DeFi Technologies Inc. (NASDAQ:DEFT) Q3 2025 Earnings Call Transcript

DeFi Technologies Inc. (NASDAQ:DEFT) Q3 2025 Earnings Call Transcript November 14, 2025

DeFi Technologies Inc. misses on earnings expectations. Reported EPS is $0.01 EPS, expectations were $0.07.

Curtis Schlaufman: Hey, everyone. Thanks for joining. Let’s give a few moments for rest of the folks to filter in. We’ll wait until 9:01 to get started. But in the meantime, I’ll go ahead and remind everyone that this call is being recorded, and there will be some forward-looking statements. And then — this is not investment advice. We’ll start the call with an overview of our Q3 financials from Paul Bozoki. We’ll then move on to a statement from our current CEO, Olivier Roussy Newton, followed by a follow-up from Johan Wattenstrom, our incoming CEO; and then some growth initiatives that are currently in progress and updates from our President, Andrew Forson. So let’s give some everybody about another 30 seconds, and then I’ll hand it over to Paul.

Well, the Q&A is also open to folks. So after the presentation and after comments, we’ll go through Q&A from retail and then open it up to — and bring on our analysts to ask questions and then wrap up the call. So joining us today, as you can see on the screen, my name is Curtis Schlaufman, VP of Marketing and Comms. We have our current CEO, Olivier Roussy Newton; incoming CEO, Johan Wattenstrom; CFO, Paul Bozoki; and President, Andrew Forson. With that, I’ll hand it on over to Paul to give an overview of the quarterly financials.

Paul Bozoki: Thank you, Curtis. Good afternoon, everybody. Starting with an overview of our AUM. DeFi closed September 30 with AUM of USD 989.1 million. Q3 average AUM increased to $950.7 million from $760.2 million in Q2 and $789 million in Q1 due to crypto price movements and positive cash flows into our ETP products. Q3 saw $38.8 million cash flow into our ETP products, bringing our year-to-date positive cash flows to $116.2 million. Moving on to revenues. Our Q3 revenue was $22.5 million and brought our cumulative IFRS revenues for the 9 months ended September 30 to $80 million. Q3 effective staking and lending income yield was 3.1% on the $950.7 million average AUM, a reduction from the 3.6% realized during Q2. The 0.5% absolute term reduction is due to lower protocol rewards realized in the quarter.

We staked approximately 58% of our AUM at the end of Q3. We adapt our staking percentage of our AUM in sync with market conditions and internal risk management policies to ensure we can meet ETP commitments on a timely basis. Our Q3 effective management fee yield was 1.2%, up slightly from the 1.1% realized in Q2 due to additional new management fee-bearing products. Reminding our investors, we don’t charge management fees on Bitcoin and Ethereum products. We closed Q3 with 99 products and reached our 100-product goal during October 2025. Moving on to our revenue bridge from our guidance. The company previously disclosed revenue guidance of $218.6 million. This consisted of $116.6 million of core revenues and $102 million of DeFi Alpha-related revenues.

DeFi Alpha opportunities have been delayed from the forecast due to the proliferation of digital asset treasury companies and the consolidation in digital asset price movements in the later half of 2025, thereby delaying arbitrage opportunities and compressing available arbitrage profits. Furthermore, given the unpredictable nature of DeFi Alpha transaction revenues, we understand most analysts were not factoring these revenues into their financial and valuation models. As such, we reiterate our core forecast of $116.6 million revenue for 2025 and guide that the $102 million of DeFi Alpha-related revenues will be deferred over a longer period. We believe the core revenue forecast of $116.6 million will be achievable if cryptocurrency prices post a modest rally into year-end from current levels.

Q&A Session

Given Bitcoin is currently in a material supply distribution phase and the price is still holding in and around $100,000, plus or minus a few percent, with the increasing institutional and retail participation in cryptocurrencies, we are bullish for cryptocurrency prices in the coming months. We believe DeFi’s strong balance sheet, bolstered by the recent $100 million equity financing and our relationships will allow the company to source attractive arbitrage opportunities, which others cannot. Moving on to our operating income. Q3 operating income came in at $9 million and $32.6 million for the 9 months ended September 30, reflecting our strong focus on profitability. Q3 IFRS net income after tax came in at $3.9 million and $33.8 million for the 9 months ended September 30.

In terms of our crypto investments, our venture portfolio now consists of 12 private investments with our largest being our 5% stake in AMINA Bank that makes up 83% of our portfolio’s fair value. AMINA Bank continues to perform exceptionally well, growing its AUM quarter-over-quarter and year-over-year to approximately CHF 3.5 billion at this time. We also made three new investments during the third quarter being TenX Protocols, Canada Stablecorp and Continental Stable Coin. Lastly, about the $100 million equity raise, the $100 million equity raise in September of 2025 will assist the company to increasing its staking back to the 70%-plus target by providing more capital to facilitate ETP market-making on a larger AUM base, provide working capital for DeFi Alpha trades and support our other revenue and AUM growth initiatives.

The company is also always on the lookout for accretive M&A opportunities. As of September 30, the company had $119.5 million of cash on hand, treasury crypto holdings of $46.2 million for a combined total of $165.7 million. Management is confident that this capital will support future growth and also provide downside protection in the event of market turbulence. Thank you. Handing it over to Olivier.

Olivier Roussy Newton: Thanks, Paul, and welcome, and happy to have everyone who’s joined us on this call. Q3 2025 was another exceptional quarter of execution and consistent profitability. We delivered revenues of $22.5 million and operating income of $9 million, marking our third consecutive profitable quarter this year. I think this really reflects the scalability and resilience of our model through kind of macro headwinds that we’ve kind of experienced, I would say, throughout the last kind of 10 months or so. Valour continued to be a major driver of performance, achieving net inflows every month year-to-date and delivering $38.8 million of inflows during the quarter and $116.2 million year-to-date. Importantly, Q3 marked our highest average AUM on record over USD 900 million per month.

And all of the aforementioned figures are also in U.S. dollars, just for the record. Ending the quarter at $989.1 million. I mean, in terms of Valour’s trajectory, it’s quite clear. As AUM compounds, reoccurring revenue scales. With continued product launches and internal expansion, Valour remains at the center of our long-term growth strategy. On to our other very exciting acquisition that we made about 1.5 years, 2 years ago. Stillman Digital continues to see exceptional trading volume and produced $2.2 million in trading commissions in Q3, continuing to strengthen its position in institutional trading. They recently integrated into the Talos network, which is an FX and stablecoin capabilities network that deepens our liquidity, provisioning and exposure.

And senior hires have been made to exponentially drive higher volumes and improve execution. Stillman’s steady growth and high-margin model further enhance our profitability, and we expect a lot more going forward as that business grows. We remain exceptionally well capitalized with just under $120 million in cash and $46.2 million in digital assets for a combined $165.7 million on our balance sheet as of September 30. This financial strength enables us to fund growth, maintain flexibility and return value to shareholders. During this quarter, we also repurchased just under 1 million shares for $2.44 million. Our NCIB buyback, share back program is still in place, and I think we will continue to execute that moving forward with the larger cash position that we have, something that Paul reflected on.

But in terms of a company, Valour specifically, as well as DeFi having never done an institutional capital raise, the ratio to our AUM, I felt was a bit on the lower side of things. I think we kind of timed our financing well. And it gives us a lot of further capabilities to do buybacks, acquisitions and other strategic initiatives. While we’ve adjusted 2025 revenue guidance to $116.6 million as DeFi Alpha opportunities have been delayed due to the proliferation of DAT or digital asset treasury companies and the consolidation in digital asset price movement in the latter half of 2025. The underlying business remains strong, diversified and profitable. Our asset management, trading and research divisions are all contributing to a foundation that compounds cash flow and shareholder value.

Valour’s record AUM levels demonstrate sustained investor demand for regulated digital asset exposure. Stillman’s institutional footprint continues to expand, and our balance sheet gives us the strength to capitalize on opportunities across all lines of business. We are executing, scaling and delivering profitability quarter after quarter. Our model works, our platform is compounding, and our focus remains on long-term sustainable growth. As we look forward, I want to take a moment to announce my resignation as CEO. After 3 transformative years as CEO and Chairman, I’ve made the decision to step down. This has been one of the most rewarding chapters of my career, not without it’s up and down — ups and downs as we see, obviously, across crypto cycles.

I’m extremely proud of what our team has achieved together. We’ve scaled and institutionalized Valour’s ETP platform, strengthened our capital base, executed strategic M&A and delivered record financial results of — to our shareholders. And obviously, came out of a mountain of debt that we did so by focusing on revenue generation without the need for diluting shareholders. I’m deeply grateful for the support of the employees, partners, investors throughout the journey. Johan Wattenstrom, who I consider a dear friend, I’ve got to know him over the course of the last 8, 9 years. We founded Valour together before we set up DeFi, has been but by my side since day one, we’ve been through ups and downs, round and rounds together, and will step in as CEO and Executive Chairman.

Johan’s leadership, discipline and deep understanding of our business make him the right person to guide DeFi Technologies into the next phase of growth. Thank you all for your continued trust and support. I could not be prouder of what we’ve built and even more excited for what lies ahead. And yes, I’m not going anywhere. I continue to remain a significant shareholder, partner and an advisor day-to-day. Hopefully, I won’t annoy anyone too much with all of my pestering. And my focus will go towards BTQ Technologies, which has been a 13-plus year endeavor. And I think we’re at a critical juncture for digital assets being protected by quantum security, and it’s a real risk for the entire industry along with businesses such as Valour, BTQ. And Valour as well as DeFi will have working relationships and joint ventures going forward as well.

That’s it from my side. I’ll pass it on to Johan.

Johan Wattenstrom: Right. I’ll start to comment a bit on use of funds, DeFi Alpha monetization rates. But first of all, I also want to thank Olivier for everything so far, and we will have continued great cooperation going forward as well. And obviously, I’m super excited to take the CEO role in a time where we have never been — had a better infrastructure in — had a more solid balance sheet and more potential on the upside than we have right now. As we’ve seen in the last quarter, when we have the highest average AUM we ever had, we more — have a stronger balance sheet than we ever had, and we’re making weekly progress on all our core areas and also expansions beyond that. On the use of funds, DeFi Alpha monetization rate, they are quite intertwined.

One first comment would be on the monetization rate, where we have had a temporary dip during end of Q2 and during Q3, due to the fact that we launched tons of products. We have expanded market-making efforts quite a lot and more need for operational capital in those businesses. However, we have worked to build the infrastructure and the potential monetization rate to be of much higher potential. And I would say that we would, for this quarter and also starting this week, next week, we’ll be able to deploy basically all the AUM to making yield for the company. And I would say that our annual ongoing monetization rates from — in a week or 2 will be higher than it’s ever been historically. Much thanks to also the capital raise we did, which go in great length in supporting more effortless handling of the market making, the flows, the capital we need to deploy to be working at the most optimal level.

And this also goes for DeFi Alpha for sure, where it opens up new opportunities. The forecasted — we obviously had hoped to be able to execute more on the DeFi Alpha side now. None of the opportunities on our pipeline have disappeared, not to digital asset treasury companies or to anything else, they still remain. Some are dependent on levels for specific projects. And we obviously hope to be able to execute on these and more the coming 6 to 12 months and are very optimistic about that line of continuously our business. But as we think have been very clear in communication from — that those type of deals started to come around 1.5 years ago. It’s super hard to predict timing, and we’re doing all we can to expand the scope of that business, along with the core business, where we also now see a lot of new opportunities in our core markets in Europe, even not counting the new geographies.

There’s a lot of new demand that we can see in Continental Europe, including not the least in France, where it’s been hard to penetrate before. We’re also extremely optimistic about the slight shift we’re seeing starting to happen now in Europe towards more institutional participation on the back of what’s happening in the U.S. during this year. I think that will trigger a big expansion in the addressable market for us in our core markets, in our core operations. When it comes to use of funds, as I think we also have communicated before, some of it goes to optimizing the treasury, DeFi Alpha and market-making business, providing liquidity for our own products and making more deals. Besides that, we have the UCITS funds coming up, actively managed certificates that we all hope to be able to execute on before year-end.

We will — as soon as that’s up and running, we will obviously PR on those. And one aspect of this type of products is that we do need to [ put ] some seed in a few of these in order to get institutional flow. Some of our liquidity will be used for seed, which will be redeemed once we have a critical mass of AUM in those different products. We will also obviously be more active in our treasury with the — also the arbitrage operations we’re running there to provide a high return on all our assets, both crypto and fiat. We are always looking at strategic deals. We are obviously super selective, but — and it depends a lot on the market. We’ve seen obviously a big [ attraction ] here in the crypto market the last few days. And I think it’s — for us, it’s just positive because there’s more deals available for us at prices where we’re happy to participate.

But, obviously, we’re looking long term to build the business to be more efficient, to grow with the AUM, grow the monetization rates, which are our prime targets. We also do some new efforts in institutional sales, [indiscernible] marketing budgets in our core markets. We have already added a bit to crypto treasury over time at low prices. And besides seeding, we are also working more in the treasury strategies with these funds. So we’re confident we’ll be able to give a very high return on our liquidity over the next 3 to 6 months on the back of a strong balance sheet. I think furthermore, maybe we have commented on the digital asset treasury companies before that delayed a few things, not only in DeFi Alpha. I think that from our perspective, that’s been a bit of a hype that attracted from operational profitable companies such as us.

And we do believe that, that way we’ll come to kind of an end in terms of how hyped it is. which we’ve seen already where we get present with more deals that were — it was delayed before because some counterparties thought there would be other avenues within the treasury company space. I’m sure there will be a lot of interesting treasury companies coming up, but we have seen a lot of things that are of low quality. And we obviously are just focusing on our own business and executing going forward. And with that, I think I’ll leave over to Andrew to talk about the geographical expansion and other new areas of interest.

Andrew Forson: Yes. Thank you so much, Johan. And of course, thank you, Olivier, for all the hard work and the many early mornings, late nights. I think it’s always a challenge whenever we talk about geographic expansion because sometimes there’s the impression that these things can happen quickly. Whilst we can’t assure that they always happen quickly, we can assure that they will happen. We’ve been working very, very tirelessly, speaking with different jurisdictions. I can indeed confirm that we have had success. However, we are not able to announce the particular market where we will be listing next until such time that the regulator and exchange provides us with the listing date. This has been a significant team effort, a group effort — and I’m particularly excited because we now have a strategic approach to looking at different markets.

We understand which markets are more receptive. As a matter of fact, we have some markets reaching out to us, but it will take time. It is not overnight. And it is not something that we can just glibly discuss on X because the regulators don’t want us to until they authorize this sort of thing. Certainly, another critical factor, and I think Johan alluded to this, is the importance of our home market in Europe. Europe is a market that has a lot of potential. We demonstrated our fidelity and our view of the importance of Europe as a market with our first DeFi Alpha Global Insights event, which was based in Frankfurt. There is a great deal of opportunity that can be had by us reaching out to broker-dealers, private wealth managers, family offices and banks in the European ecosystem.

And this is something that we are actively doing. We have a system in place. And the metric that I’m always most interested in are what are our average inflows irrespective of new product launches. And consistently, our inflows have been quite significant, and we are always going to be pushing Europe on a country-by-country basis, exchange-by-exchange basis to ensure that our AUM grows from inflows, not just from capital increases in the underlying assets. And now I’ll go on to the next two points briefly. I think in the coming weeks, we will definitely have more focused information on new products and new initiatives. One of the things that is near and dear to me is the idea of data. I mean, I’m coming from the DeFi space but have always worked in the quantitative finance space.

And the data that we have access to both as Valour as DeFi Technologies and indeed, as our underlying operations with the ETPs, it means that we can do a great deal to feed the world of decentralized finance. I look forward to having a rejuvenated reflexivity operation. I think in some instances, some people may have heard of some of the projects that we’re doing. Most of it has to do with providing — using our own IP to provide scoring services for digital assets on a fee basis, and this would be made available to both institutional investors, which is important because there’s actually not too effective scoring systems for institutional investors in the digital asset space. And of course, it would also be available to the foundations, which are always looking for novel ways to maximize the utility and communicate the message of their project.

With regards to SovFi, for which there have been a number of questions, just to give a slight background and history, this has been a long-term project. It’s not something that just came up. This has been something that’s been percolating for, I think, since prior to COVID — pre-COVID and this is something that we’re working on strategically with DeFi Technologies to find a great way to leverage our existing platform in a way that maximizes revenue and shareholder value for DeFi. It will take time. Under the new leadership with Johan, we will work together to figure out how do we maximize this in a way that leverages what we’re doing as Valour and DeFi, but also that injects new blood and new energy, in addition to increasing our total addressable market to something that is a little bit more significant beyond just the crypto space.

And this is something that is well within our means. It will certainly take a little bit of time to establish. But in terms of the products, the research products, they’re all well within our grasp. The platform of Valour and the ecosystem of DeFi Technologies is more than able to support what needs to be done there. And we look forward to having very, very detailed descriptions of the technologies, the IP, the projects that we’re working on. And I think we’ll also be able to give more insights into geographic expansions that comes with these new products because we’re able to have different types of conversations in jurisdictions that may have been a little bit more squeamish or squealish about dealing with crypto. We’re now able to have other service offerings that are all revenue generating, much like the DeFi Insights events are also revenue generating, that we’ll be able to bring into the DeFi Technologies fold.

So in the coming weeks, I look forward to discussing all of this. It’s all very passionate. It’s actually very exciting stuff. We have a great growth story. We’re well capitalized. And I remember there’s a famous quote about Warren Buffett saying that in the short term, the market is a voting machine, but in the long term, it is a weighing machine. At the end of the day, we’re generating significant revenues, and our multiples are low. And now the onus is on us to prove to our shareholders and our communities, how effective we are, and we intend to do so with novel products and great results.

Curtis Schlaufman: Great. Thanks, Andrew. I’ll open it up now to some questions that have been in the Q&A, and then we’ll turn it over for Q&A from analysts. I’ll start with a question from Juan. Do Alpha trades carry a liquidity or price liability. Can you please explain what happens with the May $23.8 million SUI trade if price is lower or higher than $3.51 per token, at maturity? Also, could you explain if and how DeFi is hedged, if, for example, DeFi replaced 30% of their fee and liquid SUI tokens at the ETPs for these locked tokens in the March trade and there is a run on 75% of the SUI. So basically, I think the question is, how are we hedged against these locked token trades, particularly if they don’t realize — if they trade lower than the valuation they were acquired at maturity?

Johan Wattenstrom: Yes, happy to answer that. So basically, with that trade and I think two other trades historically, as I think we communicated before, we have hedged all market risk for the core operation. We have a part of the profit, locked-in profit for this trade and the historical trades has been retained in tokens. So to that respect, the profit — some of the profit is locked up and in token. So that part of the profit will obviously fluctuate a bit with the market. We will get a higher profit if the market goes higher and slightly lower if market goes down. Whilst the core — the arbitrage itself is 100% hedged for the principal, the pure profit we locked in is retained in tokens that will be locked for a bit. So we will — we might see some volatility there over time.

There’s a lot of upside and some downside, but it will not — the principal of that trade is locked up and hedged away. Same thing as historically, we’ve seen with some of the other trades as well, where we retain some of the parts in the actual token where we did the trade. And that’s something that we are keen to do for some of the assets where we have a high conviction and where we’re building, where we have products and we’re happy to support those ecosystems. And we believe the upside and potential is great, and we have a lot of interactions and support those ecosystem and technologies for sure. So yes, short answer, we have — on the pure profit, there is a correlation to the market, so it can go up or go down. And yes — I think was there anything more specific, Curtis, that I missed there?

Curtis Schlaufman: No, I think you covered it.

Johan Wattenstrom: So that’s differs for different trades. If we do these trades in assets where we don’t have a high conviction, we typically do not have any exposure at all. We lock in all fiat — all profits in fiat. For some others, we keep some of the profit in the assets.

Curtis Schlaufman: Great. Another question for you, Johan. What key message do you want to give long-term shareholders to take away today? And what to expect in regarding to milestones should they watch out for over the next 12 to 18 months?

Johan Wattenstrom: Yes. I think nothing really has changed in the long-term core strategy. We will continue with a really, really high core focus to maximize AUM and maximize monetization and expanding in all the vectors like new products, second, third generations of products, more value-added and also more types of vehicles for participating in digital assets that will tap into new pools of capital that could be a debt markets, it could be funds that are not allowed to invest in ETFs and so forth. So we have new types of vehicles to reach that — those types of capital pools. And what they all have in common, I would say, is that while a lot of [ ETFs ] we have now are kind of geographically sold in — direct to markets, a lot of the new products that are more aimed at institutions are more global in their nature, so they can more easily be distributed globally without the confines — being confined to Europe or Sweden or France and so forth.

So I think you will see a super high pace in execution in our core strategy, making sure we don’t not miss any of the low-hanging fruit we still see in our core markets. We obviously now have over 100 products. I think we cover all the actual digital assets we want to cover. We will selectively list more trackers if we see new extremely exciting technologies come through. Otherwise, the core focus now is on new vehicles and new more value-added products such as leveraged products, such as bonds, such as funds — hedge funds, active managed certificates, UCITS funds and so forth. So we can tap into a much larger market and a more global market from our present organizational base and really leveraging the scalability we have had since long — since beginning and also utilizing the extreme upgrades we have done, I would say, monthly in our infrastructure as well.

So for some of that, we have taken a few hits temporarily in the monetization rate that was made in — for us to be able to upgrade to a better infrastructure where we have partly new counterparties, partly new setups for the market making, where we can use collateral much more efficiently and being able to deploy a much more higher percentage of our balance sheet in income-generating yielding activities. And I think we have never been at a stronger point actually in terms of our balance sheet, liquidity, asset under management and an ability to really leverage and quickly go after and execute. And I think we have a great starting point. I also think that any temporary weakness in the macro scenarios or order temporary — in the market, which we see, for instance, right now, I think that provide us with better opportunities to build on this long term.

So, yes, I’ve never been more optimistic actually about how well positioned we are versus competitors and also within our present markets and also how we will be able to roll out after a lot of obviously grinding on the new — on new geographies where sometimes regulatory authorities take time. Something also, that maybe Andrew has noted before, is that we come from a scenario on the geographical expansion where we had to chase new markets to start executing. Now these — the new geographies are actually contacting us and want it, which is also a shift we’ve seen. Another really important shift, I think, is that we’re seeing the beginning of more institutional participation from Europe, where I think right now, I would say, we have probably over 40,000 clients in Europe, but it’s overwhelmingly retail, which obviously always are the first adopters.

We have a lot of really tech savvy, financial savvy retail clients, while the institutions are lagging a bit because of other constraints within their operations. But I think with the new administration, we’ve seen the new climate in the U.S. It’s clear that a lot of [ institutions ] in Europe has gotten the message that this is something they need to participate in, and this is something we are making sure we are in the lead of helping them being a participant in through our new products, new platforms, new vehicles which will make it easy to gain secure and best-in-class access to these exposures.

Curtis Schlaufman: Thanks. I’ll hop around now. I’ll — Kevin, you raised your hand first. So if you want to meet yourself and ask your question. Kevin Dede from H.C. Wainwright.

Kevin Dede: I was hoping Johan might offer a little more color around DeFi Alpha and the influence that DAT have on that environment, it’s not I guess, dots that I can easily connect in my little brain.

Johan Wattenstrom: No. Yes, happy to do that. So there are a few particular deals, I would say, maybe three of them, all quite a bigger scale. We have been negotiating for a long time. And at some point, quite a few of these included, obviously, were thought because of the hype in that sector that they would have preferred to be able to participate in public markets, traditional markets through that type of vehicle instead. I think none of them are looking at that still. But when the hype was created with MicroStrategy and tons of new participants joining in, premiums were super high, there was a lot of, I would say, maybe a bit too creative solutions being offered to these, which never were actually set in motion in the end.

So I think there was a lot of delays while they were contemplating other ways of getting financing, but also being participating in kind in different deals for their particular technologies, and that’s just something that had dried out. In other cases, it has nothing to do with digital assets treasuries, it’s more like the market — for some of the alternative coins, their market has not been at all-time high levels. They have looked at specific levels where they want to execute these deals specifically for two deals we’re looking at. And that’s something that’s still there, and we hope to be able to execute as soon as markets recover when they recover. If they don’t recover, it will take time. But specifically in relation to the digital asset treasury companies, I’m not sure if you’re aware, but with the high premiums, we saw at some stage in not least in the U.S. and Japan and so on, the — all over the world in the Middle East, in Europe, there was a lot of this project being started and they were promising quite a lot to some of these technologies and some of these institutions, which never come to fruition.

And I think that has delayed a lot of the discussions.

Kevin Dede: Could someone comment on the investment pipeline, given focus that the company has had on it previously, I guess you can still continue to focus on it. You just have a little more dry powder rather lately than you’ve had in the past. And I mean, if asset prices here are any indication of how companies are valuing themselves, please offer some insight on your investment pipeline.

Johan Wattenstrom: You mean in terms of M&A and…

Kevin Dede: Exactly, Johan. Exactly.

Johan Wattenstrom: Yes, sure. We — I touched upon a few other uses of funds that we do right now to get a high yield on our liquidity and how we use it to be able to monetize our assets better. Obviously, a big factor here is also that we — like we did in the past with Stillman, with Reflexivity, with Neuronomics. We’re always looking, and we get tons of calls every week from interesting projects, competitors, complementary type of companies…

Kevin Dede: I’m still on the DeFi call — sorry.

Johan Wattenstrom: So it’s — we’re looking at a lot of different opportunities right now, and it’s hard to say something really concrete because we are super, super selective, and this has been even historically. We don’t venture into something that’s not 100% will strengthen our long-term growth prospects and are part of our vertical integration and makes our infrastructure stronger and is aligned with our long-term strategic goals. So we obviously say no to, I would say, 9 out of 10 of all these suggestions and the deals we actively seek up as well early on. But there is a few that we’re always looking at, and we are looking at a few of these interesting kind of deals right now. Obviously, one thing I might be able to say that’s more concrete is obviously, it’s one thing we’re considering is when and how to enter the U.S. market with something that is differentiated and have a strong distribution with products, given the size of the U.S. markets.

We don’t — it’s not a — we’re not looking to just jump in for the sake of it, obviously. We want to maintain high margins and make sure we have a unique offering. But in that space, obviously, there’s quite a few things we’re looking at. I’m not sure if there’s much more concrete things I can say at this point, but we have proven, I believe, in the past that we’ve been able to do acquisitions that is in line with our strategy in terms of vertical integration and long-term strategy to grow AUM and monetization rates. And we’re looking at a few of the opportunities that would allow us to continue that process. We’re also looking to internally grow one or two new business areas that also would increase our profitability and vertical integration and make us independent of outside suppliers.

And we probably would be able to announce more in the near future as well.

Curtis Schlaufman: Let’s move on to Mike from Northland.

Mike Grondahl: First question is maybe for Andrew. It sounds like you were talking about a geographic expansion win in your comments. I mean, was that the case? And is it in a small market, a big market? Just a little more color there. And I know you can’t name it. I’m not asking that, but a little more color would be helpful.

Andrew Forson: Yes. And it’s a big market.

Mike Grondahl: Good. Good. That’s great. And then, hey, a question maybe for Paul, it looks like year-to-date, you guys have done $64 million, and now you’re guiding to $116 million for the year. I mean that implies $52 million in the fourth quarter. What’s driving that?

Paul Bozoki: Mike, I’m at $80 million. $80 million for 9 months. And the $116 million is IFRS. So I got to do $36 million in Q4. We just did $23 million, right? $22.5 million. So $36 million.

Curtis Schlaufman: And apologies, like we have dozens of questions. So if we don’t get to your question on the call here, you can always e-mail or give me a call, widely available, as always. But let’s hop over to Ed Engel from Compass Point.

Edward Engel: Paul, some on the accounting side for you. In the MD&A, there was an add-back for adjusted revenue and EBITDA, which is a “price movement on equity investment distribution timing loss.” Can you kind of go through that, please?

Paul Bozoki: Yes. So we have an investment in a fund, and it took almost 3 weeks for the fund to distribute cash. It was a bunch of Solana, and they sold it at the end of the quarter and then just the nuance of getting the money to us in Switzerland took a bit of time. So there was some slippage on the crypto price. So it was a one-off, Ed.

Edward Engel: Okay. And then as I think about the revenue for the third quarter, crypto prices were broadly higher and I think your total realized and unrealized impact for 3Q was still negative even if I do that adjustment for the — that movement, as I think about Q4, crypto seems like it’s going to probably not be higher Q-on-Q. So…

Paul Bozoki: I had my IFRS number is [ 9.7% ] in Q3. If you look at the income statement for the [ digital assets movements. ] And that’s got the negative hit from the timing loss, right? So it would [indiscernible] to that.

Edward Engel: Okay. So the — okay, that helps.

Paul Bozoki: Thanks. So that’s how you can see what we think we can get there. I mean, it does require crypto prices to move up from here, but with — we’re probably everybody on this call is generally crypto bullish. So if you think Bitcoin is going higher than $100,000, we should be able to get there. If you think it’s going lower, we won’t get there.

Edward Engel: Okay. That’s fair. And then I guess next on — so what was I was going to say? For the staking. So I mean, I understood why staking the yield was lower. I guess looking into the fourth quarter post the capital raise, can you kind of expect that staking yield implied one to get back to maybe 2Q levels? Or is it going to be a gradual buildup?

Paul Bozoki: Johan, do you want to add — Johan, go ahead.

Johan Wattenstrom: Happy to jump in. So we had — we’re quite confident that the high — that rate will go higher. We are confident. We already have deploy a much higher rate of the coins. We did need some of the coins for the market making, for the collateral with new counterparties to be efficient in our market making. That was part of us tuning up our infrastructure and also the capital raise has helped us to not need to do that in the future. And we also have a better way to — for a lot of the assets now to get higher rates for going forward. So it has been temporary in, I would say, from the end of Q2 to maybe last week at some point. But from last week and for some of the assets from Monday, closer to 90% to 100% instead of much lower rates will be deployed for yield and also in many cases, at a lot higher yield.

So we would expect — let’s see, yes, I would expect it to go up to the former highs from last year in terms of monetization, but at a higher level of AUM from a dip during this quarter.

Edward Engel: Okay. And I guess that’s even with, I guess, just staking yields across the industry. I guess they’re still probably higher year-on-year, maybe just below the end of last year. Okay. That makes sense. And then just lastly for me, on Stillman Digital, I think initially, you guys were guiding $15 million of revenue for 2025. It looks like you kind of reduced that.

Paul Bozoki: It’s going to do USD 8.6 million. [indiscernible] on $8.6 million. It was CAD 12 million to CAD 15 million, so it’s going to be $12 million…

Curtis Schlaufman: And I think we’ve gotten a couple of questions on growth path for Stillman Digital, Andrew or Johan, if you wanted to tackle that on how we’re effectively scaling, or even Olivier, Stillman Digital and onboarding new services, new clients and then even expanding Stillman services geographically as Valour expands geographically?

Johan Wattenstrom: Yes. I can comment a bit on that. So for Stillman, I think we see continued really strong growth for Stillman, and they’re entering into new geographical areas. They have a lot of new clients in Europe. They — I think early in the year, they had to re-onboard a lot of clients from earlier, I think U.S. to our — for the international clients to the Bermuda entity. And that has opened up new markets, new clients for them as well. So they see a large inflow of new types of clients from new geographies. It’s not tied to DeFi or Valour’s other markets really. They are able to grow their business independently on where we have a presence for ETPs and so on. But they see a lot of upside within new — the Bermuda for international — Bermuda license for international clients.

And also in the present markets, Latin America, North America and so forth and also on the back of our — the group’s balance sheet, they’re able to do a lot more partnerships and deals and participate in more flows for market making and brokers. So it’s a very optimistic message from that team, and we see continued growth in both top and bottom line. I don’t know Andrew, if you have something else specific?

Andrew Forson: Yes. If I can add to that, I mean the Stillman business case itself is one of the most pleasant to present. First off, the counter on the website significantly understates the gross transaction volume that they’ve actually executed since inception. I think they’re actually over something like $51 billion in transactions executed. And that was as at September 25, when I met, I think, Johan in Germany. But I think the thing that’s interesting is almost every instance where I speak with a centralized exchange, decentralized exchange, an on-ramp and off-ramp, they’re all looking for liquidity. And if any people are following the news, you realize that pretty much any platform that seeks to sell or deal in tokenized assets, issue them, they need liquidity providers, and that’s effectively a market for Stillman.

One of the challenges is there is significant regulatory process, and there’s a lot of KYC stuff associated with onboarding. So their sales cycles are long. But it’s one of those situations where almost every single recommendation or introduction that I have made to Stillman has been able to be their client. And I think another thing that we should know, sometimes people see and hear, “Oh, yes, these guys have invested in Stablecorp, a stablecoin company, or they’ve invested in the cNGN. A stablecoin company.” The glue that ties a lot of these things together, that gives us the opportunity to create alpha from our internal corporate venture capital portfolio is something like a Stillman. That provides liquidity to both and ensures that cash flows between a country like Nigeria and a country like Canada, via their stablecoin infrastructures, can happen.

Now this is not something that is immediate. It’s not something that when the deal is signed, those on rails and off-ramps are already established. But it’s definite, it’s true, it’s there, and we have that capacity vertically within DeFi. So Stillman is a great story.

Curtis Schlaufman: Michael Kim from Zacks.

Michael Kim: Just given all of the new strategic initiatives around the advisory business, stablecoins, sovereign debt and what have you. Just curious to get your perspective on how you see the revenue mix evolving over time, particularly as it relates to management/advisory fees versus more trading or volume-based fees, if that makes sense.

Johan Wattenstrom: Yes. I think — those are — the reason we have taken these initiatives is that we see they have a lot of synergistic properties to our other assets and our other businesses, for sure. I think it’s in some of these areas, we are at a point where we see a huge potential stepping into new capital pools, new flows and so on that will benefit all sides of the business. It’s probably a bit too early to say that in 1 year, the revenue mix will look this and that different. It’s a little bit like with the DeFi Alpha that these are businesses we are building. It’s much easy to forecast the core business and the evolution of that and then the new also type of products we will incorporate into that. I think that we do obviously want more streams of revenues, but we — I’m not sure — it’s a goal in itself to just find things that makes us more diverse in that sense.

I think we’re really trying to make things that are synergistic and really make sure we are a leader within our core business. And I think all of these initiatives are synergistic with that goal in mind. While obviously, we would not have done these investments in these initiatives, we wouldn’t think they would be great stand-alone revenue generators also in the long term because we don’t really invest in anything that’s not — we don’t — we not have a high conviction that it will be cash flow positive, and we don’t need to throw a lot of money at it. We’re trying to build the long-term robustness and I would say, edge and the uniqueness of our business, so it’s much harder for competition to really touch any of our core general drivers. And I think all of these new initiatives contribute to that.

It’s very hard, obviously, I guess, from my perspective, in 1 year to say how much would be contributed from this new business. I don’t know if — Andrew, if you have some color on that from your side.

Andrew Forson: Yes. I think, Johan, you’re absolutely correct. I think there’s immense value in our cash cow core business and our cash cow core business models. That said, it’s a expression that I very much like. We’re really focused on investing initiatives that can positively impact the trajectory of expected returns for DeFi stock. So for instance, whilst I don’t think I can give a specific case. I know that one of our portfolio companies in terms of volume had a massive quarter-on-quarter growth rate for their products. This is why we make certain investments and particularly in certain verticals. We like to go into places where we would have a unique competitive advantage, where we don’t necessarily have to throw a lot of capital investment in order to be competitive and that there is significant moat in the space.

And if you look, in particular, I think this is very public knowledge, at our stablecoin investments, whilst they’re not one of the 20 U.S.-dollar stablecoin projects that are out there, they are the leading or at least top two stablecoin projects in each one of their markets and more significantly in both instances, we are on the cap table with Coinbase and Circle. So that doesn’t happen by accident. And if we understand what underpins those stablecoins, we realized that, well, if you’re dealing with treasuries or money market type instruments, that Valour is very, very well placed to help accelerate their mission. So it’s not something that we might see the next quarter. But in terms of altering the trajectory of the expected return of DeFi stock, we’re definitely there, and we’re definitely partnering with the right people.

Curtis Schlaufman: And Andrew, it’d probably be helpful to touch on hybridized products and specifically as well — basically TAM versus TAM.

Andrew Forson: Yes. Look, I don’t know how much time we have. I’ve got to be short. But this is an area that I’m absolutely passionate about. And to be honest, I think that this is where DeFi stands unique. And whenever people are concerned about a quarter-per-quarter progression, of course, look, my mom and dad are invested in the company. I want to make sure that the stock price goes up. But ultimately, we focus on products, and we focus on the future, and we focus on executing in a profitable way. And where we have proven our expertise in generating product after product of single asset underlying ETPs. We’ve done 100 of them with a very small footprint. We’ve been so successful at that, that people almost take it for granted.

It’s sort of like whenever you have a really great athlete who keeps winning, they sort of ignore the fact that it takes a lot of work to stay at the top. We’ve been very efficient in that way. And I think now what particularly excites me is our ability to take novel instruments from within capital markets, whether they be equities, whether you look at debt, and create new instruments that have new return profiles to access new markets. I have always said, and I say this in many of the presentations that I make, the digital asset market is a $4 trillion market. Today, it might be less, but let’s average. If you look at the market cap of gold, that is approximately $25 trillion. The market cap of global equities, $125 trillion. The market cap of sovereign debt and global debt a $100 trillion, $325 trillion, respectively.

And we’re one of the few entities that has the ability to tap these with hybridized instruments. And I’m very excited for this. And I know under the existing leadership team, we can make it happen.

Curtis Schlaufman: Cool. We are a couple of minutes past time. But thank you, everyone, for joining the call. Please, if we didn’t answer your questions, please feel free to e-mail ir@defi.tech or curtis@defi.tech. Also always happy to jump on a call per schedule. And then we’ll see you guys in March, if not sooner, on some other announcements of sort. So thanks again. We’re always widely available, can’t stress this enough, curtis@defi.tech. Happy to answer any questions. And everyone, have a great rest of your weekend. Thank you.