Antalpha Platform Holding Company

Good day and thank you for standing by. Welcome to NLFAR's third quarter 2025 earnings conference call. Today's call is being recorded. All participants are now in a listen-only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to Mr. Chris Mamoni, Managing Director of the Blucher Group and Representative for NLFAR's Investor Relations Team. Mr. Mamoni, please go ahead.

Thank you, Operator. Please note that our remarks today will include forward-looking statements based on current expectations. These statements involve risks and uncertainties that could cause actual results that differ materially. For discussion of these risks, please refer to NALPHA's filings with the SEC. We do not undertake any obligation to update forward-looking statements except as required by law. Management may make remarks on the product and tax differentiation between an ETF and listed stock based on their understandings. The company is not providing tax or investment advice. Please consult your CPA and other licensed professionals for such advice. This call also contains reference to non-GAAP financial measures. Reconciliations to the most comparable GAAP measures can be found in our press release and SEC filings. Now, I'll turn the call over to Herman Yu, Head of Strategy for AntAlpha. Herman, please go ahead.

Thank you, Chris, and good morning, everyone. AntAlpha delivered another strong quarter in Q3. We executed across major strategic initiatives, and our revenue grew 62% year-over-year, accelerating from the first half. For the fourth quarter, Analfa is expecting revenue to roughly double year-over-year. Both supply chain loans and margin loans contributed this momentum, reflecting the broader adoption of collateralized loans in the crypto sector. Total loans facilitated on and Alpha Prime reached $2.4 billion. And BDC Collateral supporting these loans reached $3.9 billion. And Alpha's LTV on supply chain loans was at 59% at the end of the third quarter. And Alpha has multiple vectors driving our double digit top line growth due to the sheer size and new businesses evolving from the crypto market. which is set to gain wider adoption. With the passing of the Genius Act, other policy tailwinds, and the U.S. leading the crypto industry, a tsunami of real-world assets, or RWAs, are set to enter the massive crypto market for new customers. During an October 14th interview on CNBC, BlackRock CEO Larry Fink said the financial industry is at the beginning of the tokenization of all assets. One must think about the opportunity cost of not participating in the crypto market as a business or an investor at this stage of development. The crypto market has a market capitalization hovering between $3.5 to $4 trillion. To put in perspective, this is about the size of Japan's or the UK's annual GDP. N-Alpha is quite unique in that we are benefiting from the development of the crypto market by financing the Bitcoin mining infrastructure and its adjacent industries. In a way, our business is tied to the economics of compute, energy, and collateral-based financing, which are familiar to traditional finance. Turning to new growth curves. With the large growing crypto market, N-Alpha is presented with new lending scenarios For example, in early October, we provided a $206 million bridge loan to Nakamoto to serve their digital asset treasury, also known as DAT. DATs generate value by continuously financing with leverage and purchase their DAT asset to outperform their respective crypto index on a per share basis. That financing is merging as a new segment for crypto lending. Nalpha's priority growth strategies are globalization and Nalpha RWA Hub. On the prior, we are making progress in our entry into the U.S., building up our team and infrastructure. We will provide more updates when we reach new milestones. On the latter, in collaboration with Tether, we launched Nalpha RWA Hub at the end of September to provide institutions with broad access to Tether Gold to improve financial stability on their crypto holding. Globalization and RWA Hub are two very sizable opportunities. These are strategic priorities for us that will require investments and we believe in time will develop into significant new growth curves for AN-Alpha. Let me talk a little bit about the importance of tokenized gold in the crypto economy. In September, Morgan Stanley CIO Mike Wilson stated that he favors a 60-20-20 portfolio strategy that includes 20% in gold over the old investment adage of 60-40 between equity and bond. Wilson's rationale is that gold is both an inflation hedge and a safe haven when real rates fall. According to CoinMarketCap, the size of USDT plus USDC is approximately $250 billion, and tokenized gold today is about $2 billion market. Gold market cap is about 80% the size of U.S. treasuries at $23.5 trillion. Assuming gold to treasuries on-chain will be at the same ratio as real-world assets, Tokenized gold stands to grow 100-fold when people see it as a safe haven for stablecoin. At the other end of the spectrum, where N-Alpha customers sit, we have seen Bitcoin's value rise significantly over the past decade. And in between, Bitcoin has been volatile. For example, since the beginning of 2023, Bitcoin has sold off more than 20% on seven separate occasions. And thus, holding tokenized gold in one's collateral pool would allow institutional borrowers of crypto loans to better meet cash flow needs and sudden market shocks in crypto winners. Turning to tethered gold debt. As a tech lending platform, we are seeing tremendous opportunities for crypto collateralized loans. Our lending scenarios can further broaden if we increase the supply of funding. Incubating a tether gold debt not only helps an alpha secure more funding, it can also increase the resiliency of our balance sheet against macro conditions. On October 10th, we completed the acquisition of Prestige Wealth which will be renamed Aurelion. The NASDAQ ticker is AURE. This is a pivotal milestone in Analfa's treasury strategy. Through this transaction, Analfa invested $43 million in Aurelion and anchored its $100 million pipe, allowing Aurelion to be the first listed Tethergo RWA-focused company on the NASDAQ. Based on Aurelion's last Friday's closing price of 40 cents per share, ANALPHA's position in Aurelion is valued at approximately $48 million. ANALPHA holds a 32% equity interest and 73% voting right in Aurelion. Heather also invested in Aurelion for $15 million. What makes ADAPT more appealing than an ETF? You may ask. Aurelion is leveraged gold, and it can generate yield by lending unsecured gold to ANALPHA. A $100 million pipe bought Aurelian $134 million in tethered gold. Other benefits may include more favorable tax treatment. Most gold ETFs are set up as a grantor trust whose taxable status as collectibles is taxed at 28% on long-term capital gain, whereas long-term gain on equity is usually taxed at 20%. Aurelia has a focused mandate to raise funds repeatedly to buy gold with an internal goal to become a $10 billion debt over time. By increasing funding supply, Analfa can grow to be many times our current size. Analfa Prime lending platform can be fine-tuned to perform risk management well beyond financing Bitcoin mining, such as financing debt, Ethereum, and XAT collateralized loans. and also can be fine-tuned for adjacent industries, such as inference compute, thereby significantly expanding N-Alpha's tab. With that, I will now turn over to our Chief Financial Officer, Paul Laring, to discuss our financial results in more detail.

Paul Laring Thank you, Herman, and hello, everyone. N-Alpha delivers strong quarter of financial performance in Q3. highlighted by solid revenue growth, margin expansion, and strong operational execution. Let me quickly walk you through the key financial highlights, which are all on a year-over-year comparison basis. Total revenue reached $21.1 million, up 62% year-over-year. making our third consecutive quarter of acceleration. Tax financing fee on supply chain loans reached $15.6 million, up 51% year-over-year, driven by strong hashrate loan growth. We financed 77.1 exahash of hashrate capacity at the end of Q3. The mining sector remained active and our financing solutions help clients scale capacity in a disciplined and capital efficient way. Platform fee on margin loans also perform very strong, roughly doubling year over year to 5.5 million. Margin loans tend to do better when we have a period of relatively higher Bitcoin prices. as we saw in Q3. Total loans facilitated on Nalpha Prime reached $2.4 billion, up 60% year-over-year, driven by new client wins and increased loan amount from existing clients. The continued expansion of TVL, or total value of loan, demonstrates the stiffness of our client relationships and the scalability of our technology platform. The number of institutional clients increased 28% year-over-year in Q3, and TVL per customer on a 12-month rolling basis increased 55% year-over-year. As we focus on larger, high-quality clients Turning to funding causes. Funding causes on supply chain loan declined to 5.18%, down 29 basis points from a year ago. Net interest margin on margin loans improved 44 basis points to 1.63%. We also look at our top line growth on the total net interest margin basis. combining revenue recognized on both gross and net basis. Our total net interest margin grew 64% year-over-year in Q3, which is an indication of Nalpha's improved branding recognition and bargaining power. Turning to other operating expense. Operating expenses excluding funding costs were approximately $9 million, up 69% year-over-year. Technology and development expense increased $0.6 million, or 52% year-over-year, primarily due to the increase of stock-based compensation and labor costs, including added head accounts in risk management and prime platform development. Sales and marketing expense increased $1.5 million, or 137% year-over-year, primarily due to an increase in labor costs, stock-based compensation, and marketing events related to conference sponsorship and other very hot developments. General and administrative expenses increased $1.4 million, or 54% year-over-year, primarily due to the increase of labor costs, stock compensation, professional fees, and office lease. Profitability improved in the first quarter, with adjusted EBITDA margin reached 40% in Q3, which includes $3.4 million in unrealized gain on Tethergo Holdings, and $1.1 million in non-operating income. Excluding these non-recurring items, adjusted EBITDA margin would have been 19% in Q3 compared to 14% a year ago. Looking ahead, assuming stable market conditions, we expect fourth quarter revenue to range between $26 million and $28 million. representing another consecutive quarter of acceleration to between 94 to 109 percent growth year-over-year. In summary, the first quarter demonstrated that NLVAS model continues to scale profitability. We are leveraging our platform to drive sustainable revenue growth, expand margins, and strengthen our balance sheet. all while positioning the company for a long-term global expansion. And now I will return to Herman to conclude the call.

Let me quickly recap today's call. Q3 was another strong quarter for ANALPHA. Our revenue growth continues to accelerate from the last two quarters. We are scaling with respectable profit margin, reflecting the scalability of our traditional fintech platform. New customer ads were strong. Average loan per customer significantly increased. The large Burgoyne crypto market is providing us with new lending scenarios. And our strong risk management capability, along with Nalpha Prime, is equipped to meet these new lending scenarios. Despite the accelerating growth of our core Bitcoin mining financing business, we are investing to develop a second growth curve. in globalization in Nalpha RWA Hub. Nalpha anchored Aurelion's $100 million pipe to enable it to purchase $134 million in tethered gold. Our internal mandate to grow Aurelion to a $10 billion tethered gold debt over time to increase collateral resiliency and provide funding to new lending scenarios that will significantly enlarge our task. With that, let me turn the mic back to the operator.

Thank you. We will now begin the question and answer session. To ask a question on the phone, please press star 1-1 and wait for a name to be announced. To cancel a request, please press star 1-1 again. One moment for the first question. Our first question comes from the line of Darren Asahi from ROC. Please go ahead.

Hi, guys. Good morning. Good evening. Thanks for taking my questions and congrats on the progress. Just a couple, if I may. In terms of the guide, sort of the growth acceleration, is that fully coming from organic sources, said another way? Is that kind of your core business or is that – are there any assumptions of laying on anything from a really into your financials? And then I guess there's kind of a second part to that question. you mentioned a lot of different kind of growth avenues. One of them was DATs. So I guess on the growth vectors, your strength in your core business, could you maybe speak to geographic presence? I know you talked on the IPO Roadshow about penetrating the U.S. Is that kind of assumed in that or is it still organically most other parts of the world? And then what the impact of any kind of DAT financing as well as RWA would be helpful to understand. Thanks.

Can you repeat your first question?

Yeah. The first question was really about is the fourth quarter guidance assuming any benefit from Aurelian, or is that organically all in alpha?

Okay. Got it. First of all, we don't derive revenue from Aurelian. It's the other way around, right? When Aurelien raises capital, it, you know, has gold, and then the idea is they're our balance sheet, right? We, through, you know, technology, we lend gold from them, and that strengthens our balance sheet, and we pay them a fee for that falling of gold. Okay, so it doesn't increase our revenue. Point number one. Point number two is our growth guidance into Q4. Guidance in TQ4 is the current pipeline that we have. We are experimenting other loan amount, other loan scenarios we talked about previously. I don't think any of those are material to our current numbers. I think most of it would be what we have historically, the Bitcoin mining. Point number one. Point number two is in terms of regional expansion, as we said in the prepared call, we are hiring. We are building the infrastructure in the U.S. Currently, the amount of revenue that we're guiding, it may or may not have revenue from the U.S. Even if it does, we don't think initially it's going to be material. I think a lot of that's going to come next year when our

overall infrastructure is more prepared. Got it.

And if I could just squeeze one more in, I think you talked in the release about pricing power in the business. Maybe if you could just expand a little bit more on that. Thank you.

Yeah. I mean, typically when you look at, you know, the Fed decreasing interest rate since last September, I think they made three adjustments. you would expect that, you know, our fees, tech fees would be lower and so forth. We've been pretty good at holding up to that tech fee at the same time. When you look at the cost of financing that we have, as Paul mentioned, that went down a little bit. So overall, I think it's the branding power that we have since taking public space. you know, that being listed in the U.S., I think that helps. The scale that we've become, that helps. So I think all of that taken together, it's making our margins better than last year.

Appreciate it, Herman. Great. Thank you. Thank you for the questions. One moment for the next question. Our next question comes from Delilah Harrow-Gorich from B. Riley Securities.

Please go ahead.

Hey, good morning, gentlemen. Thanks for your time today on the call. I just wanted to ask about the net interest margin, 1.63%, I think, in here in the quarter. What would you say is maybe the proper range on that? Is it limited? Can it get to the 2% level? Because I review other lenders doing research like It appears you're the low-cost producer. You're clearly some of the lowest rates from what I see. And my next question is, Herman, you mentioned the average loan per customer is off. Can you generally give us what that level is, or is that something you don't want to disclose? Thank you.

Yeah, I'll take the first one, and then Paul can take the second one on our average loan amount. The first one, I think you're talking about two things. different items, right? One is the cost of funding. 5.18 is our cost of funding. I think last time we talked about last quarter, I recall our cost of funding was 5.45%. We've lowered this to our negotiation. And then net interest margin is the difference between what we charge and the cost of funding that we have. So, the net interest margin for both, you know, machine loans and then also for hashrate loans have been improving, and that's a pricing power that we talked about historically. With regards to further increase in net interest margin, I think just as we have built this you know, last year, I think we have the opportunity to, you know, make it bigger. But, you know, I think, for example, if we can come into the U.S., I think it probably gives us more opportunity. So I think over time, as our brand scales, as people trust us more and so forth, I think there's opportunity for that to, you know, be able to grow more. The other The way you also want to look at it is net interest margin is on a per product line basis. So, for example, net interest margin for machines are much higher than for hash rate loan because machines are less liquid. So on a product level dimension, we are growing year over year. But when you're looking at the whole P&L, just got to factor in. that there's net interest margin by different product loans because they have different risks.

Thank you, Herman.

Yeah. Great.

Yep. I think regarding the average loan amount, we do see an increase year over year, both in supply chain loan and also margin loan. And currently, the average loan amount per customer for supply chain loans is roughly $42 million. And then for margin loans, roughly $47 million. Both of them are growing at over 50% year-over-year. So that's roughly the average size of the loan amount for the customers. And on top of that, our clients or customer numbers also grow on a year-over-year basis.

Okay. If I ask one more, can you maybe give the total number of customers a quarter end in each segment? Is that possible? Because you didn't disclose that in your, yeah.

Well, sure. Roughly, I think for supply chain loan, it's close to 50. Okay. for margin loan is a little bit above 40 at that level. And in total, it's the number.

Yeah, I think how, I think the way to look at it is the net, because I don't think it makes sense to break out the customers by product line because one customer might have multiple products.

Okay.

So you're overlapping. So, so my suggestion is when you look at the whole, so, At the whole, we're at approximately 80. Otherwise, you'll be adding in there. How do you add in a person? Yeah. Gotcha.

All right.

Thanks, guys.

Good quarter. Thank you very much.

Thank you.

Thank you for the questions. Our next questions will come from the line of Daniel Malani from H2 Raybright. Please go ahead.

Hi. Thank you. Danny Malin here for Kevin DD. Herman, I was just Curious, you know, moving forward with many deaths trading at a discounted NAV, could you see an influx of, you know, maybe new customers if they were to, you know, acquire financing from you guys and then later on buy back their own stock? Second part would just be any general thoughts or color on demand that you're seeing in the last month or two. Thank you.

So first of all, when we make these type of loans, they're all over collateralized loans. So we don't look at how they're trying to manage the treasury strategy, but we look at it more from, you know, our risk management perspective. So I don't have too much insight into each of these companies, how they're managing their treasury strategies. But I do think that as long as they do have a you know, their cryptos available to be secured, then that's where we go in.

Okay.

And any more color on, I guess, rigged demand more generally?

Yeah. So, you know, At the beginning of the year, we held off on a lot of these machine loans because the volatility of BTC prices, it has been pretty stable from the beginning of the year, you know, over $100,000. And when you look at the machine models, you know, you have the S23 coming out. and then you had X21 XP that came out at the beginning of the year. So typically when these things happen, the new models come out, you give it a few quarters, that's where our financing would take off. So I would expect, you know, in the next quarter or two that machine loans would pick up on the assumption that, you know, BTC prices stay stable.

All right, thank you. Thank you. Thank you for the question.

That concludes the question and answer period. Thank you again for joining our call today.