Consolidated Operating Highlights ($, in billions):

AUM

Assets acquired

Net inflows/(outflows)

Average AUM

Average advisory fee

Consolidated Financial Highlights ($, in millions, except per share amounts):

Operating revenues

Net income

Diluted earnings per share

Operating income margin

Non-GAAP¹:

Net income, as adjusted

Diluted earnings per share, as adjusted

Operating income margin, as adjusted

In August 2018, Ally Invest announced the addition of commission-free ETFs to its online trading platform, including WisdomTree’s full range of ETFs.

In September 2018, the Company announced that the WisdomTree Digital Portfolio Developer (DPD) won the 2018 WealthManagement.com Industry Award for “Thought Leadership Initiative” of the Year; and TCA by E*Trade announced the expansion of its ETF trading platform to include WisdomTree ETFs.

In October 2018, the Company announced it collaborated with PIMCO on three ETF Model Portfolios in which PIMCO’s fixed income ETFs will be added; and AdvisorEngine announced that the Company’s Digital Portfolio Developer is now available as a free add-on for Junxure, AdvisorEngine’s wholly-owned subsidiary.

In August 2018, the Company announced the launch of the WisdomTree 90/60 U.S. Balanced Fund (NTSX); and the Company announced the launch of two transparent actively managed multifactor funds – the WisdomTree Emerging Markets Multifactor Fund (EMMF) and the WisdomTree International Multifactor Fund (DWMF).

In October 2018, the Company announced the restructuring of the WisdomTree Emerging Markets Consumer Growth Fund (EMCG) and the WisdomTree Emerging Markets Quality Dividend Growth Fund (DGRE) from index-based to transparent active funds.

In August 2018, the Company announced the launch of three new currency hedged share classes for the WisdomTree AT1 CoCo Bond UCITS ETF. Investors can now access USD and GBP hedged options on the London Stock Exchange and EUR hedged options on the Borsa Italiana and the Deutsche Börse Xetra; and the Company announced the launch of two new currency hedged share classes of the WisdomTree Enhanced Commodity UCITS ETF, making EUR hedged options available on the Borsa Italiana and Deutsche Börse Xetra, and GBP hedged options available on the London Stock Exchange.

In October 2018, following the acquisition of ETF Securities in April, the Company successfully completed the migration of all content relating to legacy-ETFS products to the WisdomTree website.

In August 2018, the Company announced the launch of the WisdomTree Japan Equity Index ETF – hedged (JAPN) and non-hedged (JAPN.B) – and the WisdomTree ICBCCS S&P China 500 Index ETF – non-hedged (CHNA.B) – on the Toronto Stock Exchange.

In October 2018, the Company announced the launch of the ONE North American Core Plus Bond ETF (ONEB) on the Toronto Stock Exchange.

Compensation and benefits expense decreased 10.0% from the third quarter of 2017 to $17.5 million due to lower incentive compensation within our U.S. Business segment, partly offset by higher compensation of our International Business segment due to the ETFS Acquisition. These expenses decreased 9.1% from the second quarter of 2018 primarily due to lower incentive compensation within our U.S. Business segment. Headcount of our U.S. Business segment was 151, 155 and 165 and our International Business segment was 76, 76 and 43 at September 30, 2018, June 30, 2018 and September 30, 2017, respectively.

Fund management and administration expense increased 40.8% from the third quarter of 2017 to $15.3 million due to higher average AUM of our International Business segment primarily associated with the ETFS Acquisition. These expenses increased 4.6% from the second quarter of 2018 primarily due to the recognition of a full quarter of expense from the ETFS Acquisition which was completed on April, 11, 2018. We had 84 U.S. listed ETFs and 451 International listed ETPs at the end of the quarter.

Marketing and advertising expense was essentially unchanged from the third quarter of 2017. These expenses decreased 14.3% from the second quarter of 2018 to $3.2 million due to lower levels of spending in our U.S. Business segment, as previously disclosed.

Sales and business development expense was essentially unchanged from the third quarter of 2017. These expenses decreased 15.6% from the second quarter of 2018 to $3.8 million primarily due to lower spending on sales related activities in our U.S. Business segment, as previously disclosed.

Contractual gold payments expense was $2.9 million during the third quarter of 2018, which was associated with the payment of 2,375 ounces of gold at an average daily spot price of $1,213 per ounce. For the period April 11 through June 30, 2018, we recognized $2.7 million of contractual gold payments expense associated with the payment of 2,085 ounces of gold at an average daily spot price of $1,302 per ounce.

Professional and consulting fees increased 86.9% and 24.0% from the third quarter of 2017 and second quarter of 2018, respectively, to $1.9 million due to higher professional and corporate consulting-related expenses in our U.S. Business segment.

Occupancy, communications and equipment expense increased 25.0% from the third quarter of 2017 to $1.7 million due to office space associated with the ETFS Acquisition, as well as higher real estate taxes. These expenses increased 9.4% from the second quarter of 2018 due to higher real estate taxes.

Third-party distribution fees increased 98.2% from the third quarter of 2017 to $1.4 million primarily due to a new distribution relationship announced in the fourth quarter of 2017. These expenses decreased 15.5% from the second quarter of 2018 primarily due to lower fees paid to our third-party marketing agent in Latin America.

Acquisition-related costs decreased 94.2% from the second quarter of 2018 to $0.5 million and primarily included costs associated with the integration of ETFS. Costs incurred in the prior quarter included professional advisor fees payable upon completion of the ETFS Acquisition, a write-off of our office lease and compensation and other integration costs.

Other expenses increased 31.9% from the third quarter of 2017 to $2.3 million primarily due to higher International Business segment office expenses associated with an increase in headcount from the ETFS Acquisition. These expenses were essentially unchanged from the second quarter of 2018.

Interest expense increased 16.6% from the second quarter of 2018 to $2.7 million primarily due to the recognition of a full quarter of expense as borrowing under our term loan commenced on April 11, 2018.

We recognized a gain on revaluation of deferred consideration of $7.7 million during the third quarter of 2018 as compared to a gain of $9.9 million recognized in the second quarter of 2018. The gain arose in the current quarter as the price of gold decreased when compared to the price on June 30, 2018, the date on which the deferred consideration was last measured. The magnitude of any gain or loss recognized is highly correlated to the magnitude of the change in the price of gold.

Interest income was essentially unchanged from the third quarter of 2017. This item increased 17.5% from the second quarter of 2018 to $0.7 million due to higher paid-in-kind (“PIK”) interest on a note receivable from AdvisorEngine Inc.

Other net gains of $0.1 million recognized in the third quarter of 2018 arose from the recognition of an insurance claim reimbursement, partly offset by miscellaneous foreign exchange losses. We reported other net losses of $0.5 million in the third quarter of 2017 which were primarily associated with our short-term investment grade bond portfolio and miscellaneous foreign exchange losses. Other net losses of $0.5 million reported in the second quarter of 2018 were primarily due to the sale of gold earned from management fees paid by physically-backed gold ETPs, as well as miscellaneous foreign exchange losses.

anticipated trends, conditions and investor sentiment in the global markets and ETPs;

anticipated levels of inflows into and outflows out of our ETPs;

our ability to deliver favorable rates of return to investors;

our ability to develop new products and services;

our ability to maintain current vendors or find new vendors to provide services to us at favorable costs;

our ability to successfully expand our business into non-U.S. markets;

competition in our business; and

the effect of laws and regulations that apply to our business.

Net outflows in our two largest ETFs – the WisdomTree Europe Hedged Equity Fund and the WisdomTree Japan Hedged Equity Fund – have had, and in the future could continue to have, a negative impact on our revenues.

Over the last few years, we have expanded our business globally. This expansion subjects us to increased operational, regulatory, financial and other risks.

The ETFS Acquisition was significant in size relative to our assets and operations and has resulted in significant changes in our business. Our failure to integrate and manage ETFS successfully could materially and adversely affect our business, results of operations and financial condition.

Declining prices of securities, precious metals and other commodities can adversely affect our business by reducing the market value of the assets we manage or causing customers to sell their fund shares and trigger redemptions.

Fluctuations in the amount and mix of our AUM, whether caused by disruptions in the financial markets or otherwise, may negatively impact revenues and operating margins, and may impede our ability to refinance our debt upon maturity, increase the cost of borrowing or result in our debt being called prior to maturity.

We derive a substantial portion of our revenues from a limited number of products, and as a result, our operating results are particularly exposed to the performance of these products and our ability to maintain the AUM of these products, as well as investor sentiment toward investing in the funds’ strategies and market-specific and political and economic risk.

Much of our AUM is held in our U.S. listed ETFs that invest in foreign securities and we therefore have substantial exposure to foreign market conditions and are subject to foreign currency exchange rate risks.

Many of our ETPs and ETFs have a limited track record, and poor investment performance could cause our revenues to decline.

We depend on third parties to provide many critical services to operate our business and our ETPs and ETFs. The failure of key vendors to adequately provide such services could materially affect our operating business and harm our customers.

See “Non-GAAP Financial Measurements.”

Gross margin is now calculated as total operating revenues, less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues. See “Non-GAAP Financial Measurements” below for additional information. Amounts previously reported as gross margin for the U.S. Business segment have been restated to conform with our current presentation.

Operating Revenues:

Advisory fees

Other income

Total revenues

Operating Expenses:

Compensation and benefits

Fund management and administration

Marketing and advertising

Sales and business development

Contractual gold payments

Professional and consulting fees

Occupancy, communications and equipment

Depreciation and amortization

Third-party distribution fees

Acquisition-related costs

Other

Total expenses

Operating income

Other Income/(Expenses):

Interest expense

Gain on revaluation of deferred consideration – gold payments

Interest income

Settlement gain

Other gains and losses, net

Income before taxes

Income tax expense

Net income

Net income per share – basic

Net income per share – diluted

Weighted average common shares – basic

Weighted average common shares – diluted

Operating Revenues:

Advisory fees

Other income

Total revenues

Operating Expenses:

Compensation and benefits

Fund management and administration

Marketing and advertising

Sales and business development

Professional and consulting fees

Occupancy, communications and equipment

Depreciation and amortization

Third-party distribution fees

Acquisition-related costs

Other

Total expenses

Operating income

Other Income/(Expenses):

Interest expense

Interest income

Settlement gain

Other gains and losses, net

Income before taxes

Operating income margin

Operating Revenues:

Advisory fees

Other income

Total revenues

Operating Expenses:

Compensation and benefits

Fund management and administration

Marketing and advertising

Sales and business development

Contractual gold payments

Professional and consulting fees

Occupancy, communications and equipment

Depreciation and amortization

Third-party distribution fees

Acquisition-related costs

Other

Total expenses

Operating income/(loss)

Other Income/(Expenses):

Interest expense

Gain on revaluation of deferred consideration – gold payments

Other gains and losses, net

Income/(loss) before taxes

Operating income margin

ASSETS

Current assets:

Cash and cash equivalents

Securities owned, at fair value

Securities held-to-maturity

Accounts receivable

Income taxes receivable

Prepaid expenses

Other current assets

Total current assets

Fixed assets, net

Note receivable

Securities held-to-maturity

Deferred tax assets, net

Investments, carried at cost

Goodwill

Intangible assets

Other noncurrent assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Current liabilities:

Fund management and administration payable

Compensation and benefits payable

Deferred consideration – gold payments

Income taxes payable

Securities sold, but not yet purchased, at fair value

Accounts payable and other liabilities

Total current liabilities

Long-term debt

Deferred consideration – gold payments

Deferred rent payable

Total liabilities

Preferred stock – Series A Non-Voting Convertible, par value $0.01; 14.750 shares authorized, issued and outstanding

STOCKHOLDERS’ EQUITY

Common stock, par value $0.01; 250,000 shares authorized:

Issued and outstanding: 153,083 and 136,996 at September 30, 2018 and December 31, 2017, respectively

Additional paid-in capital

Accumulated other comprehensive income

Retained earnings/(Accumulated deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

Cash flows from operating activities:

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Advisory fees paid in gold and other precious metals

Contractual gold payments

Gain on revaluation of deferred consideration – gold payments

Stock-based compensation

Deferred income taxes

Paid-in-kind interest income

Settlement gain

Amortization of credit facility issuance costs

Depreciation and amortization

Other

Changes in operating assets and liabilities, net of the effects of the ETFS Acquisition:

Securities owned, at fair value

Accounts receivable

Income taxes receivable/payable

Prepaid expenses

Gold and other precious metals

Other assets

Acquisition payable

Fund management and administration payable

Compensation and benefits payable

Securities sold, but not yet purchased, at fair value

Accounts payable and other liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Purchase of fixed assets

Purchase of securities held-to-maturity

Purchase of debt securities available-for-sale

Purchase of investments

Funding of AdvisorEngine note receivable

Proceeds from held-to-maturity securities maturing or called prior to maturity

Proceeds from sales and maturities of debt securities available-for-sale

Cash paid – ETFS Acquisition, net of cash acquired

Net cash used in investing activities

Cash flows from financing activities:

Dividends paid

Shares repurchased

Credit facility issuance costs

Preferred stock issuance costs

Proceeds from the issuance of long-term debt

Proceeds from exercise of stock options

Net cash provided by/(used in) financing activities

(Decrease)/increase in cash flows due to changes in foreign exchange rate

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents – beginning of period

Cash and cash equivalents – end of period

Supplemental disclosure of cash flow information:

Cash paid for taxes

Cash paid for interest

U.S. LISTED ETFs (in millions)

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

Average assets during the period

Average ETF advisory fee during the period

Revenue days

Number of ETFs – end of the period

INTERNATIONAL LISTED ETPs (in millions)

Beginning of period assets

Assets acquired

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

Average assets during the period

Average ETP advisory fee during the period

Revenue days

Number of ETPs – end of the period

PRODUCT CATEGORIES (in millions)

International Developed Market Equity

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

Average assets during the period

Commodity & Currency

Beginning of period assets

Assets acquired

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

Average assets during the period

U.S. Equity

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

Average assets during the period

Emerging Market Equity

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets