Bullish (BLSH) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call presents mixed signals: while there are positive developments in SS&O revenue and assets under management, adjusted EBITDA is down significantly. The Q&A section reveals management's reluctance to provide specific guidance, which raises concerns. Positive factors include growth in Liquidity Services and new product launches, but the lack of detailed guidance and a significant drop in EBITDA balance these out, leading to a neutral sentiment.

Key Financial Performance

Total adjusted revenue for Q2 2025 $57 million, down 6.1% year-over-year. The decline was attributed to historically low BTC price volatility, which led to lower market-wide digital asset trading volumes.

Adjusted operating expenses for Q2 2025 $48.9 million. No specific year-over-year change or reasons were mentioned.

Employee compensation expenses for Q2 2025 $25.7 million, down 3% year-over-year. No specific reasons for the decline were mentioned.

Advertising and promotional costs for Q2 2025 $7.4 million. This was largely driven by variable expenses for the North American consensus event in Toronto.

Adjusted EBITDA for Q2 2025 $8.1 million, down 45% year-over-year. The decline was due to lower adjusted transaction revenue flowing through to the bottom line.

Subscription service and other revenue for Q2 2025 Record high, though no specific figure was provided. This partially offset the lower trading activity.

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Operating Highlights

Options Trading Platform: Anticipated full launch in Q4 2025. Currently in beta phase with select clients trading in a risk-limited manner.

CoinDesk Indices: Launched new products like CDOR (CoinDesk Overnight Rates) and increased assets under management to $41 billion, up $9 billion from Q1.

CoinDesk Data: Completed integration of CC Data acquired in Q4 2024 and signed a comprehensive data contract with LSEG Refinitiv.

U.S. Market Entry: Received New York BitLicense, enabling imminent launch in the U.S., expected to become the largest trading market.

Global Market Expansion: Holds Tier 1 regulatory licenses from Hong Kong, UK, Germany, and New York, positioning for institutional adoption globally.

Liquidity Services Growth: Collaborated with Solana Foundation and other partners, expanding liquidity services and deepening the sales pipeline.

Pricing Optimization: Adjusted exchange fees based on client type and activity, leading to improved spreads in Q3.

Regulatory Approvals: Achieved 'quad factor' of Tier 1 digital asset licenses, including the prestigious New York BitLicense.

Cross-Selling Initiatives: Leveraged relationships to cross-sell products, exemplified by a partnership with Igloo Inc. for multiple subscription-based services.

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Risk or Challenges

Regulatory Uncertainty: While there is increasing regulatory clarity globally, the company acknowledges that regulatory uncertainty has historically hindered institutional adoption of digital assets. This remains a potential risk as regulatory frameworks evolve.

U.S. Market Entry Challenges: The company is entering the U.S. market following the receipt of the New York BitLicense. However, onboarding institutional clients in the U.S. is expected to take time, and there is a risk of slower-than-expected adoption and trading volumes.

Market Volatility: The company experienced historically low BTC price volatility in Q2, which led to lower market-wide digital asset trading volumes. This highlights the risk of dependency on market conditions for revenue generation.

Competition: Bullish operates in a highly competitive market with other regulated exchanges. Differentiating its offerings and maintaining market share could be challenging.

Operational Costs: The company reported high advertising and promotional costs, particularly for events like the Consensus conference. Managing these costs effectively while driving growth is a challenge.

Dependence on Key Partnerships: The company’s growth strategy heavily relies on partnerships, such as those with Solana and Pudgy Penguins. Any disruption or failure in these partnerships could impact revenue and growth.

Technological Risks: The company is launching new products like options trading and expanding its platform. Any technical issues or delays in these launches could affect customer trust and revenue.

Economic Conditions: Broader economic conditions, such as a downturn, could impact institutional and retail investment in digital assets, affecting Bullish’s revenue streams.

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Guidance & Outlook

Digital Asset Market Growth: Industry analysts estimate that the crypto space will more than double in the coming years, largely driven by institutional adoption. Bullish expects this growth to be conservative and anticipates significant expansion in the digital asset space.

Regulatory Developments: Bullish is optimistic about increasing regulatory clarity worldwide, including Europe's MiCA regulations, Hong Kong's ASPIRe roadmap, and the U.S. GENIUS Act. These developments are expected to drive institutional adoption and transition traditional finance markets to blockchain technology.

U.S. Market Entry: Bullish has received the New York BitLicense and plans to launch its exchange in the U.S. imminently. The U.S. is expected to become the company's largest trading market, although institutional client onboarding may take time.

Options Trading Platform: Bullish plans a full launch of its options trading platform in Q4 2025. The platform is currently in a beta phase with select clients.

Liquidity Services Growth: The liquidity services business is growing rapidly, with new collaborations such as Solana and other stablecoin issuers. The company has a deep and growing pipeline of future opportunities.

Information Services Expansion: CoinDesk Indices ended Q2 with $41 billion in assets under management, up $9 billion from Q1. New products like CDOR and expanded partnerships, such as with LSEG Refinitiv, are expected to drive further growth.

Q3 Financial Guidance: Bullish expects Q3 2025 total adjusted revenue between $69 million and $76 million, adjusted EBITDA between $25 million and $28 million, and adjusted net income between $12 million and $17 million.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:How many tokens were part of Liquidity Services at the beginning and end of 2Q, and what is the expected growth for 3Q?

A:The management did not disclose specific numbers for tokens in Liquidity Services for 2Q or 3Q. They mentioned that the business has accelerated rapidly throughout the year, driven by regulatory clarity and long-term commitments from customers.

Q:What does the pipeline look like for stablecoins and non-stablecoin tokens beyond 3Q and 4Q?

A:The pipeline is heavier on non-stablecoin token issuers, with more than 25 out of the 50 most likely customers being non-stablecoin token issuers. However, stablecoin issuers continue to emerge, and the product market fit remains compelling.

Q:Is there an analog for the sales cycle to sign up institutional accounts in the U.S., and what is the timeline for onboarding?

A:The sales cycle for U.S. institutional accounts can range from 2 to 6 months, depending on the complexity of legal and technical requirements. The company has an advanced pipeline and expects to see the first customers onboard within 1-2 months.

Q:What is the purpose of the $10 million trader challenge promotion, and how should it be viewed in terms of marketing expenses?

A:The $10 million trader challenge is an investment in participants' funds rather than a direct expense. It aims to attract new customers, expose them to the company's data and services, and potentially lead to cross-sell opportunities.

Q:How has customer concentration evolved, and are there plans for further pricing adjustments?

A:Customer concentration has been reduced through pricing adjustments, and the company is satisfied with the current pricing framework. While some customers remain heavy in terms of volume, the diversified pricing structure has mitigated risks.

Q:What is the outlook for the indices business, and are there any catalysts for growth?

A:The indices business has $41 billion in assets under management, generating fees on a small number of basis points. Growth catalysts include the launch of multi-token ETFs like the CoinDesk 5 and 20, partnerships with major exchanges, and increasing institutional interest in broader crypto exposure.

Q:What is the growth trajectory for Liquidity Services beyond 3Q?

A:Liquidity Services is expected to grow in 4Q, driven by bookings and the onboarding of new contracts. However, the pace of growth may not match the substantial sequential growth seen earlier in the year.

Q:What is the sustainability of the recent uptick in transaction spreads, and how does it impact guidance?

A:The recent uptick in transaction spreads is sustainable and reflects a sweet spot for revenue optimization. Spreads are sensitive to market volatility, and the company provides monthly disclosures to offer clarity.

Q:Does the BitLicense approval indicate any changes in the business model, particularly regarding custody services?

A:The company already offers custody services and does not plan significant changes to its business model following the BitLicense approval. However, there are some unannounced initiatives in the works.

Q:What is the progress and potential impact of the options platform?

A:The options platform is in a beta phase with real trading activity. While the market for crypto options is small, it is expected to grow. The company is optimistic but advises a conservative outlook for its initial impact.

Q:Review of Unclear Management Responses

A:Management avoided providing specific numbers for tokens in Liquidity Services for 2Q and 3Q, as well as detailed guidance for Liquidity Services growth in 4Q. They also used vague language when discussing the potential impact of the options platform and unannounced initiatives related to custody services.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

BLSH Transcript

Bullish (BLSH) Q3 2025 Earnings Call Transcript

Positive11-19

The earnings call highlights strong financial performance with record net income and significant revenue growth. The company has strategic plans for U.S. market entry and options trading, bolstered by regulatory approvals. Despite some challenges like customer onboarding and market volatility, management is optimistic about regulatory developments and partnerships. The Q&A reveals positive sentiment towards the company's strategic initiatives and regulatory achievements, despite some vague responses. Overall, the strong financial metrics and strategic advancements suggest a positive outlook for the stock price.

Bullish (BLSH) Q2 2025 Earnings Call Transcript

Unknown9-24

BLSH Report

Bullish 6-K

6-K

2025-11-19

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