Exodus Movement, Inc.

Hi, everyone. Thanks for being here, and welcome to Exodus's first quarter 2025 earnings conference call. I'm your host, Elizabeth Shores, and with us today are Exodus's co-founder and CEO, JP Richardson, alongside CFO, James Gronetsky. Now, during today's call, we may have made forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may vary materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described in forward-looking statements in our earnings press release and our most recent Form 10-Q filed with the SEC, available on the investor relations portion of our website. We do not undertake any obligation to update forward-looking statements. So you can feel free to visit our social media on X or Reddit to submit any questions you may have about this quarter to our investor relations team after today's call. With that, we're going to turn it over to our CEO to walk us through the quarter. JP, the floor is yours.

Thank you, Elizabeth, and thank you everyone for joining us today. I'm pleased to be here. Q1 was our first full quarter of trading on the NYSE American. And XS delivered operational excellence, celebrating our second best quarter of revenue ever. First quarter revenues were $36 million, which is an increase of 24% year over year. The quarter is further validation of our innovative and user-friendly crypto products that consumers trust and love. Our products are designed to place value of crypto in the hands of everyone. We believe everyone, now and in the future, will benefit from digital asset technology, even if they don't know they are using crypto. Crypto rails are efficient and they empower the consumer. Exodus makes beautiful products to harness blockchain technology for the average consumer. A perfect example of this is Echo. Echo is our product using our newest Passkeys wallet technology. It is a demo product we created to highlight the power of our Passkeys wallet solution. Echo enables crypto payments on the X platform, allowing anyone to send crypto to anyone with an X user handle with no need for complicated addresses or even for the recipient to have a wallet. In addition, since we're using our PassKeys wallet technology, consumers don't even have to worry about the hassle of a 12-word secret phrase. Echo also allows content creators to accept crypto tips from the communities they cultivate. We created Echo simply as a demo, a demo that leverages gamification to grow the user base, and it has resulted in over 1.2 million Passkeys wallets being created to date. While we do not anticipate Echo itself having a material impact on our business, we are very pleased with the results of this demo. We plan on incorporating these lessons into future products on our roadmap. Moving on from Echo, our core product, Exodus Mobile, is now faster and more beautiful. If you update to the latest version, you will see these updates. Again, more bolder, more beautiful, and faster than ever, and includes real-time prices Our aim is to create emotional experiences for consumers. Experiences that make them feel as if they are viscerally a part of the action happening in the market. And long term, our aim is to bring real world utility to consumers. To empower them to leverage crypto to bring utility in their daily lives. More on this in a future update. Let's talk ExoSwap. We're excited about ExoSwap putting in a big quarter with approximately 30% of the Q1 swap volume, up from 19% in Q4. As a reminder, ExoSwap is our multi-chain exchange aggregator technology, bundled up and white-labeled for other wallets and industry projects to take advantage of. Including two new partnerships signed in Q1, we now have seven active partnerships and 13 signed partnership agreements. Exoswap is a key revenue growth driver and positions us to further expand our market share. We expect its momentum to continue because adopting Exoswap is a win-win-win, a win for Exodus, a win for our partners, and a win for our partners' consumers. Let's talk a little bit about the industry and consumers using Exodus. You may have seen, but deal activity continued throughout the crypto ecosystem, even as crypto prices took a step back throughout Q1. Our industry stands to benefit from the more welcoming environment and the end of regulation by enforcement, especially in the United States. That said, the price of Bitcoin declined 12% in the quarter and altcoins in particular recorded substantial losses. The price of Ether decreasing 45% and Solana decreasing 34% in Q1. So certain markets were already looking a bit rough by the end of Q1. Even before recent volatility around tariffs, these macroeconomic headwinds impacted overall monthly active users. To add some transparency and clarity around our user base, we have data around quarterly funded users to our materials. And James will speak to QFUs shortly. Our marketing efforts continue to shine the spotlight on Exodus, and you'll see us keeping a high profile by sponsoring key industry events such as the upcoming Bitcoin conference in Las Vegas, with more such opportunities coming this year. The Bitcoin 2025 conference in Las Vegas is a logical place for Exodus to have a strong presence. is we have had a Bitcoin treasury strategy since our inception in 2015, except we are using our earnings to acquire more Bitcoin and crypto. And with that, Exodus predates the current trend of corporate Bitcoin ownership with over 2000 Bitcoin already on our balance sheet. Exodus is positioned to benefit while we remain poised to address the future opportunities we might come across. And not to mention, we pay 100% of our salaries in Bitcoin. Yes, you have to take your salary in Bitcoin to work at Exodus. So you know we only have the most mission-driven people working here. Switching gears to our stock, Exxon, our stock trading on NYSE Americana is off to a good start. Our liquidity has shown improvement over our OTC listing, and the exposure of this national exchange listing dramatically enhances access to capital markets and brings many opportunities for Exodus and our shareholders. Looking ahead, we're encouraged by the prospects of regulatory clarity within the United States. We believe this will accelerate mainstream digital asset adoption. Our proactive engagement with policymakers is designed to produce clear regulation that protects innovation. I personally have been participating in the trenches, having been invited to the first White House Crypto Summit, contributed my feedback to the administration and other crypto industry players. I've also had the good fortune of being invited to other events with David Sachs and the president himself. These opportunities have allowed me to communicate what's most important for us at Exodus. And as always, I'm incredibly grateful to all of you who have joined our journey. Creating useful blockchain products requires a large community of users and a deep well of developers. Of course, there would be no earnings call without you, the investor. and we look forward to bringing you news and results for many quarters to come. Thank you again for your continued confidence and support. Exodus remains extremely optimistic about future growth prospects of our wallet. Our appetite for M&A activity and partnership pipeline provide additional paths to victory. As we've said in the past, our strategies for driving performance and progress include growing and diversifying Exodus services, expanding our partnerships, and making selective additive acquisitions. We'll continue to actively pursue these strategies. Now James is here to review our finances. James?

Thanks, JP. From a financial perspective, the real highlight is that Q1 was our highest first quarter revenue ever recorded, and it was our second highest revenue ever. So with that, let me jump into some details. In Q1, revenue was $36 million. That's a 24% increase compared to the same quarter last year. As JP mentioned, macroeconomic events created headwinds that impacted the tail end of the quarter. We are no strangers to volatility in Exodus. Crypto markets historically have been the champions of volatility, actually. And Exodus has thrived over the last 10 years by not just preparing for, but taking advantage of this volatility. A key example of leaning into that volatility is the exchange aggregation. Crypto market volatility drives exchange aggregation and the volume generated from it, which was 94% of total revenue. ExoSwap partnership activity also saw substantial growth. ExoSwap is our exchange aggregator packaged for use by our partners in the crypto ecosystem. Despite being a new product fully launched just last summer, we received meaningful value from ExoSwap contributing 30% of Q1 volume, as you can see here, and 17% of the Q1 revenue. Now I'd also like to highlight that ExoSwap received a large boost from one of our partners who ran a very highly successful promotional campaign during Q1. Now, while this type of activity from our partners may cause lumpiness in the short-term revenue we generate from our partnerships, it really highlights the power of the partnership model, where the success and marketing efforts of our partners help drive the success of ExoSwap, which in turn generates more revenue share for us and for our partners. So over the next few years, as we grow our partnership ecosystem, this lumpiness should decrease. Exchange provider process volumes for the quarter were $2.1 billion, reflecting a 62% growth year-over-year and a 7% reduction sequentially, reflecting weaker short-term conditions against longer-term tailwinds of digital asset prices and the emergence of Exoswap. Monthly active users were 1.6 million. This 30-day trailing metric is down 30% sequentially and 6% year over year. The nature of the MAU metric is that it is monthly and it is a measure of activity. In months like March, financial market fatigue can have a dramatic impact on user activity. That does not mean that these users are gone for good. It simply means that in March, folks were not interested in looking at their portfolio. So to help provide a broader view, we've added quarterly funded users or QFUs to the presentation. This metric has two important differences versus MAUs. First, it has a longer time horizon. So one or even two months of market fatigue have less impact. And second, it adds a funding component, which means that a user has actually taken some of their money and trusted it on our platform. And they were active in the quarter. So the level of trust of putting funds on our platform is very powerful and it really cannot be overstated. And so with that lead in, you can see that quarterly funded users were 1.8 million. That's down 5% sequentially, but up 6% year over year. As we move on to Echo, our PassKeys technology is a demonstration of how payments technology can be made. Very simple and so that people may not even know that the underlying technology exists. So that PassKeys technology stitches together the biometrics of your phone with a seamless and secure crypto wallets and payments. This means payments no longer require a routing and account number if you're doing direct deposit, a credit card number with swipes, et cetera, or even a long Bitcoin address. For example, Passkey's enabled Echo, a cool piece of tech that we built that allows transactions to be sent on the X platform. Now, Echo is more of a demonstration than a full-fledged product line, In its current form, Echo is not currently a source of revenue for Exodus. What Echo demonstrates is the adaptability of past keys technology, while hinting at the countless potential use cases for our technology. Our balance sheet remains strong with $238 million in digital and liquid assets, no debt, and continued growth in our Bitcoin holdings, now totaling 2011 Bitcoin as of March 2021. as of March of this year. As a reminder, we're early adopters of ASU 202308, which means our digital assets are recorded at fair value. So note that the $238 million was measured at the significantly lower prices we saw on March 31st. At today's prices, this would be closer to $280 million. A reminder that we have a Bitcoin treasury strategy, as JP mentioned, since our founding in 2015. we receive the majority of our revenue and we pay our largest expense salaries in bitcoin so internally our treasury strategy is for us a reflection of our success excuse me so far in q2 we have seen bitcoin prices rebound which is driven uh volatility Macro market uncertainty is still present, but markets are adjusting. Through April 30th, we have seen $444 million in transaction volumes. May is off to a solid start with Bitcoin back over 100,000 and increased excitement driving higher swap volumes. And as mentioned in previous calls, we continue to evaluate acquisition opportunities. While I do not have a specific transaction to discuss or announce at this point, I will say that inbound activity remains elevated and we continue to believe that the industry will see consolidation over the next 12 to 18 months. And as one of the few publicly traded crypto companies and with our strong balance sheet, Exodus is well positioned to participate in that consolidation. Shifting gears just a little bit, I'd also like to comment on something that has gotten a decent amount of attention recently, stablecoins. Stablecoins offer an easy to understand crypto use case, providing cheap, fast, and 24-7 payments on the most modern of payment rails. Total stablecoin issuance is currently $243 billion, according to DeFi Llama. We see stablecoins as growing into a multi-trillion dollar market as they steal share from 50-plus-year-old payment rails like SWIFT and Visa. The opportunity is large. SWIFT alone processed 11 billion transactions in 2022, the last year it disclosed any data, while Visa processed $13 trillion of payments in 2024. Of course, in order to use stablecoins, you need a wallet. As a multi-chain wallet provider, Exodus is well positioned to take advantage of the growth of stablecoins. We currently support all major stablecoins on multiple networks, and our Passkeys technology makes wallet creation extremely easy, facilitating broader stablecoin growth. So in summary, Q1 leaves Exodus smartly positioned in the growing world of digital assets. We remain confident and excited about our strategic direction, and we hold a deep commitment to shareholders. As JP mentioned, we are looking to grow our core wallet through increased visibility and marketing, and we seek horizontal expansion through partnerships and vertical expansion through purposeful M&A activity. All of this while our developers at Exodus innovate relentlessly on future products. And Elizabeth, with that, we'll take some questions.