Earnings call transcript: DeFi Technologies boosts Q1 2025 revenue guidance

DeFi Technologies reported its first-quarter 2025 earnings, showcasing substantial growth and strategic acquisitions. The company increased its revenue guidance significantly from USD 130 million to USD 201 million. According to InvestingPro subscription, including exclusive Fair Value estimates and detailed company health scores.

Full transcript - DeFi Technologies Inc (DEFI) Q1 2025:

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Q one twenty twenty five DeFi Technologies, financials. And, today, we're gonna discuss our progress through the quarter, touch on a little bit about, oh, what we accomplished last year and and what we're looking forward to over the course course of this year and the next couple of years. My name is Curtis Lofman, VP of marketing communications, joined by, our CEO, Olivia Russe Newton, cofounder, Johan Wattenstrom, our CFO, Paul Bozzocchi, capital markets, head guy, Russell Starr, and our, our corporate secretary, Kenny Choi. First thing we'll read, forward looking statements, and then, we'll jump into this. Risk and forward looking statements, the the presentation given, and certain statements made within this earnings call, which are not historical facts, such as expectations, anticipations, beliefs, and estimates are forward looking statements.

These statements may include, without limitation, any statements preceded by, followed by, or including words such as target, believe, assume, expect, commit, aim, intend, may, anticipate, foresee, see, estimate, plan, project, will, is to, focus, can, have, likely, should, would, could, continue, in other words or terms similar meaning of negative thereof. Others can be identified from the context in which these statements are made. Forward looking statements give the company's current expectations and views of the future developments in light of its current experience and perception of historical trends. Based on numerous assumptions regarding the company's present and future business strategies and the environment which it will operate in the future. Although the company deem such forward looking statements to be reasonable, no assurance can be given that they will be proven correct.

These forward looking statements are not guaranteed of future developments and results mentioned therein. Forward looking statements involve known and unknown risks, uncertainties, and other factors such but not limited to, general economic and industry conditions, which are, in some cases, beyond the company's control, which may cause actual results to materially differ from those expressed in such statement. The statements are made as per the date of the presentation and this earnings call, and the company does not assume any obligation to review, update, or confirm any forward looking statements contained herein, except to the extent legally required. Also forgot to mention, we're also joined by Andrew Forsen, president of DeFi Technologies and chief growth officer of Valor. Welcome, Andrew.

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This is your first call. Alright. Let's get into it. Ollie, I'll hand it off to you.

Olivia Russe Newton, CEO, DeFi Technologies: Thank you, Curtis, and thanks to everyone who's, joining us on this call. So we are, you know, delighted to, give our first presentation as a Nasdaq listed company and and and also, encapsulate, another record, quarter for the the company. We, operate own and operate, several subsidiaries, our own venture portfolio, trading desk, treasury strategy, and, several industry partnerships, which allow us to, seamlessly tap into the extensive $33,000,000,000,000 sector, in a regulated manner, which we've, you know, done so since inception of the war and and also DeFi as a public company. So, you know, high level numbers, EBITDA for q one. Chris, if you go back Right.

High level, numbers, we're 44, just under 45,000,000. Canadian translates to 31.2 USD, q one twenty twenty five, EBITDA, market cap of, 1,900,000,000.0 Canadian equivalent to 1,300,000,000.0, US. We have 65, listed exchange traded products across number of different, jurisdictions. I think it's almost six or seven now. Six highly scalable, business lines, and, we are gonna get more into how we plan on, you know, growing all of this, in in the coming quarters and years.

So, this is our q, q one twenty twenty five key financial and business metrics. Book value, 9.7, million Canadian, equivalent to $55,500,000 USD. Q 1 20 20 5 net revenue, 62,700,000.0 Canadian, 4 4 hundred and 40 3 point 1 million, USD. Q 1 20 20 4 earnings per share is 13¢ CAD equivalent to 9¢ USD, covered the market, capitalization. Assets under management, just under a billion, Canadian translates to, 640,000,000 USD AUM as of, thirty first twenty twenty five.

We've obviously seen somewhat somewhat of a slump, I would say, over the last kind of four to five months in in digital assets, associated with macro environments that we're seeing a nice rebound in. We've covered q one twenty twenty five EBITDA, 44,800,000.0. And as of now, our as of today, our our cash digital asset treasury and venture portfolio stands at a hundred and 17,000,000 Canadian, equivalent to 81,500,000.0, USD. We've updated our revenue guidance, which we can get into in, in further detail on the call, from, I believe, it was, hundred and 30,000,000 USD up to 201,000,000, USD, hundred and 80 5 point 6 million dollar Canadian equivalent. So a big jump based on, how we're forecasting digital assets, towards how they've picked up dramatically in the last quarter and and into the year end.

If if anyone's kind of new to DeFi technologies, this is kind of an overall infographic on all of the specific subsidiaries and business operations that we we own and operate. We have our I'll start from left to right. We have our own, research unit called Reflexivity Research that we acquired from Anthony Pompliano and Will Clemente about a year ago. It's been highly complementary to our Velour business unit, where we can provide cutting edge pragmatic research for the holders and, prospective, investors looking for exposure across our 65 plus, exchange traded products. So we complement that with high level research.

We've recently, closed the acquisition of Stillman Digital, which is a leading market making liquidity service provisioning custody, and OTC desk that is growing extremely rapidly, and has, you know, enabled us to, expand our our internal DeFi Alpha profitability and, and trading execution capabilities. So we're we're extremely, happy about having that, integrated finally. It was a kind of a regulatory hurdles of transitioning their, you know, Bermuda based, licenses into our overall corporate structure. We own a, 5% stake in the first licensed, FINMA licensed Swiss Swiss Swiss bank, which which is a AUM has been, growing along with the cryptocurrency industry trend, which is nice to see. And we we also have, a fairly new business unit called DeFi Alpha.

We identify low risk arbitrage opportunities, that present themselves, and generated just under a hundred million US in 2024, equivalent to a hundred and 33,000,000 Canadian, and recently announced a trade, I believe it was a week a week and a half ago, of, $30,000,000. So we continue to assess opportunistically, amidst the volatility of the cryptocurren cryptocurrency landscape, risk free arbitrage opportunities that we see opportunistically picking up. We have a venture portfolio, that is, really kind of used to take stakes early early stage stakes in companies, that we believe have promising potential for, the securitization and creation of exchange traded products, which we continue to do. And, also very excited about, the I I believe it was a month ago, we closed a majority, stake, 52.5% of a pioneering company called Neuronomics that has been devising equity related, artificial intelligence strategies for close to a decade and for the last four or five years has refocused, their efforts in the cryptocurrency space. So we look forward to, utilizing our Velour infrastructure and, new, fund infrastructures that we are working on to encompass, artificial intelligence strategies overlaid, with with digital assets.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Alright. Thanks, Ollie. Paul, let's, let's turn it to you and go a little deeper into the financials from Q1.

Olivia Russe Newton, CEO, DeFi Technologies: Paul, you're on mute.

Paul Bozzocchi, CFO, DeFi Technologies: Sorry about that. Thank you, Curtis. Thank you, Ollie. I'll start with a balance sheet review. So while Q1 saw significant volatility in crypto prices, with declines from December 31 to March 31, It's also reflected in our total assets declining from Canadian 1,300,000,000.0 to just over CAD 1,000,000,000 at March 31.

I'd like to point out that our average q one AUM was 1,130,000,000.00 Canadian or 2% 2.7% higher than our q four twenty twenty four average AUM of 1,100,000,000.0. So, just shows that we're we're also susceptible to very volatile crypto prices, but over time, we've actually had a stronger AUM in q one than we did in q four. Similarly, with on the back of that, while our AUM did decline, at March 31 at a point in time, The quarter, we had a net positive inflow of $72,400,000 into our ETP products, reflecting continued investor interest despite the volatility. The company launched four new products in March 2025, bringing its total ETPs to over 65, and we continue to target over 100 by the end of the year. Our focus remains on maintaining a conservative balance sheet with cash of $20,000,000 at March 31, crypto treasury holdings of CAD43.4 million and the venture portfolio investments of CAD53.9 million.

At 03/31/2025, we have shareholders' equity of CAD79.7 million. Our loans at 03/31/2025 totaled CAD12.6 million, which represents which constitutes a CAD2.4 million margin loan at one of our crypto exchanges that we use to facilitate trade clearances and the 10,200,000.0 loan payable to Genesis that's in receivership. The Genesis loan is fully collateralized by $3.59 Bitcoin at March 31, which have been fully impaired and thus offset the loan. So it just represents a gross up of our balance sheet. As a p and l review, the company states 66% of its cryptocurrency and earned Canadian 14,000,000 of staking income in the first quarter for an effective yield on the entire AUM of 5%.

On the staked only portion, the yield is 7.6%. The 5% effective yield is up from 4.7% in 2024. Our staking policies will allow for higher staking. We, of course, manage it in in our risk management as well, considering in terms of how much we stake. Management fee income for q one of twenty twenty five was 3,600,000.0, representing effective yield of 1.3% on our entire AUM.

And I investors are aware that most of our funds have a 1.9% management fee, but there are Bitcoin and Ethereum funds with zero. So the average is 1.3. This is unchanged from 2024. The net investment result of our unrealized and realized changes in our digital assets, equity investments in digital assets and ETPs in Q1 was $42,400,000 positive in the quarter. This contributed to the company earning IFRS net income of $43,000,000 A large part of the result was driven by a $45,000,000 reversal of our $124,500,000 DLOM provision at 12/31/2024.

The DLOM is the discount for lack of marketability on some of our tokens that are locked up. The remaining DLOM at 03/31/2025 is $79,500,000 which will also fully reverse back into income over time as the coins are unlocked. The DLOM provision in Q1 came down with the reduction in Solana and Avalanche prices in the quarter, hence the reversal. In the non IFRS adjustment section of the MD and A, we have detailed this adjustment along with a smaller adjustment related to our Genesis loan, Bitcoin. The company did receive back 6 Bitcoin from the receiver related to our Genesis loan, which is a positive in our income.

Stillman Digital recorded trading commissions of CAD2.9 million in Q1 twenty twenty five, consistent with Q4 twenty twenty four. Stillman contributed CAD1 million to our bottom line in Q1. Stillman is guiding for revenues of CAD 12,000,000 to CAD 16,000,000 in 2025 while maintaining margins. Reflexivity recorded revenue of CAD 262,000 compared to CAD 507,000 in Q1 of twenty twenty four. Reflexivity earns most of its revenue in the second half of the year when it hosts various events that support its core research business.

The company is upgrading its revenue guidance from CAD 227,200,000.0 to Canadian 285,600,000.0 for 2025 on the back of a positive q one. Thank you.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Thanks, Paul. Now let's turn it back to Oli, Johan, and Andrew, to talk about some additional highlights, particularly about, Beller's product pipeline, our AUM, and net inflows, and explain that business a bit deeper as it is our most important business, or subsidiary under the DeFi Technologies umbrella.

Johan Wattenstrom, Cofounder, DeFi Technologies: Right. Maybe I I should jump in here and and take that.

Olivia Russe Newton, CEO, DeFi Technologies: Sure.

Johan Wattenstrom, Cofounder, DeFi Technologies: So what we see here is is the AM in in different products, the how we the the development over time. And as you can see, we have lost a lot of new products. The the last few quarters, and a lot of the new inflow is also in the new products, which is actually is over our expectations as as a lot of these are the smaller cryptocurrencies. I'm not sure if we go back. Okay.

So I think yes. Hold on this slide for a little bit. And then, obviously, if if we could see the crypto prices here, you could obviously see that the, our AUM is is, very much correlated to to the market markets, obviously, but the inflow has been constant since inception of of the company. And what we've seen is that we have a very, an investor base that are very loyal and, seem to, invest in all the new products to some extent. We can see that the same brokers, the same type of flows go in directly on the first day of of listing.

We have over 65 products now. I think we have probably over 85 within two months. And what you can see in white here is is the the inflow into these smaller coins. And, obviously, still, Solana is a is a big chunk of of the AUM. But this also an important point here is that this this also reflects the improvement in product mix over time.

We started out early on with the Bitcoin and Ethereum 0, which had zero management fees. But the the more products we we put out there, we have higher margins of those. There's more staking rewards, possibility to to lend for higher rates, and we have a higher management fees. Most of them are 1.9. We had some higher for some more complex products.

We have we're also listing now the leverage products in in Scandinavia, I think, within a few days. We have more basket products, active managed certificate, and so on where the management fees will be a bigger portion. For the active managed products, we'll also have a a a two plus 20 type structure similar to a hedge fund what hedge funds use. So we will see other types of revenue occurring from from those products as well, hopefully, within quarter the third quarter. I'm not sure if someone want to want to add anything here.

What's obviously important point that Paul let's say that we had actually the average AUM in q one was higher than q three last year even though we saw a large dip in the in the markets. And, yeah, with with the recent bounce of 20 over 20% for for Bitcoin, more on average for our portfolio, We're in great shape for for q two here, which is, kind of linear to to, to to the AM the the income from this. So, yeah, I I don't know if there's anything for the time. I'll go to your

Olivia Russe Newton, CEO, DeFi Technologies: I I think that, you know, covers the kind of ebbs and flows specifically of the you know, obviously, the AAM is highly correlated with with the prices of crypto. We we definitely see retention amongst retail and institutional users and and customers of Allure. They're they're definitely kind of, I would say, hodling coins over the long term. So we we don't see extreme amounts of outflows. You know, there there's been volatile periods.

But I think, you know, within the coming months, we will have, you know, out of out of any issuer of digital assets, structured products, the largest portfolio out of out of anyone in terms of selection for, altcoins, newer coins, indexes, as as Johan mentioned, warrants, different types of certificates. We've also been working, behind the scenes on, you know, the creation of a an index calculation agent that will enable us to mix digital assets with equities. You you know, obviously, there's there's kind of a large trend in the capital markets of of equities that are taking on new strategies in the form of of accumulating coins and people, you know, trading, you know, certificates and or structured products around those to have more effective exposure. So that will enable us to kind of offer this new plethora of, I would say, emerging structured products in the form of equities in digestible exchange traded product products to our clienteles in in existing European markets and and markets that we're expanding into aggressively.

Johan Wattenstrom, Cofounder, DeFi Technologies: Yeah. And maybe also should emphasize this this chart we have up right right now. I think a lot of people investors have heard it before, but it's worth reiterating that the AUM represent where it's taking money. We have no month within this period or historically, since inception with net outflows. We have separate days without net outflows, but not on a weekly or monthly basis.

I have also data from this from ten years back from starting XBT in 2015. And on a daily series, we see the same thing that the investors should tend to be long term, very few swing traders or short term traders. And it's used in the long term savings and and and represent where you're sticking money. And we we see this pattern continue and even strengthen, when looking at, daily, data.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Right. Let's, let's move into, some of Valor's global expansion and strategic market development efforts. Yohan and and Andrew, if you guys wanna tackle those.

Andrew Forsen, President and Chief Growth Officer, DeFi Technologies: Sure. Maybe I'll speak up here. Obviously, strategically, we are very strong in Europe and The Nordics. And as we continue to reinforce our marketing and communications and market access processes in these regions. We're also looking strategically in the regions where our technology, our vertical integration, and the fact that we are very effective at providing regulated access to crypto and digital assets is something that is actually in high demand in a lot of regions that are looking to expand the access to crypto and digital assets.

Some of those regions being The Middle East, we have been having ongoing discussions in The UAE, in Qatar, in Bahrain, and other jurisdictions. We have been having very advanced discussions with East Africa, which is probably one of the primary hubs of expansion and use of digital assets globally. So we have the agreement that has been announced with the Nairobi Securities Exchange, which is a traditional securities exchange, which is seeking to adopt and expand into the digital asset space. And there in particular, we are also working on building a digital assets exchange to be known as a Kenya digital exchange and partnership. We have significant outreach into the LatAm region and in particular, Southeast Asia, specifically Singapore.

People have to understand that a lot of what we're doing is completely groundbreaking. So it actually involves interaction with regulators, local legal support, and in some instances, actually contributing to regulatory frameworks with regards to virtual assets. It is oftentimes slow. It is frequently unpredictable, but we advance inexorably towards listing our our our products in different markets.

Olivia Russe Newton, CEO, DeFi Technologies: I think I think one important thing to also note, specifically in terms of, you know, moving into these markets, whether it be Singapore, the five or six jurisdictions we're targeting in The UAE, five or six others in in Asia, Southeast Asia, is that we're, market first entrants. So, you know, we are working handholding, the regulators on how to, structure. Basically, these these offerings, we it it it helps. You know, thanks to UN that we have, you know, the longest track record of operating digital assets on regulated stock exchanges. And, you know, a lot of these countries, I think, specific to, you know, for instance, take Nairobi, for example, you know, there's been sovereign nations that are adopting or putting in place legislation to acquire cryptocurrencies.

And, for pension funds, sovereign wealth funds, government funds in these developing nations, they don't wanna get left out. They want baskets of cryptocurrencies, but they don't wanna buy it on a foreign cryptocurrency exchange. They wanna buy it through their regulated stock exchange, and that gives us kind of an unparalleled advantage in going into these, jurisdictions where, you know, we we wanna be the first and will be the first, to operate within these jurisdictions and dominate the market.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: We'll move on from there. Just discuss that. Let's move into, touch a little bit on Stillman Digital and DeFi Alpha.

Olivia Russe Newton, CEO, DeFi Technologies: Yeah. I mean, I I can take this. I think and Paul chime in, in respective to the, the Stillman financial outlook, but I know the, you know, the q one twenty five forecast was small due to the timing of the acquisition. Is that correct?

Paul Bozzocchi, CFO, DeFi Technologies: We we acquired them in October It just they ramp up more in the second half of the year.

Olivia Russe Newton, CEO, DeFi Technologies: So yeah. It's it's a it's a very robust business. Lean and mean continues to exceed our expectations, and I think, you know, over the next over the coming quarters will be a significant contributor to our our bottom line, along with, the enablement of trading technology to be utilized, specifically within operations such as DeFi Alpha and Valor. Sorry. Go ahead.

Andrew Forsen, President and Chief Growth Officer, DeFi Technologies: Oh, I just wanted to add that with regards to Stoneman Digital too, with this explosion in growth and stablecoin adoption globally, what we're finding is companies are actually coming to us. Any brokerages, digital asset platforms, any platforms that are looking to provide merchant access to stablecoins or crypto to enable payment by a stablecoin or crypto. They're coming to us. They're looking at the Stillman platform, and indeed, the Stillman team is incredibly responsive. I've been pleasantly surprised by the degree of interest in what they have to offer and the size of counterparties that are interested in engaging with Stoneman and using their services.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Great. Thanks, Andrew. And then, Johan, could you touch on some of the progress, for for DeFi Alpha and and and how that's shaping out for the rest of the year?

Johan Wattenstrom, Cofounder, DeFi Technologies: Yeah. For sure. May maybe for context, the for new listeners, I should also reiterate a little bit what what we do in DeFi Alpha. So it's, basically, we're we're on our balance sheet, we we hold quite a lot of different digital assets and fiat assets, obviously. And we're as a part of starting with a treasury function to optimize the the earnings and and the monetization of our full balance sheet.

We, last year, started DeFi Alpha as a more focused effort to to to do trades that are not typically within our treasury or optimization, strategies that are typically more, stat arb type of basis trading, arbitrage, lending, staking, and so forth. While SafeAlpha looks at more, in beginning opportunistically at large, trade, distressed ones, and other trades with foundations, with funds, and with other counterparties within within the, the ecosystem, where we have a unique position, given our our platform, our vertical integration through for our businesses, and the assets on our balance sheet where we actually, without mark without market risk, are, pursuing these trades where we did over a hundred million US dollars last year. And and, we we have, just recent analysis we said earlier, of course, $22,000,000 revenue generating trade for the year. But, also, during the last year from our last call, our pipeline has strengthened since significantly, especially now when with the market coming back up. We are even much even more optimistic than on the last call regarding the next few trades in the near near near future, but also for the pipeline for the rest of the year.

So it's from from had been an opportunistic part of treasury. We it's a self driving business at this point where we build infrastructure to institutionalize these these earnings as well. And and we found a great way to to actually go out and and offer our services and trades and balance sheet to to counterparties where we can do these trades. And it's, yeah, been much much more optimistic, yeah, start with the year than than I actually thought that last call here. Yeah.

I'm not sure really if there's anything more here to is on the for for the full year forecast, we haven't really a big part of the increase in the full year forecast is the higher market now, which actually organically, with our base cash flow, be becomes much stronger. So that's a big part of that. A little part of that is also the, DeFi alpha that we have actually added, quite a few, very concrete deals to our pipeline here in DeFi alpha. But, yeah. That's the Excellent.

Essence.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: And then I think Go ahead.

Olivia Russe Newton, CEO, DeFi Technologies: Yeah. No. I I was just gonna touch on DeFi Alpha because we often, you know, get get asked, how to project out the specific, you know, revenue numbers and logistics. I think, it took us, you know, three three years to feel comfortable or even more so four years, to start projecting, a financial forecast for Valor as we gathered, specific information on inflows, outflows, specific product launches. There was a bunch of technicalities around there.

I think we're, you know, nine nine or ten months in if that with DeFi Alpha. And I feel confident that, you know, within within the coming months, we will be able to, you know, project with, you know, a high level of certainty what we're expecting, as we've seen and sequenced, trading data patterns associated with some of the trading strategies kind of employed. So kind of going forward, you know, investors, shareholders will be able to kind of as we adequately predict, hopefully, also forecast specific numbers that we're projecting for the Alpha business unit.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Great. Moving on. Ale, could you quickly touch on how we plan to utilize and integrate Neuronomics for the rest of the year and sort of touch on product pop up pipeline and integrating that into our IP infrastructure?

Olivia Russe Newton, CEO, DeFi Technologies: Yeah. I mean, I've touched on it, touched on it, specifically. You know, DeFi had acquired an initial stake in in Neuronomics, a few years ago. We've built a relationship with the team, world class team of artificial intelligence engineers, that have really, you know, spent the better part of the last decade looking at, artificial intelligence kind of, you know, before it was cool to to figure out how to manage and optimize equities, due to the nature of, data points available within the digital asset sector. They thought it was a much more market ready approach for them.

One one of the, you know, the key, components of this acquisition is a FINMA license, which allows us to distribute funds and products within Switzerland and within fund frameworks that are comfortable with the the Swiss fund regulatory landscape, which is one of the largest in the world. So we are extremely excited to kind of target these AI specific digital asset products and funds to Swiss based and Swiss, you know, funds that invest in in Swiss structures, which is which is one of the, you know, largest fund fund markets in the world. So so we're extremely excited about that. And I think as institutional investors develop cryptocurrency portfolios, you know, similar kind of akin to, you know, some five, six years ago. You know, every fund had to have some sort of ESG mandate of, you know, 5% 10% of their assets.

And to ESG assets, I think, you know, fund managers will be scared, not to have, artificial intelligence, enabled, products capturing returns for them. And we we will we are in the process of updating the Neuronomics website with, you know, the performance of their funds today, which are which are are extremely well performing.

Johan Wattenstrom, Cofounder, DeFi Technologies: Yeah. If you could add add also that that they have have a number of AI driven strategies that where we can engineer the risk profiles that that our clients are are asking for. So we will launch a few pure alpha type strategies, but also some long plus overlay portfolios and also some overlay portfolios for investors who are already long crypto. And this will be driven out of the signals and and the the AI IP we have here, and then we will distribute it through actively managed certificates, hedge funds, and mutual funds, also probably through, UCLEX funds within Europe, depending on how we skew them a bit. So and this is for for step, this is all all crypto, but this also show extremely well good results in in actual, trading for for, equity markets.

And so we see a continuation long term within other asset classes and also maybe also trend following multi asset class type products.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: And and finally, Ali, could you speak on progress regarding SolFiTech and CoreFi?

Olivia Russe Newton, CEO, DeFi Technologies: Yeah. For sure. You know, as as we, you know, went through I I mean, what was a four year trajectory with the SEC at DeFi, you know, and coming out of coming out of it at the end, we've been actively kind of working with lawyers to optimize the trajectory and launch of you know, both companies, CoreFi and, obviously, the Solana ecosystem are are both grow growing and maturing very well, and we will have, you know, updated guidance on those go to market strategies that would that are that are definitely more efficient given the new stance of digital assets, that the SEC has embraced and is just kind of, you know, coming to light. So as opposed to, you know, when these strategies were launched, you know, some six months ago taking approaches that would have, you know, potentially hindered the the success and ability for them to reach, you know, their kind of pinnacle market capitalizations and exposure to international capital markets, we now have adequate plans to launch these vehicles. Thanks,

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Ali. We'll now go into questions from analysts. I have a list of questions prepared. First from Mike Rondahl at Northland. I think this is for Johan.

Can you detail what areas of business drove your 2025 guidance higher?

Johan Wattenstrom, Cofounder, DeFi Technologies: Yes. For sure. Thanks for the question. So it is yes. Two components, basically.

As there's two the main drivers of the the base cash flow from our ETPs. That's a major part, made the half of our revenues last year. That's totally dependent on, obviously, the the the levels of market and our in and outflows. And, it's just the, the market coming up back over 20% have obviously compared with q one, especially end of q one, markets are and our AUM is now at a significantly higher higher place. So we basically ask every day on more than, I would say, 25 more on on the, all the staking revenue, lending revenue, management fees, and so forth.

So that has just informed us to conservatively, up shift our monthly or or forecast for the year for the market, which is basically a big part of our income, like for a brokerage firm where where they take a percentage in commission. So that's that's a big part of this. And and the other part which where we have seen where we did a small upward shift in in the forecast was on the DeFi Alpha. And that's just because the the the one trade we actually did execute now was not even in our pipeline before, and we've seen quite a few other trades becoming yep. We're we're we're close in time, hopefully.

So we have we have a much more much more insight in when and and and how much to what value we can do these trades than we had a month ago. So so that's a major shift for the DeFi Alpha. But I I would say so so that's one part. DeFi Alpha is one part. The other big part is the the higher AM.

If, obviously, if the market goes down here, the the base inflow from our monetization of our balance sheet will will go down with it, but, our forecast for the year is, has shifted up with with the with the market since end of year. But it's obviously was much lower, not only for Bitcoin, but for all our assets. On on average, I think for our portfolio, it was, a much higher shift upwards, in in our AM mark to market prices and which is actually what's half of our revenue stems from. So, yeah, that's the simple answer.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: And then, Andrew, could you talk about new geographies for ETPs and any rough timing as it relates to any of the specific regions?

Andrew Forsen, President and Chief Growth Officer, DeFi Technologies: Yeah. Thank you very much for the question. I I would say that the ones that are most mature in the process are East Africa because we've been able to work at the highest levels of government at the regulatory framework. And the wonderful team in Valour has been very effective in assigning, determining the plumbing that is needed to get this done. But close in that race for listings are you also have Southeast Asia.

We're in continued discussions in in Singapore, continued discussions in, some of the Gulf Coast countries, and increasingly, we're looking at LATAM. Now I have to I I I'm I'm trained as a financial risk manager, so I have to caveat all of this with everything we're doing, as Ali, our CEO, mentioned, is basically tip of the spear market access. That means we are at the intersection of regulatory approval and the actual products that we have and know have been well accepted throughout Europe. So at any one time, it is not, exclusively the domain of valor to determine the timing of the entry into a particular market, but sometimes it depends on when a capital market authority decides to have their sitting to review instruments. What I can personally attest to is that we don't deal at the government bureaucracy level.

We are dealing at the highest level, director general level, ministry level in order to ensure that they have a clear understanding of what we wanna do, that our objective is to get listed and to get listed in a timely manner so that their populations will have access to our instruments, and we can grow shareholder value.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: And I also think it's important to touch on the time it takes us to establish and list these products in these specific regions is by nature a moat in Time is acting as a moat once we're have Valor's instruments listed there.

Andrew Forsen, President and Chief Growth Officer, DeFi Technologies: You're you're absolutely correct. This requires a significant investment in personal relationships, regulatory relationships, and as you've accurately mentioned, Curtis, just time. And we are nurturing these in a number of jurisdictions. I would expect that we will start to see significant progress, obviously, through this fiscal year. But then we're also gonna see somewhat of a cascading effect because every time we hit a new market, we get better.

We get more efficient. We know who to speak to, and we're more accurate in our offering.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Thank you, Andrew. Question from Mark Palmer at Benchmark. What do you see as the tangible benefits of DeFi technologies uplisting to the Nasdaq in terms of cost of capital and other metrics? Like, Ollie can answer that one.

Olivia Russe Newton, CEO, DeFi Technologies: Positive capital. Well, I I I mean, in terms of, you know, financing, I think, you know, we're we're still a few days in, but, I I would assume that, you know, as as people recognize the uniqueness of of DeFi's business compared to, I would say, kind of leveraged, overleveraged plays to acquire, Bitcoin, we we will see kind of a unique, shareholder base form around our equity, as we continue to execute as as as we have. And, obviously, with more enhanced liquidity, visibility, access to larger institutions, you see kind of a more efficient cost of capital, to be to be utilized for, you know, potential acquisitions and or other strategies that that we might have up our sleeves. Did I miss anything in that in that question, Chris? Because I'm just typing some

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Yeah. I don't I don't think so. I think I think you covered it pretty well. Well, then we'll we'll speak to Mark after if he has any clarifying questions. Another question from Mark, and this one is for Paul.

What purse just to I I know you covered it earlier, but just to refresh, what percentage of, the Valor's AUM did the company stake during q one twenty twenty five? And how does that percentage compare with what was staked in q four of twenty twenty four and in prior quarters?

Paul Bozzocchi, CFO, DeFi Technologies: It's about consistent. So we've traditionally staked in this 66% to 70% range.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Okay. And then Michael questions from Michael Kim at Zacks. Can you provide an update on your plans to launch ETFs here in The US via the partnership with Professional Capital Management? And could you flesh out the strategy in terms of which products you plan to bring to market, how you plan to position your offerings relative to other players in the market? Ali, can you tackle that one?

Olivia Russe Newton, CEO, DeFi Technologies: Sorry. I'm just trying to answer these questions, Chris. What what was the

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: This was a I guess, do a refresher on the plans to launch ETFs here in The US with professional capital management, where that stands or what the thinking behind that is and Yeah. Sure. Progress and timing.

Olivia Russe Newton, CEO, DeFi Technologies: I mean, the the thinking behind that was, you know, we we have a relationship with Professional Capital Management, and assessing the potential viability of that entrance into The US is something we're still considering. Obviously, the the market dynamics have have changed formidable since since we've launched that. We've seen a lot of competitors of ours make the mistake of trying to enter The US market, and we we do not want to compete with BlackRock, Fidelity, you know, established US financial institutions who have all the retail and institutional reach for their products. So we're still assessing North America, specifically The US as as a market. We're finding you know, we're just making sure that we do that acutely so that when we do launch things, we have a specific market niche that is in competing against, you know, hunt you know, multi hundred billion dollar companies and waste a bunch of money, which which nearly killed, if not killed, some of the compete competing ETP markets, which, you know, I can't complain about.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: And then another question for Michael. In terms of capital management, can you provide an update on your current thinking around returning excess capital to shareholders via share repurchases and or potentially instituting a dividend at some point?

Olivia Russe Newton, CEO, DeFi Technologies: Yeah. I mean, we we have actively, utilized our, you know, NCIB. I'm I'm not sure what the The US share share buyback program, you know, continuously, when we believe our share price is is undervalued, and we may do so opportunistically, with with with our cash and shares. And, obviously, our, you know, company has gone you know, transitioned from, you know, being kind of having, you know, debt on our balance sheet, having, you know, having not raised any any institutional capital, clearing that debt, having, you know, a a very sizable cash treasury now, extremely profitable. So the the natural transition, of a company of our nature is, you know, once we reach a comfortable, you know, revenue milestone, the board would, you know, consider dividends if it made sense for a company of our nature.

Keep in mind, we are still a growth company. You know? So we're we're we're very early in in our kind of trajectory. And when you, you know, typically look at high growth tech companies, you know, they're they're they're not paying dividends immediately, but that's not some you know, not to say that we wouldn't rule it out in the future when we have excess cash flow and, you know, happy shareholders, and we can redistribute some of that to shareholders. It's it's something, you know, the board consider when the time is right.

But I think we have, you know, before that, at least a few quarters to to to grow, and and our focus is on on making this as as an an efficient cash engine and and really the most profitable, you know, crypto company listed on public stock exchange, which we which I think we have a very good, opportunity of doing.

Johan Wattenstrom, Cofounder, DeFi Technologies: I I, yeah, I think we see ourselves as a high growth company, and we we have no problem to profitable deploy funds. So, even though we have a really high cash flow and and to make good money here, we we have high returns on our free cash and and the cash flow on the balance sheet, both in in in different trading strategies, but also in in things we're building. We we we're not we don't invest in long term very unclear projects. We we have some worry. We know exactly how to deploy the funds.

We are on a very high return on our funds internally. We haven't seen any better way to invest our money or pay pay it back, because we we, we ourselves as a high growth company, and we have a great pipeline of high highly profitable products and and and strategies to deploy our funds at. So we, at this end also, I would say that some one part of our funds is also the working capital for our trading and liquidity market making business where we earn a lot of money on all the flow in and out of our products, so which we still still which is still the field that's growing with our growing, portfolio and and so forth. So we have several, highly profitable ways of deploying the capital, and it's it's I think it's for yeah. Like, Olivier mentioned, it it's very early for us to to to consider probably dividend at this point.

Paul Bozzocchi, CFO, DeFi Technologies: Just a quick one for me that we did subsequent quarter end buyback 505,000 shares at a cost of 2,100,000.0 Canadian. So the company returned just over 2,000,000 Canadian to its shareholders subsequent quarter end. It's disclosed in the MD and A.

Johan Wattenstrom, Cofounder, DeFi Technologies: Paul,

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Ollie and Yohan, in addition to this year's momentum, can you speak to where you see DeFi technologies in two to three years? What are the key initiatives, markets, or innovations that you believe will shape the company's future trajectory?

Olivia Russe Newton, CEO, DeFi Technologies: Yeah. I I think, you know, you know, going back, it feels like ten years ago, but it wasn't so so far long ago when FTX and and these these kind of occurrences happened. We, you know, took the initiative to build our own, you know, internal technology, trading engines, custody, for fully vertically integrated, you know, technology company. We see you know, I think the, you know, the first the first thing I told Johan when I met him was, you know, he he had a single product called XBT provider, the world's first Bitcoin e ETF. And I said, you know, why don't we do this for for thousands of products and derivatives and and warrants and and all types of products?

So I I want, you know, DeFi by way of Valor and its other pertinent subsidiaries to be one of the largest operators of products, derivatives in emerging niche markets where we, you know, like The Nordics, entirely dominate, the the space and have first mover advantage. And in doing so, acquire, incubate, and build trading technologies that complement, all of our unique businesses. You know? Keep in mind, you know, DeFi Alpha came out of an idea, you know, Johan had, a few months ago, and and now it's, you know, making, you know, potentially hundreds of millions of dollars a year. So as we are, you know, entrepreneurs at our core, we will, you know, continue to innovate innovate, strive to innovate, look at, you know, Apple hires and or acquisitions that complement the robustness of our trading technology.

And I think we have a very good opportunity to be the most profitable, specifically kind of vertically integrated trading technology and asset management company in the digital asset space.

Johan Wattenstrom, Cofounder, DeFi Technologies: Yep. I agree a % on that. And and also the what we've seen and and really optimized now is how this model works in Europe and not least in Scandinavia. And, obviously, also on the marketing PR side, we we done a learned a lot in last two years. And I think that blueprint is something we we expanding on geographically, but also in terms of vehicles because now we have the EPTs, the ATMs, but we also now have the asset management license in Switzerland.

We will do other types of vehicles like funds, use it funds, hedge funds, and make sure all pools of money can access our asset and strat strategy. So both trackers, different types of of, bulk get the leverage product, but also the alpha type strategies, and and make sure we can distribute that even more efficiently across, other types of vehicles. So all types of asset managers, from retail to to institutional can invest because not everyone can buy equities. Not everyone can buy EPPs. Others can only buy convertible bonds or corporate bonds or hedge funds or mutual funds and so on.

So so the expansion, which is really, high pace right now, it's not only on geographical side. It's also on on the type of vehicle side where we see huge demand from new type of investors that have not been able to participate, but we will make it possible for them to participate, where we're assuming in the same geographies where we are successful now. So I I think, Jose, we we, we have a lot to build still.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Thanks, Johan. Final question from Edward Ingle, and this one is for you again, Johan. At a higher crypto prices impact the outlook of DeFi alpha opportunities, do higher valuations create more trading opportunities, can they widen the spread you earn on some of these trades?

Johan Wattenstrom, Cofounder, DeFi Technologies: I think the it's a bit annoying now also to that. The the I would say we we don't maybe maybe we'll get higher margins, but we could probably do larger tickets per trade. And, obviously, we see with with higher markets, we see more opportunities, though, for for sure, because there might be opportunities for us to buy distressed assets or or discounted assets at from different types of actors in space. And and if the market is higher, they are more likely to be willing to sell to us or do I and I have a type of structured deal within this this framework. So, I think the higher markets will will, make the our counterpart is more more trigger Apple for for sure.

And the margin probably remains about the same, but but the ticket ticket sizes might be be higher for sure. So, yeah, it's it's all in all, it's positive that the market goes up, yeah, on all fronts.

Curtis Lofman, VP of Marketing Communications, DeFi Technologies: Great. That concludes today's call. If you do have any follow-up questions, please email us ir@defi.tech or Curtis@defi.tech. Thank you all again for your support, your participation. There will be a recording of this provided shortly after.

It'll be emailed and tweeted out and also on the company's LinkedIn page. Thank you again. Enjoy the rest of your day.

Johan Wattenstrom, Cofounder, DeFi Technologies: Thanks.

Olivia Russe Newton, CEO, DeFi Technologies: Thanks, guys.

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