Galaxy Digital Inc. Class A Common Stock 2026 Q3 Earnings Call

Please go ahead. Good morning, and welcome to Galaxy's third quarter 2026 earnings call.

Before we begin, please note that our remarks, including answers to your questions, may contain forward-looking statements. Actual results may differ materially from those described in these statements as a result of various factors, including those identified in the disclaimers in our earnings release or other filings, which have been filed with the U.S. Securities and Exchange Commission and on SEDAR+. Forward-looking statements speak only as of today and will not be updated. Additionally, we may discuss references to non-GAAP metrics, the reconciliations of which can also be found in our earnings release. Finally, the information on this call does not constitute a recommendation, solicitation, or offer by Galaxy or its affiliates to buy or sell any securities. With that, I'll now turn the call over to Mike Novogratz, Founder and CEO of Galaxy, to discuss our results.

Good morning, everyone, and welcome, Taylor, to the Galaxy team. You guys will get to know her well and will like her as much as we do. Listen, we had an awesome quarter. I'm really proud of what the team delivered. But what excites me more is what performance says about where Galaxy is headed. We've spent years investing ahead of two enormous shifts, finance moving on chain, and the build-out of AI infrastructure, and we're increasingly seeing those investments translate into results with the strategy playing out in three important ways this quarter. First, we saw a strong rebound in crypto markets. Bitcoin was up more than 40% with a meaningful improvement in sentiment and client activity. Our global markets business capitalized on that momentum, growing trading volumes and expanding client engagement.

We also saw a significant appreciation across our investment portfolio, reflecting the value of capital we've deployed across crypto and the broader technology ecosystem. Second, the opportunity in digital assets is getting bigger, and I think we're just scratching the surface of what's ahead. Crypto remains an important and growing asset class, but the opportunity extends well beyond that. With digital assets increasingly becoming the foundation for the future of finance. Increasingly, those two worlds are coming together. You can see it in the growing adoption of stablecoins, the tokenization of traditional financial assets, and the participation of major financial institutions. I have a tremendous amount of conviction that the financial architecture developed by the crypto industry will underpin much of how the financial system operates in the future.

Galaxy has spent years investing in these capabilities, and while we are still in early stages, I believe that investment will translate into meaningful results over the next several years. Regulatory clarity will be an important part of that. While the CLARITY Act has not become law, unfortunately, the SEC and the CFTC are working towards clearer frameworks. There is still a lot to sort out, but the direction is encouraging. Investing ahead of these shifts has always been part of our strategy. We did it early in crypto, investing in companies and technologies that help build the ecosystem. Now we are taking that same approach to AI, increasingly investing in the next generation of companies through our investment strategies in our balance sheet. Third is data centers, where we are building a very sizable business. Helios has come a long way in the past year.

We are now generating approximately $80 million of leasing revenue per quarter from phase one. As phase two comes online next year, we expect to exit 2027 at an annualized leasing revenue run rate of between $800 million and $850 million, based on our current delivery schedules. That is a substantial business from the capacity we have already leased, and the momentum is building. We have significant additional approved power available to lease and a deep development pipeline beyond that. I want to address the timing of leasing announcement at Helios 2. Earlier this year, I spoke about the possibility of reaching agreement during the summer. We were in advanced discussions around a potential transaction, but as the market dynamics shifted material in late summer, we ultimately decided not to move forward on the terms being considered.

The market for large scale power via data centers has become increasingly constrained, while demand for capacity beginning in 2028 and beyond has strengthened. With more than 800 megawatts of secured power and supporting infrastructure, we believe Helios 2 is an even more valuable asset today than it was just a few months ago. With delivery plan for 2028, we have the flexibility to evaluate our opportunities and get the right deal. We have built Galaxy by adapting to changing markets and being disciplined about where we commit capital. These are large, long-term agreements, and we are not going to compromise on terms just to meet an announcement date. We continue to have productive and active discussions with prospective customers with a focus on maximizing long-term value for shareholders. As the Helios campus scales, we are fundamentally changing the earnings profile of Galaxy.

We have established a digital asset franchise with significant earnings power, growing opportunities for recurring fee-based revenue, and a data center business is adding long-term contracted cash flows. Together, these businesses give us multiple drivers of growth and more diversified earnings base that we believe will make Galaxy a stronger, more durable franchise over time. We also have the balance sheet to back that ambition. It is a competitive advantage that allows us to commit capital as a principal, invest in growth across our businesses, and take advantage of opportunities as they arise. We are focused on putting that capital to work where we see the most attractive long-term returns. That includes investing in our own shares when we believe they are trading at a meaningful discount. We have repurchased $200 million year to date, and this morning announced an additional $200 million share repurchase authorization.

As significant shareholders ourselves, we see buybacks as another potential way to allocate capital thoughtfully to create long-term value. Chris will now take you through how we are translating these opportunities into results across our businesses and what we are focused on next. Chris, over to you. Thanks, Mike.

Starting with digital assets, one of the strengths of our global markets business is the breadth of solutions we can offer clients. We are seeing growing demand for more sophisticated trading and financing solutions, particularly as traditional financial institutions look to participate in decentralized markets through products and structures they are familiar with. We have spent years building capabilities for crypto-native clients, and that experience gives us an advantage as traditional finance increasingly moves on-chain. We understand these markets, can move quickly, and have the flexibility to develop solutions for both groups. Lending is a great example. We have expanded the Galaxy Onchain Financing Rate, or GOFR, which gives clients access to on-chain financing, alongside our growth financing facility, which allows us to support more lending activity through external capital. We are expanding our loan syndication, collar lending, and structured financing capabilities, broadening the range of clients and financing needs we can serve.

We are seeing the same innovation across trading. Our derivatives business executes sophisticated options and hedging strategies for clients. This quarter, we completed our first Compute Link derivatives transaction, extending our capabilities into an emerging market that we believe has the potential to grow into a sizable new standalone asset class. In asset management, we are expanding our investment strategies and product offerings to meet evolving institutional demand. During the quarter, we launched the Galaxy Sharplink Onchain Yield Fund, an actively managed strategy providing access to yield opportunities in decentralized finance through an institutionally managed SMA for a public company. Sticking with on-chain asset management theme, SWEEP, the first-ever decomposable 24/7 on-chain money market fund in partnership with State Street Global Advisors, is now approaching $300 million of AUM, which we believe is an early signal of strong product market fit among first-mover institutions interacting with tokenized real-world assets.

With Galaxy Digital Ventures, we are progressing towards a first close of Fund 2, expected towards the end of Q4, with a fund target size of $250 million to $300 million. As an investor, you only win the right to raise a second larger fund once you have proven out a strong process and great returns, and the GEV team has done that with Fund 1, currently marked at 2.25 gross MOIC. In digital asset infrastructure, we are seeing growing momentum with some of the world's largest financial institutions and are expanding our capabilities and offerings across tokenization, custody, and staking to meet their evolving needs. Staking is an area where we are seeing growing engagement with major institutions. Assets under stake grew 64% in the quarter to $4.6 billion.

While this was primarily driven by price appreciation of the underlying assets in the quarter, we've also seen a number of large ETF providers begin delegating their ETH and SOL stake to Galaxy's infrastructure, driving over $400 million of gross new inflows in Q3 and subsequent to quarter end, and we expect additional sizable partner launches before year end. More broadly, our relationship with BNY announced this summer has been an important validation of our capabilities as we continue to deepen our engagement with leading global financial institutions. These are complex engagements with long sales cycles, but the potential is significant. Our objective is to become a long-term strategic partner as institutions build out their digital asset businesses, creating opportunities to expand relationships beyond an initial mandate and generate meaningful recurring revenue over time. Turning to our data center business.