Consolidated Operating Highlights ($, in billions):

AUM

Net inflows/(outflows)

Average AUM

Average advisory fee

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

Operating revenues

Net income/(loss)

Diluted earnings/(loss) per share

Operating income margin

Non-GAAP¹:

Net income, as adjusted

Diluted earnings per share, as adjusted

Operating income margin, as adjusted

In April 2019, we announced winning two 2019 ETF.com Awards: Index of the Year – The WisdomTree U.S. Multifactor Index and Best New Asset Allocation ETF – The WisdomTree 90/60 U.S. Balanced Fund (NTSX); we cross-listed five UCITS ETFs on the Bolsa de Valores de Lima (BVL) in Peru; we announced winning two 2019 Mutual Fund Industry & ETF Awards: ETF of the Year – The WisdomTree Floating Rate Treasury Fund (USFR) and ESG/Impact ETF of the Year – The WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (XSOE); and we announced that Susan Cosgrove was appointed to our Board of Directors.

In February 2019, we announced the addition of 44 WisdomTree ETFs to Schwab ETF OneSource^TM, one of the largest commission-free ETF programs in the industry; and we announced the closing and liquidation of eight WisdomTree ETFs.

In March 2019, we announced the implementation of changes for the WisdomTree Dynamic Currency Hedged Europe Equity Fund (DDEZ) to the WisdomTree Europe Multifactor Fund (EUMF) and the WisdomTree Dynamic Currency Hedged Japan Equity Fund (DDJP) to the WisdomTree Japan Multifactor Fund (JAMF), transitioning to transparent, actively managed multifactor strategies.

In April 2019, we announced the launch of the WisdomTree India ex-State-Owned Enterprises Fund (IXSE) on the NYSE Arca.

In February 2019, we announced the launch of two enhanced exchange-traded commodities products: the Boost Enhanced Industrial Metals ETC and the Boost Enhanced Energy ETC, both listed on the London Stock Exchange, the Deutsche Börse Xetra and the Borsa Italiana.

In March 2019, we launched our Investor Solutions program and Digital Portfolio Developer (DPD) in Europe. Building on the success of the Advisor Solutions program in the U.S., the program aims to help investment managers to engage more effectively with clients and prospects, and modernize portfolios to meet evolving investor needs; and we launched the WisdomTree USD Floating Rate Treasury Bond UCITS ETF (USFR) on the London Stock Exchange, making U.S. floating rates notes available to European investors in an ETF for the first time.

In April 2019, we cross listed seven ETFs on the Swiss Stock Exchange, bringing the total to 16 WisdomTree strategies now listed on SIX Swiss Exchange.

Compensation and benefits expense increased 13.1% from the first quarter of 2018 to $21.3 million due to higher compensation expense of our International Business segment associated with the ETFS Acquisition and severance expense of $2.0 million, partly offset by lower headcount costs. These expenses also increased 13.1% from the fourth quarter of 2018 primarily due to higher incentive compensation and seasonally higher payroll taxes associated with bonus payments made in the first quarter of 2019. Headcount of our U.S. Business segment was 141, 153 and 157 and our International Business segment was 75, 75 and 34 at March 31, 2019, December 31, 2018 and March 31, 2018, respectively.

Fund management and administration expense increased 39.0% from the first quarter of 2018 to $15.2 million due to higher average AUM of our International Business segment primarily associated with the ETFS Acquisition. These expenses decreased 4.4% from the fourth quarter of 2018 primarily due to lower average AUM of our U.S. Business segment, two fewer revenue days in the current quarter and seasonally higher costs in the prior quarter. We had 77 U.S. listed ETFs and 457 International listed ETPs at the end of the quarter.

Marketing and advertising expense decreased 16.1% and 27.0% from the first quarter of 2018 and fourth quarter of 2018, respectively, to $2.7 million. The decrease from the first quarter of 2018 was primarily due to lower spending of our U.S. Business segment. Spending was reduced globally as compared to the fourth quarter of 2018.

Sales and business development expense increased 16.0% from the first quarter of 2018 to $4.4 million due to sales related activities of the ETFS acquired business. These expenses decreased 12.2% from the fourth quarter of 2018 due to lower spending on sales related activities globally.

Contractual gold payments expense increased 6.2% from the fourth quarter of 2018 to $3.1 million. This expense was associated with the payment of 2,375 ounces of gold and was calculated using an average daily spot price of $1,304 and $1,229 per ounce, during the first quarter of 2019 and fourth quarter of 2018, respectively.

Professional and consulting fees decreased 9.4% and 48.1% from the first quarter of 2018 and fourth quarter of 2018, respectively, to $1.5 million due to lower spending on corporate consulting-related expenses.

Occupancy, communications and equipment expense increased 18.7% from the first quarter of 2018 to $1.6 million due to additional office space associated with the ETFS Acquisition. These expenses were essentially unchanged from the fourth quarter of 2018.

Depreciation expense decreased 24.2% and 11.2% from the first quarter of 2018 and fourth quarter of 2018, respectively, to $0.3 million primarily due to the closure of our office in Japan.

Third-party distribution fees increased 39.1% and 32.4% from the first quarter of 2018 and fourth quarter of 2018, respectively, to $2.4 million primarily due to one-time fees for a platform relationship.

Acquisition-related costs decreased 84.8% and 68.9% from the first quarter of 2018 and fourth quarter of 2018, respectively, to $0.3 million as the integration of ETFS is essentially complete.

Other expenses increased 14.7% from the first quarter of 2018 to $2.1 million primarily due to higher International Business segment office expenses associated with an increase in headcount from the ETFS Acquisition. These expenses decreased 6.8% from the fourth quarter of 2018 due to lower levels of miscellaneous spending.

Interest expense of $2.9 million was essentially unchanged from the fourth quarter of 2018.

We recognized a gain on revaluation of deferred consideration of $4.4 million and a loss of ($5.4) million during the first quarter of 2019 and fourth quarter of 2018, respectively. The gain arose in the current quarter as the forward-looking gold curve flattened when compared to the forward-looking gold curve on December 31, 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 forward-looking price of gold.

Interest income decreased 19.0% from the first quarter of 2018 to $0.8 million due to the maturity of our short-term investment grade portfolio in the first quarter of 2018, partly offset by paid-in-kind (“PIK”) interest on a note receivable from AdvisorEngine Inc. Interest income was essentially unchanged from the fourth quarter of 2018.

We recognized an impairment of $0.6 million during the first quarter of 2019 in connection with the termination of our Japan office lease.

Other gains/(losses), net were ($4.6) million, ($0.3) million and $0.4 million during the first quarter of 2019, first quarter of 2018 and fourth quarter of 2018, respectively. Included in the first quarter of 2019 is a charge of $4.3 million arising from a release of a tax-related indemnification asset upon the expiration of the statute of limitations. The indemnification arose from tax exposures assumed in the ETFS Acquisition. An equal and offsetting benefit has been recognized in income tax expense. In addition, gains and losses generally arise from the sale of gold earned from management fees paid by our physically-backed gold ETPs, foreign exchange fluctuations, securities owned and other miscellaneous items.

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;

competition in our business;

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 operate and expand our business in non-U.S. markets; and

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

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 WisdomTree ETP investors 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.

Withdrawals or broad changes in investments in our ETPs by investors with significant positions may negatively impact revenues and operating margins.

Competitive pressures could reduce revenues and profit margins.

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 products’ strategies and market-specific and political and economic risk.

A significant portion of our AUM is held in ETFs that invest in foreign securities and we therefore have substantial exposure to foreign market conditions and are subject to currency exchange rate risks.

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.

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 WisdomTree ETP investors.

See “Non-GAAP Financial Measurements.”

Adjusted net income is now calculated excluding tax shortfalls and windfalls upon the vesting and exercise of stock-based compensation awards. Amounts previously reported as adjusted net income have been restated to conform with our current presentation. This change had no impact to previously reported adjusted earnings per share for the first and fourth quarters of 2018.

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/(loss) on revaluation of deferred consideration – gold payments

Interest income

Impairments

Other gains and losses, net

Income/(loss) before taxes

Income tax (benefit)/expense

Net income/(loss)

Earnings/(loss) per share – basic

Earnings/(loss) 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

Impairments

Other gains and losses, net

Income/(loss) 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

Other Income/(Expenses):

Interest expense

Gain/(loss) 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

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

Right of use assets – operating leases

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

Securities sold, but not yet purchased, at fair value

Operating lease liabilities

Accounts payable and other liabilities

Total current liabilities

Long-term debt

Deferred consideration – gold payments

Operating lease liabilities

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: 155,056 and 153,202 at March 31, 2019 and December 31, 2018, respectively

Additional paid-in capital

Accumulated other comprehensive income

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/(used in) operating activities:

Advisory fees received in gold and other precious metals

Gain on revaluation of deferred consideration – gold payments

Contractual gold payments

Stock-based compensation

Deferred income taxes

Amortization of right of use asset

Amortization of credit facility issuance costs

Paid-in-kind interest income

Impairment

Depreciation and amortization

Other

Changes in operating assets and liabilities:

Securities owned, at fair value

Accounts receivable

Income taxes receivable/payable

Prepaid expenses

Gold and other precious metals

Other assets

Fund management and administration payable

Compensation and benefits payable

Securities sold, but not yet purchased, at fair value

Operating lease liabilities

Accounts payable and other liabilities

Net cash provided by/(used in) operating activities

Cash flows from investing activities:

Purchase of fixed assets

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

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

Net cash provided by investing activities

Cash flows from financing activities:

Dividends paid

Shares repurchased

Proceeds from exercise of stock options

Net cash used in financing activities

Increase in cash flows due to changes in foreign exchange rate

Net increase 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)

Fund closures

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

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

Average assets during the period

Average ETP advisory fee during the period

Number of ETPs – end of the period

PRODUCT CATEGORIES (in millions)

Commodity & Currency

Beginning of period assets

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

International Developed Market 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

Average assets during the period

Fixed Income

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

Average assets during the period

Leveraged & Inverse

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

Average assets during the period

Alternatives

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

End of period assets

Average assets during the period

Closed ETPs

Beginning of period assets

Inflows/(outflows)

Market appreciation/(depreciation)

Fund closures

End of period assets

Average assets during the period

Headcount – U.S. Business segment

Headcount – International Business segment

Adjusted net income and adjusted diluted earnings per share. We disclose adjusted net income and adjusted 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 measures provides investors with a consistent way to analyze our performance. These non-GAAP financial measures exclude the following:

Unrealized gains or losses on the revaluation of deferred consideration: Deferred consideration is an obligation we assumed in connection with the ETFS Acquisition that is carried at fair value. This item represents the present value of an obligation to pay fixed ounces of gold into perpetuity and is measured using forward-looking gold prices. Changes in the forward-looking price of gold may have a material impact on the carrying value of the deferred consideration and our reported net income. We exclude this item when arriving at adjusted net income and adjusted diluted earnings per share as it is not core to our operating business. The item is 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.

Tax shortfalls and windfalls upon vesting and exercise of stock-based compensation awards: GAAP requires the recognition of tax windfalls and shortfalls within income tax expense. These items arise upon the vesting and exercise of stock-based compensation awards and the magnitude is directly 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 determining adjusted net income and adjusted diluted earnings per share as they introduce volatility in earnings and are not core to our operating business.

Non-recurring items: Severance expense of $2.0 million (or $1.5 million after-tax) for both the first quarter of 2019 and fourth quarter of 2018, acquisition-related costs of $0.3 million, $1.0 million and $2.1 million (or $0.3 million, $0.8 million and $1.9 million after-tax) for the first quarter of 2019, fourth quarter of 2018 and first quarter of 2018, respectively, and impairments of $0.6 million and $17.4 million (or $0.6 million and $14.0 million after-tax) for the first quarter of 2019 and fourth quarter of 2018, respectively, are excluded when determining adjusted net income and adjusted earnings per share.

Adjusted effective income tax rate. We disclose our adjusted effective income tax rate as a non-GAAP financial measurement in order to report our effective income tax rate exclusive of items that are non-recurring or not core to our operating business. We believe reporting our adjusted effective income tax rate provides investors with a consistent way to analyze our income taxes. Our adjusted effective income tax rate is calculated by dividing adjusted income tax expense by adjusted income before income taxes. Income tax expense and income before income taxes has been adjusted for the $4.3 million reduction in unrecognized tax benefits and offsetting reduction of a tax-related indemnification asset. In addition, see “adjusted net income and adjusted diluted earnings per share” above for information regarding the other items that are excluded.

Gross margin and gross margin percentage. We disclose our gross margin and gross margin percentage as non-GAAP financial measurements for our U.S. Business segment and International Business segment because we believe they provide investors with a consistent way to analyze the amount we retain after paying third-party service providers to operate our ETPs. These ratios also assist us in analyzing the profitability of our products. We define gross margin as total operating revenues less fund management and administration expenses. Gross margin percentage is calculated as gross margin divided by total operating revenues.

Adjusted operating income margin. We disclose adjusted operating income margin as a non-GAAP financial measurement on a consolidated basis, as well as for our U.S. Business segment and International Business segment in order to report our operating income margin exclusive of items that are non-recurring or not core to our operating business.

Adjusted Net Income and Diluted Earnings per Share:

Net income/(loss), as reported

Add back/(deduct): Unrealized loss/(gain) on revaluation of deferred consideration

Add back: Severance expense, net of income taxes

Add back/(deduct): Tax shortfalls/(windfalls) upon vesting and exercise of stock-based compensation awards

Add back: Impairments, net of income taxes

Add back: Acquisition-related costs, net of income taxes

Adjusted net income

Weighted average common shares - diluted

Adjusted earnings per share - diluted

Adjusted Operating Income Margin:

Operating revenues

Operating income

Add back: Severance expense, before income taxes

Add back: Acquisition-related costs, before income taxes

Adjusted operating income

Adjusted operating income margin

Adjusted Effective Income Tax Rate:

Income/(loss) before income taxes

Add back/(deduct): Unrealized loss/(gain) on revaluation of deferred consideration

Add back: Loss recognized upon reduction of a tax-related indemnification asset

Add back: Severance expense, before income taxes

Add back: Impairments, before income taxes

Add back: Acquisition-related costs, before income taxes

Adjusted income before income taxes

Income tax (benefit)/expense

Add back: Tax benefit arising from impairments

Add back: Tax benefit arising from reduction in unrecognized tax benefits

Add back/(deduct): Tax windfalls/(shortfalls) upon vesting and exercise of stock-based compensation awards

Add back: Tax benefit arising from severance expense

Add back: Tax benefit arising from acquisition-related costs

Adjusted income tax expense

Adjusted effective income tax rate

Gross Margin and Gross Margin Percentage:

Operating revenues

Less: Fund management and administration

Gross margin