DeFi Technologies Inc. (DEFT) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows mixed signals. The share buyback is positive, but the Q&A reveals uncertainties, particularly around DeFi, delayed deals, and unclear geographic expansion details. Management's optimistic guidance is contingent on crypto market recovery, which is uncertain. The lack of specifics in expansion and revenue mix evolution adds to the uncertainty, balancing out the positives, resulting in a neutral sentiment.
Key Financial Performance
Assets Under Management (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 ETP products. Q3 saw $38.8 million cash flow into ETP products, bringing year-to-date positive cash flows to $116.2 million.
Revenue Q3 revenue was $22.5 million, bringing cumulative IFRS revenues for the 9 months ended September 30 to $80 million. The 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 due to lower protocol rewards realized in the quarter.
Management Fee Yield 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. Management fees are not charged on Bitcoin and Ethereum products.
Operating Income Q3 operating income came in at $9 million and $32.6 million for the 9 months ended September 30, reflecting a strong focus on profitability.
Net Income After Tax Q3 IFRS net income after tax was $3.9 million and $33.8 million for the 9 months ended September 30.
Cash and Treasury Holdings 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.
Equity Raise The $100 million equity raise in September 2025 will assist the company in increasing its staking back to the 70%-plus target, facilitate ETP market-making, provide working capital for DeFi Alpha trades, and support other revenue and AUM growth initiatives.
Venture Portfolio The venture portfolio consists of 12 private investments, with the largest being a 5% stake in AMINA Bank, making up 83% of the portfolio's fair value. AMINA Bank's AUM grew to approximately CHF 3.5 billion.
Share Buyback During Q3, the company repurchased just under 1 million shares for $2.44 million as part of its NCIB buyback program.
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Operating Highlights
New product launches: Achieved 100-product goal in October 2025, with new management fee-bearing products contributing to revenue.
Data-driven initiatives: Plans to use proprietary IP for scoring services for digital assets, targeting institutional investors and foundations.
SovFi project: Long-term project aimed at leveraging existing platforms to expand beyond the crypto space.
Geographic expansion: Actively working on entering new markets, with Europe being a key focus. Success in new market listings is pending regulatory approval.
Institutional participation: Observing a shift towards institutional participation in Europe, driven by developments in the U.S.
AUM growth: Achieved record-high average AUM of $950.7 million in Q3, ending at $989.1 million.
Revenue and profitability: Q3 revenue of $22.5 million and operating income of $9 million, marking the third consecutive profitable quarter.
Capital position: Strong balance sheet with $165.7 million in cash and digital assets as of September 30, 2025.
Leadership transition: CEO Olivier Roussy Newton announced resignation, with Johan Wattenstrom taking over as CEO.
DeFi Alpha opportunities: Delayed due to market conditions but remain in the pipeline for future execution.
M&A and strategic initiatives: Focus on accretive M&A opportunities and strategic initiatives supported by a $100 million equity raise.
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Risk or Challenges
DeFi Alpha revenue delays: DeFi Alpha opportunities have been delayed due to the proliferation of digital asset treasury companies and the consolidation in digital asset price movements, which has delayed arbitrage opportunities and compressed profits.
Lower staking and lending income yield: The effective staking and lending income yield decreased from 3.6% in Q2 to 3.1% in Q3 due to lower protocol rewards, impacting revenue generation.
Dependence on cryptocurrency price movements: Revenue forecasts are contingent on cryptocurrency prices posting a modest rally, creating uncertainty in achieving financial targets.
Operational capital needs: Increased market-making efforts and product launches have created a higher need for operational capital, temporarily reducing monetization rates.
Regulatory and geographic expansion challenges: Geographic expansion is slow and dependent on regulatory approvals, which can delay market entry and growth.
Digital asset treasury company competition: The rise of digital asset treasury companies has delayed some DeFi Alpha opportunities and created competition for arbitrage deals.
Market turbulence risk: Despite a strong balance sheet, market turbulence could impact the company's ability to meet financial and operational goals.
Unpredictable DeFi Alpha transaction timing: The timing of DeFi Alpha transactions is difficult to predict, creating challenges in revenue forecasting and execution.
Dependence on institutional and retail participation: The company's growth is tied to increasing institutional and retail participation in cryptocurrencies, which may fluctuate.
Product seeding requirements: New product launches, such as UCITS funds, require initial seeding, tying up capital and delaying returns.
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Guidance & Outlook
Revenue Guidance for 2025: The company reiterates its core revenue forecast of $116.6 million for 2025, with $102 million of DeFi Alpha-related revenues deferred over a longer period. The core revenue forecast is achievable if cryptocurrency prices post a modest rally into year-end.
Cryptocurrency Market Outlook: The company is bullish on cryptocurrency prices in the coming months, citing increasing institutional and retail participation and Bitcoin's current price stability around $100,000.
Capital Utilization: The $100 million equity raise will support increasing staking to a 70%-plus target, facilitate ETP market-making on a larger AUM base, provide working capital for DeFi Alpha trades, and support other revenue and AUM growth initiatives.
DeFi Alpha Opportunities: Opportunities remain in the pipeline and are expected to be executed in the next 6 to 12 months. The company is optimistic about expanding this business line despite delays.
Geographic Expansion: The company is actively pursuing geographic expansion, particularly in Europe, and has had success in new markets, though specific announcements are pending regulatory approval.
New Product Launches: The company plans to launch UCITS funds and actively managed certificates before year-end, with some liquidity allocated for seeding these products to attract institutional flow.
Institutional Market Trends: A shift towards more institutional participation in Europe is anticipated, driven by developments in the U.S. market, which could expand the addressable market for the company.
Operational Efficiency and Monetization: The company expects higher monetization rates in the coming weeks, supported by recent capital raises and infrastructure improvements.
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Shareholder Return Plan
Share Buyback Program: During this quarter, the company repurchased just under 1 million shares for $2.44 million. The NCIB buyback program is still in place, and the company plans to continue executing it moving forward, supported by a larger cash position.
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Key Q&A
Q:Do Alpha trades carry a liquidity or price liability? What happens with the May $23.8 million SUI trade if the price is lower or higher than $3.51 per token at maturity? How is DeFi hedged in such scenarios?
A:Johan Wattenstrom explained that the core operation is 100% hedged for market risk, and the principal of the trade is locked and hedged. However, part of the profit is retained in tokens, which can fluctuate with the market. If the market goes higher, the profit increases, and if it goes lower, the profit decreases. For trades in assets with high conviction, some profit is retained in tokens to support ecosystems, while for others, profits are locked in fiat.
Q:What key message do you want to give long-term shareholders, and what milestones should they watch for over the next 12 to 18 months?
A:Johan Wattenstrom emphasized the focus on maximizing AUM, monetization, and expanding into new products and vehicles to tap into new capital pools. He highlighted the development of global products aimed at institutions, leveraging infrastructure upgrades, and the potential for growth despite temporary macroeconomic weaknesses. He also noted increased institutional participation in Europe and a shift in geographical expansion dynamics.
Q:Can you provide more color around DeFi Alpha and the influence of DAT in that environment?
A:Johan Wattenstrom mentioned that there were a few large-scale deals under negotiation, some delayed due to market conditions and alternative financing options. He noted that the hype in the sector had subsided, and some deals are contingent on market recovery. He also highlighted delays caused by high premiums and unfulfilled promises in the market.
Q:Could someone comment on the investment pipeline, particularly regarding M&A and other opportunities?
A:Johan Wattenstrom stated that the company is highly selective, pursuing only opportunities that align with long-term growth and vertical integration. He mentioned ongoing evaluations of interesting deals, including potential entry into the U.S. market with differentiated products. He also noted internal growth initiatives to increase profitability and independence from outside suppliers.
Q:Was there a geographic expansion win mentioned, and can you provide more details?
A:Andrew Forson confirmed a geographic expansion win in a significant market but did not provide specific details.
Q:What is driving the guidance of $116 million for the year, implying $36 million in Q4?
A:Paul Bozoki clarified that the $116 million is based on IFRS accounting, requiring $36 million in Q4. He noted that achieving this depends on crypto prices moving higher, aligning with a generally bullish outlook on crypto.
Q:Can you explain the 'price movement on equity investment distribution timing loss' adjustment in the MD&A?
A:Paul Bozoki explained that the adjustment was due to a delay in receiving cash from a fund investment, resulting in a timing loss from crypto price slippage. This was described as a one-off event.
Q:What are the expectations for staking yields in Q4 post-capital raise?
A:Johan Wattenstrom expressed confidence that staking yields would increase, with higher deployment rates and better yields for assets. He noted that temporary reductions in yields were due to infrastructure upgrades and collateral needs, but these issues have been addressed.
Q:What is the growth path for Stillman Digital, and how is it scaling geographically?
A:Johan Wattenstrom and Andrew Forson highlighted strong growth for Stillman Digital, including new clients and geographical expansion. They noted its independence from DeFi's other markets and its ability to leverage the group's balance sheet for partnerships and market-making activities. Forson emphasized Stillman's role in providing liquidity and its potential for long-term growth.
Q:How do you see the revenue mix evolving over time with new strategic initiatives?
A:Johan Wattenstrom and Andrew Forson discussed the synergistic nature of new initiatives with the core business. They emphasized investments in areas with high potential and competitive advantages, such as stablecoins and hybridized products. They noted that while the core business remains a cash cow, new initiatives aim to enhance long-term growth and differentiation.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the geographic expansion win, only confirming it was in a significant market. Additionally, they did not provide concrete projections for the revenue mix evolution or specific timelines for the impact of new initiatives.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AUM
Alpha opportunity
CEO
Chairman
ETP
Europe
President
Stillman
Valour
arbitrage
asset treasury
balance sheet
capital
cash
core
day
deal
end
expansion
flow
fund
income
investment
level
liquidity
lot
market
model
monetization rate
month
price
product
profitability
raise
record
revenue
side
term
trading
treasury company
year
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
