Bullish 2026 Q2 Earnings Call

Please go ahead. Good morning, and welcome to our second quarter earnings call.

I'm Michael Fideli, and I'm joined on today's call by our Chief Executive Officer, Tom Farley, Chief Financial Officer, David Bonanno, and Director of Corporate Development, Liam Foley. This call will contain forward-looking statements, including those relating to our expected performance and business opportunities, our proposed acquisition of Equiniti Group, the anticipated benefits and strategic rationale of the transaction, expected timing and closing conditions, and business opportunities following the transaction. These statements are not assurances of future performance and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks include, among others, the possibility that the Equiniti transaction may not be completed, failure to obtain required regulatory approvals, the possibility that anticipated benefits may not be realized, and the risks related to the integration of Equiniti's business.

For more details on these and other risks, please refer to today's earnings press release and our SEC filings, including our 20-F dated March 9, 2026. We undertake no obligation to update or revise any forward-looking statements. This call will also include a discussion of non-IFRS financial measures. A reconciliation to the most directly comparable IFRS metrics can be found in our earnings press release and presentation, which also contain additional information regarding non-IFRS financial measures and key performance indicators. I'll now turn the call over to Tom.

Thanks, Mike. Good morning, everyone. Thanks for joining. I'm Tom Farley, Chairman and CEO of Bullish. A year ago today, Bullish went public on the New York Stock Exchange. Thank you for following us and supporting us as a public company. A year ago today, our old school certificated shares began changing hands. A year later, I'm pleased to share with you that beginning yesterday, Bullish's tokenized shares are trading on our own regulated venue for the first time. This also marks Bullish's first trades of any tokenized security. This is just the beginning. We are building the infrastructure for tokenized securities, and this quarter, we turn that from a blueprint into something real. Our business has remained diversified and resilient against a soft quarter for crypto, with prices and volatility down across the market.

Our diversified, largely recurring revenue base and mission-critical product offerings have helped carry us through, and our pending acquisition of Equiniti will be another step towards further business model resilience. Regarding Equiniti, we are on track to close in January 2027. We have all the antitrust clearances secured and other regulatory approvals are advancing. Both companies are already building today for the future combined business. What excites me most is the demand from public companies, layer one and layer two blockchains, and other market participants who want to get started in earnest on issuing tokenized securities. The build of this ecosystem will take time, but the interest and demand are already there. I am pleased to share that on October 27th, we will be headed to the New York Stock Exchange for a showcase where we will share a first look at the tokenization platform.

We will introduce new issuer and layer one partners and demonstrate live tokenized equity issuance and trading. Tokenization of security sits at the heart of our strategy and is the central theme in the modernization of market structure. Tokenization is the process of turning static, traditional financial assets into active, programmable, blockchain-based assets. In May, we announced our agreement to acquire Equiniti, the second largest transfer agent in the world. Tokenized real-world assets on chain have grown more than 20 fold since around 2024 to roughly $37 billion. Tokenized cash in the form of stablecoins is now around $290 billion. Securities are the largest wave still to come. A roughly $270 trillion market that Citi sees reaching about $5.5 trillion tokenized by 2030. I believe this is quite conservative. Not all tokenization is the same, and that distinction is the basis of our strategy.

We are focused on issuer-sponsored tokenization, where the company itself chooses to tokenize its actual shares, and its transfer agent records the token as the real legal share on the official register. That is very different from a synthetic token, where a third party wraps a claim on a share it holds elsewhere, or maybe doesn't even hold it elsewhere at all, and the issuer sees none of the benefits of this tokenization. When the issuer, on the other hand, creates the token, the token is the actual share. True legal title. The issuer can finally see who owns its stock. Corporate actions and voting can be programmed into the instrument, and a greater share of the economics can flow back to the issuer. Investors gain too. They benefit from smoother collateralization of their holdings around the clock trading, instant and atomic settlement fractional access, and access to shareholder rewards and a more direct relationship with public company issuers, a facet that issuers are also very excited about.

I would like to spend a few moments telling you a little more about Equiniti, because the standalone business deserves to be better known. Equiniti maintains the share register, the legal record of ownership, for nearly 3,000 corporate issuers, including roughly half of the FTSE 100 and 30% of the S&P 500. It serves more than 20 million shareholders and moves over half a trillion dollars of payments each year. We believe it is one of only two players of real scale in its markets, with high barriers to entry, over 95% client retention rates, and relationships that average well over a decade.

Equiniti is far more than a register. It runs five connected services, as laid out on page 24 of the slide deck, that are at the center of how public companies and their shareholders interact. Each service is mission-critical, sticky, and recurring, and together they make Equiniti indispensable to how thousands of public companies operate. I will now turn to how the Bullish business performed this quarter, starting with the exchange. On spot, our core market, trading volumes moderated with the broader crypto market, but we kept deepening our institutional footprint. One of the largest global wealth managers in the world selected Bullish as the exclusive crypto trading provider for their Asia business, and we began relationships with many new customers such as SoFi, Berenberg, Bit2Me, BitGo Prime, and others. We keep winning the institutions that value a regulated venue.

On options and derivatives, in a positive development, we now believe we will gain access to the U.S. market for our perps, dated futures, and options markets in the next several months, nearly a year earlier than we previously anticipated. We believe that the United States is by far the largest global market for derivatives and represents a huge opportunity for Bullish to be amongst the first to offer onshore crypto derivatives. While industry volumes have contracted this year as volatility came down, we still believe that the digital assets derivatives markets will grow more quickly than spot volumes in the years to come. In the second quarter, we reduced trading incentives, prepared our U.S. readiness plan, and started putting in place partnerships with retail broker-dealers, and also went live with other key market participants, such as market access provider Paradigm.

While our volumes and market share declined in the second quarter, we are excited about our new strategic positioning and the long-term opportunity. Beyond the exchange, our media and events business continues to generate business opportunities throughout the Bullish business. Consensus, our flagship conference, drew more than 16,000 people from over 100 countries to Miami, where we tokenized our own cap table live on stage, a first for an NYSE-listed company. CoinDesk and Consensus power our whole franchise. We are able to gather the industry together in a way that consistently generates new business opportunities. coindesk.com, our media arm, continues to experience strong growth, with page views up by 10 million in Q2 2026, a 38% year-over-year increase. Unique visitors increased 83% against the same period prior year, and our market share continues to consolidate. Our CoinDesk Indices continue to power institutional products.

In April, Morgan Stanley chose CoinDesk as the benchmark index for their flagship Bitcoin ETP, which has already reached roughly $400 million in assets. We continue to win repeat business with our licensees. For example, Grayscale launched their Grayscale Hyperliquid Staking ETF with our indices in June, and Morgan Stanley launched with Ethereum and Solana ETPs with us in late July. We are putting wins on the board, but index revenue scales with the value of assets in each product, so a softer price environment has held total index revenue back even as we gain share and our mandates add up. Liquidity services deliver sticky, recurring revenue from our delivery of the listing, liquidity, and visibility that every asset needs to come to market and trade well. In Q2, we continued adding great new clients, including the first exchange to list SoFi's new stablecoin, SoFiUSD.

Finally, on the topic of regulation and legislation, here in the U.S., the CLARITY Act did not advance this session. While clearer market structure legislation would help the entire industry, our strategy does not depend on it. Per reporting by Bloomberg, the SEC is expected to publish a so-called innovation exemption, potentially in the weeks ahead, which would provide some rules of the road for tokenized securities. We have advocated for this innovation exemption and would welcome this as great progress. We, and issuers, are hopeful that this announcement will include provisions that provide control to the issuer of the token issuance process. If indeed the SEC does provide a role for the issuer, we believe this will further cement the importance of the issuer-sponsored token and provide further validation that our acquisition of Equiniti was the right partnership at the right time.