Galaxy Digital Inc. Class A Common Stock 2026 Q2 Earnings Call

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

Before we begin, please note that our remarks, including answers to your questions, may include forward-looking statements. Actual results could 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, none of the information on this call constitutes a recommendation, solicitation or offer by Galaxy or its affiliates to buy or sell any securities. With that, I'll turn it over to Mike Novogratz, Founder and CEO of Galaxy.

Good morning, everyone. Listen, the second quarter was transformational for Galaxy. Behind the numbers is a single idea. The economy is increasingly running on code. Finance is moving on chain, and AI is remaking every industry. Both run on infrastructure, the financial rails on one side, the power and compute on the other. Galaxy is one of the few companies building at both ends of it today. This quarter, both sides delivered. On the data center side, I couldn't be more proud of our team. We delivered phase one at Helios on schedule and on budget, and that's not easy. The campus is now generating cash flow. We acquired three new data center sites, bringing our development pipeline to 5+ GW of potential power capacity, and positioning Galaxy as one of the largest data center developers and operators in the world.

Finally, we completed a three-and-a-half billion high yield financing, the largest in our history, ensuring we have the capital to execute on our developing roadmap. 2026 was also an inflection point for our digital assets business. Crypto bear markets are the best time to build, and we certainly are in one. While token prices and trading activity remain subdued, we're seeing tremendous demand for the infrastructure that will power the next generation of financial markets. Today, we're working with some of the largest financial institutions in the world as they build out their digital asset capabilities. Last quarter, we signed our first major infrastructure engagement with Bank of New York, one of the largest custodians in the world, to further develop its digital asset infrastructure. We believe this is just the beginning. Across both segments, the through line is the same, transforming finance and powering AI.

Data centers and digital assets are each strong businesses in their own right. Today we're building the infrastructure underneath both of them. I want to give you a few quick thoughts on Clarity. Of course, everyone would have been happy if it had been passed already. Things aren't that easy. We're all sitting here waiting to see the White House's response to the ethics compromise that's been put forward, a bipartisan compromise between Senator Gallego and Senator Tillis. It's late. It does not look like anything will happen before the recess. There is some hope still that these guys will get together in September. I know from speaking to senators daily that all these issues are very close. We'll see where the political will turns out. If Clarity doesn't pass, it's not the end of the world.

We've been living without it since this business started. There's been a commitment from both the SEC chair and the CFTC chair that they will work really hard and quick to put out rules of the road to regulate crypto in a much more direct way. Finally, I'd love to welcome Steve Van Roekel to our board. Steve has built and scaled some of the world's most complex technology companies, bringing more than three decades of senior operating leadership across IT, infrastructure, large-scale M&A and capital allocation. His combination of operating expertise, capital discipline, and deep technology experience will further strengthen our board as we continue expanding our digital assets and trading center infrastructure platform. With that, I'll hand it over to Tony.

Thanks, Mike. Thank you everyone again for joining the call today. As in previous quarters, I'll start by walking through our consolidated financials, then dive into our operating businesses before turning it over to Chris to go into a bit more detail on data centers. As Mike mentioned, Q2 unfolded against a challenging macro backdrop for digital assets, but our business continued to perform. It's quarters like this that building a diversified business model with recurring revenue that is uncorrelated to market activity becomes especially valuable. In Q2, phase one of our Helios data center came online with the first 133 MW of critical IT delivered to CoreWeave. That's the start of a real shift in our earnings profile, which I'll speak to in a few moments.

For the second quarter, we reported GAAP net loss of $85 million, or $0.09 per share, and firm-wide adjusted EBITDA of negative $77 million. These results were driven primarily by the depreciation of digital asset prices during the quarter, with our treasury and corporate segment reporting an adjusted gross loss of $42 million. Combined operating businesses' adjusted gross profit was $86 million, and adjusted EBITDA was $1 million, both up significantly from Q1. Firm-wide operating expenses, excluding grossed-up transaction costs, the impairment of digital assets, and pass-through data center operator expenses, were $172 million in Q2.

Up $25 million quarter-over-quarter, driven primarily by previously capitalized interest and depreciation expense that is now being recognized alongside data center revenue. Turning to the balance sheet, we ended the period with $10.8 billion in total assets, up 9% from the prior period. Total equity was $2.7 billion, essentially flat quarter-over-quarter, with 72% of our equity capital now allocated to our two operating businesses. As we've said previously, we expect data centers to represent a growing share of our capital base as we continue to invest in the build-out. Cash and stablecoins were $2.5 billion, down 6% from Q1, reflecting cash deployed into our operating businesses during the quarter, primarily around the Helios build.

We also held approximately $1.2 billion in net digital assets and investments at quarter end, down 15% from Q1, reflecting both the depreciation of crypto prices and a modest reduction in our overall net digital asset exposure. Turning to our operating results, beginning with digital assets. Crypto prices declined double digits in Q2, with a corresponding moderation in trading volumes and on-chain activity across the industry. Despite the weaker environment, our digital asset segment generated adjusted gross profit of $66 million, up $17 million or 34% quarter-over-quarter. Delivering top-line growth despite lower digital asset prices and weaker industry activity reflects continued market share gains and further demonstrates that our earnings are becoming less dependent on the overall direction of the market.

Within global markets, adjusted gross profit was $49 million, up significantly from Q1 despite trading volumes declining 7%, driven by strength in our electronic trading business and disciplined risk management across the desks. In lending, our average loan book increased modestly from the prior quarter, despite the softer environment. That growth was driven by strong originations toward the end of the quarter, along with the successful pre-launch of our Galaxy On-Chain Financing Rate offering, which I'll discuss in more detail in a moment. We also continued to expand in areas where we're seeing growing institutional demand. During the quarter, we launched our OTC prediction markets offering, extending our derivatives platform to enable institutional clients to implement full multi-asset hedging strategies around event-driven markets.

We believe this is an area that will continue to see increasing adoption over time as more companies and institutions seek to manage business-specific risks that are difficult to hedge with traditional instruments and require 24/7 risk management. Separately, we launched the Galaxy On-Chain Financing Rate, or GOFR, a fully managed, risk-controlled lending solution that provides clients with efficient access to on-chain credit markets through a single Galaxy counterparty at an optimized borrowing rate. This product removes the operational complexity of interacting with decentralized protocols and has already generated nearly $300 million of loan originations, reflecting strong early demand from clients. We also brought to market the Galaxy Curator, an institutional vault curation offering built on Morpho and integrated with Fireblocks, providing more than 2,400 institutional clients with access to curated on-chain yield strategies.

These launches reflect our continued focus on expanding our platform in areas where we see long-term demand while creating additional opportunities to serve clients across multiple products and businesses. Turning to asset management and infrastructure solutions. We delivered an adjusted gross profit of $17 million and ended the quarter with approximately $7 billion in combined assets under management and assets under stake. This balance was down 12% from Q1, primarily reflecting lower digital asset prices and modest net outflows during the quarter. We continued to expand our investment platform with strategies focused on areas where we see long-term capital formation and believe we have a competitive edge. During the quarter, we launched the Galaxy Fintech Fund with over $100 million of assets at launch.