our distribution platforms.

Acquisition-related Costs

During the three months ended June 30, 2025,

we recorded $2.0 million of acquisition-related costs, comprised of professional fees related to the Ceres Acquisition.

Other expenses were essentially unchanged from

the three months ended March 31, 2024.

the three months ended June 30, 2024.

Other Income/(Expenses)

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Interest income

Other losses and gains, net

Other gains and losses, net

Total other expenses, net

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Interest income

Other losses and gains, net

Other gains and losses, net

Total other expenses, net

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Interest expense increased 32.6% from $4.1 million

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,

during the three months ended June 30, 2024 to $5.5 million in the comparable period in 2025 due to a higher level of debt outstanding,

partly offset by a lower average interest rate.

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

Our effective interest rate during the three months ended June 30, 2024 and 2025 was 5.0%

and 3.9%, respectively.

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Interest income increased 45.3% from $1.4 million

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

during the three months ended June 30, 2024 to $2.1 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.

Other gains and losses, net

Other gains and losses, net were ($1.3) million

and $0.6 million during the three months ended June 30, 2024 and 2025, respectively.

The three months ended June 30, 2025 includes net

gains of $1.3 million on our financial instruments owned and net gains of $0.6 million on our investments.

These items were partly offset

by $1.4 million of foreign currency remeasurement losses on U.S.

dollars held by foreign subsidiaries.

Gains and losses also generally

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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.

months ended June 30, 2025 was 22.3%, resulting in income tax expense of $7.1 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.

statutory rate of 21.0% primarily due to state and local income taxes, partly offset by a lower tax rate on foreign earnings.

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.

months ended June 30, 2024 was 26.3%, resulting in income tax expense of $7.8 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.

statutory rate of 21.0% primarily due to non-deductible executive compensation, an increase in the deferred tax asset valuation allowance

on losses recognized on our investments and state and local income taxes.

These items were partly offset by a lower tax rate on foreign

Six Months Ended June 30, 2025 Compared to Six Months Ended June

Selected Operating and Financial Information

Six Months Ended

AUM (in millions)

Operating Revenues (in thousands)

Advisory fees

Other revenues

Total revenues

Operating Revenues

Advisory fees

Advisory fee revenues increased 5.9% from $191.4

million during the six months ended June 30, 2024 to $202.8 million in the comparable period in 2025 primarily due to higher average AUM,

partly offset by a lower average advisory fee.

Our average advisory fee was 0.37% during the six months ended June 30, 2024 and 0.35%

during the comparable period in 2025.

Other revenues

Other revenues increased 44.1% from $12.4 million

during the six months ended June 30, 2024 to $17.9 million in the comparable period in 2025 due to higher other revenues attributable

to our European listed products.

Operating Expenses

Six Months Ended

(in thousands)

Compensation and benefits

Fund management and administration

Marketing and advertising

Sales and business development

Professional fees

Occupancy, communications and equipment

Depreciation and amortization

Third-party distribution fees

Acquisition-related costs

Total operating expenses

Six Months Ended

As a Percent of Revenues:

Compensation and benefits

Fund management and administration

Marketing and advertising

Sales and business development

Professional fees

Occupancy, communications and equipment

Depreciation and amortization

Third-party distribution fees

Acquisition-related costs

Total operating expenses

Compensation and benefits

Compensation and benefits expense increased

7.7% from $61.8 million during the six months ended June 30, 2024 to $66.6 million in the comparable period in 2025 due to higher stock-based

compensation expense and increased headcount.

Fund management and administration

Fund management and administration expense increased

4.7% from $40.1 million during the six months ended June 30, 2024 to $42.0 million in the comparable period in 2025 primarily due to higher

Marketing and advertising

Marketing and advertising expense increased

6.6% from $9.5 million during the six months ended June 30, 2024 to $10.1 million in the comparable period in 2025 primarily due to higher

spending related to our U.S.

listed products.

Sales and business development

Sales and business development expense increased

15.4% from $7.3 million during the six months ended June 30, 2024 to $8.4 million in the comparable period in 2025 primarily due to increases

in travel and events spending.

Professional fees

Professional fees decreased 41.7% from $10.2 million

during the six months ended June 30, 2024 to $6.0 million in the comparable period in 2025 primarily as the prior period included expenses

incurred in response to an activist campaign and in connection with the SEC ESG Settlement.

Occupancy, communications and equipment

Occupancy, communications and equipment expense

increased 20.5% from $2.5 million during the three months ended June 30, 2024 to $3.0 million in the comparable period in 2025 primarily

due to higher internet and communications expenses.

Depreciation and amortization

Depreciation and amortization expense increased

39.8% from $0.8 million during the six months ended June 30, 2024 to $1.1 million in the comparable period in 2025 due to amortization

of software development costs.

Third-party distribution fees

Third-party distribution fees increased 44.1%

from $5.0 million during the six months ended June 30, 2024 to $7.2 million in the comparable period in 2025 due to our strong organic

growth and AUM expansion across our distribution platforms.

Acquisition-related Costs

During the six months ended June 30, 2025, we

recorded $2.0 million of acquisition-related costs, comprised of professional fees related to the Ceres

Other expenses were essentially unchanged from

the six months ended June 30, 2024.

Other Income/(Expenses)

Six Months Ended

(in thousands)

Interest expense

Interest income

Other gains, net

Total other expenses, net

Six Months Ended June 30,

As a Percent of Revenues:

Interest expense

Interest income

Other gains, net

Total other expenses, net

Interest expense

Interest expense increased 32.2% from $8.3 million

during the six months ended June 30, 2024 to $10.9 million in the comparable period in 2025 due to a higher level of debt outstanding,

partly offset by a lower average interest rate.

Our effective interest rate during the six months ended June 30, 2024 and 2025 was 5.0%

and 3.9%, respectively.

Interest income

Interest income increased 40.6% from $2.8 million

during the six months ended June 30, 2024 to $4.0 million in the comparable period in 2025 due to a higher level of interest-earning assets.

Other gains, net

Other gains, net were $1.3 million and $0.4

million during the six months ended June 30, 2024 and 2025, respectively.

This period includes net gains on our investments of $0.9 million,

net gains on our financial instruments owned of $0.8 million and $2.4 million of foreign currency remeasurement losses on U.S.

held by foreign subsidiaries.

Gains and losses also generally arise from the sale of gold earned on management fees paid by our physically-backed

gold ETPs, foreign exchange fluctuations and other miscellaneous items.

Our effective income tax rate for the six months

ended June 30, 2025 was 20.6%, resulting in an income tax expense of $12.8 million.

Our tax rate differs from the federal statutory rate

of 21.0% primarily due 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.

Our effective income tax rate for the six months

ended June 30, 2024 was 23.5%, resulting in an income tax expense of $13.5 million.

Our tax rate differs from the federal statutory rate

of 21% primarily due to non-deductible executive compensation and state and local income taxes.

These items were partly offset by a lower

tax rate on foreign earnings and tax windfalls associated with the vesting of stock-based compensation awards.

Non-GAAP Financial Measurements

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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:

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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.

our non-GAAP financial measurements as the gains and losses introduce earnings volatility and are not core to our operating business.

● Foreign currency remeasurement gains and losses on U.S.

dollars held by foreign subsidiaries:

GAAP requires account balances

to be remeasured into an entity’s functional currency, with resulting gains and losses reported in net income.

Foreign subsidiaries

dollars remeasure these balances into their functional currencies and recognize the gains and losses.

Beginning in the second

quarter of 2025, we began excluding these remeasurement effects from our non-GAAP financial measures, as they introduce earnings volatility,

are not core to our operations and arise from balances denominated in our reporting currency.

● Tax windfalls and shortfalls upon vesting of stock-based compensation awards:

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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.

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

● Imputed interest on our payable to GBH:

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● Other items:

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

Acquisition-related costs, 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 and expenses

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

We also offset revenues

and related expenses pertaining to legal and other related expenses covered by insurance as the gross presentation required under U.S.

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

Three Months Ended

Six Months Ended

Adjusted Net Income and Diluted Earnings per Share:

Net income, as reported

Tax windfalls upon vesting of stock-based compensation awards

Acquisition-related costs, net of income taxes

Foreign currency remeasurement losses on U.S.

dollar balances, net of income taxes

(Deduct)/add back:

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

(Deduct)/add back:

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

(Deduct)/add back:

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

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

Tax windfalls upon vesting of stock-based compensation awards

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

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

Balance Sheet Data (in

Balance Sheet Data (in thousands):

Cash, cash equivalents and restricted cash

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Available liquidity

Three Months Ended March 31,

Six Months Ended June 30,

Cash Flow Data (in thousands):

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Foreign exchange rate effect

Decrease in cash, cash equivalents and restricted cash

Increase in cash, cash equivalents and restricted cash

We consider our available liquidity to be our

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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.

Cash, cash equivalents and restricted cash increased

by $12.5 million during the six months ended June 30, 2025 due to $45.2 million provided from operating activities, $7.5 million increase

in cash flow due to changes in foreign exchange rates and $4.5 million of proceeds from the sale of financial instruments owned, at fair

These increases were partly offset by $15.8 million used to purchase financial instruments owned, at fair value, $12.7 million

used to repurchase our common stock, $8.9 million used to pay dividends, $4.0 million used to purchase investments, $1.9 million of excise

tax paid on common stock repurchased, $1.3 million used to pay for software development and $0.1 million from other activities.

Cash, cash equivalents and restricted cash increased

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

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

and $0.7 million used for other activities.

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

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

in Securrency, Inc.

Convertible Notes

We have the following convertible notes outstanding

as of March 31, 2025:

as of June 30, 2025:

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

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to Rule 144A under the Securities Act of 1933, as amended.

As of March 31, 2025, we had an aggregate principal

As of June 30, 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”).

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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.

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:

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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.

at June 30, 2025 was approximately $37.4 million in the aggregate.

Notwithstanding these regulatory capital requirements, we expect that

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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.

During the six months ended June 30, 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

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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.

to our operating lease liabilities were $2.1 million at June 30, 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

Off-Balance Sheet Arrangements

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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