Defi Technologies, Inc.

Hi, everyone, and welcome to the DeFi Technologies 2025 Quarter 2 Financials Review and Shareholder Call. I'm Curtis Laufman, VP of Marketing and Communications. On the call, we have CEO Olivia Rusi-Newton, President Andrew Forsen, CFO Paul Bozoki, and co-founder Johan Wattenstrom. I'm going to read a forward-looking statement to get started. and then we'll get the webinar rolling. Certain information set forth in this presentation contains forward-looking information, including future-oriented financial information and financial outlook under applicable securities laws collectively referred to as forward-looking statements, except for statements of historical fact. The information contained here constitutes forward-looking statements and includes, but is not limited to, protected financial performance of the company, completion of, and the use of proceeds from the sale of shares being offered here either the expected development of the company's business projects or joint ventures these statements are not guarantees of future performance or undue reliance should not be placed on them such forward-looking statements necessarily involve known and unknown arrests and uncertainties which may cause actual performance of financial results in future periods to differ materially from any projections of future performance or result expressed or implied by such forward-looking statements So done with that. I'll give you a little overview of how this is going to go. We'll start with some statements from the exec team here, starting with Olivier. We'll move on with Paul with an overview of the financials. And then Johan will give a brief overview on our 2025 financial guidance. We'll then open it up and take some retail questions from the Q&A and then invite our analysts on live to ask additional questions and wrap it up from there. So with that, I'll hand it off to our CEO, Olivier Roussinouten.

Thanks, Curtis. And thanks to everyone who's joined on this Friday in the summer. Q2 2025. And Curtis, I'll let you flip onto the slide. Q2 2025 showed us what our platform, specifically all of our business units combined, can deliver in a softer market. We reported adjusted revenues of US $32.1 million, adjusted EBITDA of US $21.6 million, and adjusted net income of $17.4 million. The takeaways involved Our model scales, prints cash, and performs across market conditions. As a company, speaking with Johan, my co-founder of the team yesterday, in detail before we filed our financials, I still believe we're extremely early in our growth story, but the flywheel of all of our subsidiaries acquired or incubated in each business line is reinforcing the others. For Velour, our kind of largest business unit, which is specifically operating in the asset management space, demand continued to build with net inflows every month, year to date, totaling US $77.4 million for the first half AUM ended Q2 at US $772.8 million and reached US $947 million by July 31st. In Q2, Velour generated US $6.9 million in staking lending income and US $2.1 million in management fees. We also launched 14 new ETPs, keeping us on track with our target the largest issuer of digital asset structured products on regulated stock exchanges. Outside Europe, Andrew has done a tremendous job and effort in terms of pushing our global expansion. Outside of Europe, we're continuously expanding in Europe, but we are in the final phases of regulatory approval for in Kenya and both Turkey and are targeting other markets in Asia, LATAM, and we'll let Andrew elaborate on that further into the presentation. Stillman Digital, which was acquired, I believe, October of last fiscal year, has been a great acquisition. Q2 revenue was US $1.9 million. Stillman also completed its integration in Talos, deepened capabilities in FX, and a large focus of Stillman has been market making and providing liquidity for stable coins as that market segment becomes one of the largest markets you know, digital dollar-based stable coins and the availability for that. So we see that as a significant potential growth area. They also added some great senior trading talent. In our DeFi Alpha business, low risk trade in May with 17.3 million in returns and maintain a zero loss track record since inception, which was, I believe we've been operating for about a year and three months now that we incubated DeFi Alpha. Neuronomics, which was really, Recently, four or five months ago, acquired the majority stake of Neuronomics. We've been shareholder of Neuronomics for around three to four years. We see them as one of the leading and pioneering companies in artificial intelligence and specifically applying AI to the digital asset sector, which they've done for four to five years now, and traditional equities for almost 10 years. They completed the development and testing of Smart Crypto, which we'll have more news about shortly, and will open subscriptions for institutional and qualified investors in early September. Neuronomics also secured a validator node on the Canton network, which is a fast-growing blockchain positioning us to participate directly in institutional-grade tokenized assets. Reflexivity, which is our research unit that complements all of our customers at Forlore with leading edge information on all the alternative, primarily alternative crypto coins that they're kind of buying and trading. So that is kind of the main focus, but they've expanded distribution into platforms such as Beluga, BlockWire, and CoinMarketCap, which is, I believe, the largest trafficked digital asset website globally. And we are building new events and newsletter sponsorships alongside a brand upgrade aimed at institutional clients. So that kind of compromises all of our... within the DeFi technologies umbrella. Moving kind of to our balance sheet, we remain well capitalized with US $26.4 million in cash and $26 million in digital assets with a combined $52.4 million as of June 30th. We are in the process of renewing our NCIP, which is the Canadian terminology for share buyback program that we will utilize to buy back kind of what we see as an undervalued share for our financial performance as a company. What the rest of 2025 looks like, we've raised outlook. Based on the current performance and marketing conditions, we raised 2025 annualized operating revenue guidance to US 28, 200 million and 18.6 million dollars. Valor, More listings in new markets. We expect additional ETPs listings in the coming months with a robust pipeline through 2025 and into 2026. As I mentioned before, on track for 100 years, 100 products by year end. We're also expanding into Africa, Asia, Middle East, other regions within Europe, United Kingdom, And as I mentioned, final phases, regulatory approval, execution will continue. And, you know, all of these new geographies come on stream. It is a bit of a longer process, but, you know, regulatory approvals in all of these jurisdiction, market making, FX partnerships, make it all happen. And I'll let Andrew, as I mentioned, elaborate further on that. And yeah, I think that sums up most of, This, we've also kind of, I think we'll have more information coming shortly on our newest business line, DeFi Advisory, that uses our kind of expertise in trading technology, market making, OTC for public companies that are managing digital assets. So you'll see more news surrounding that. And to conclude, we're encouraged to see a structural upgrade in our shareholder base. Since early July, we've welcomed a reported 89 additional institutional investors and funds, bringing us to 95 institutional owners representing over 33 million shares. Despite recent share price action, the register is deepening with longer horizon capital. And I firmly believe it's an indicator of quiet or take a quiet rotation of our shareholder base away from retail, driven towards institutions that are welcoming digital asset companies. And yeah, to kind of I conclude, you know, put simply, I think we're delivering now and building sustainable value for the long term. And we're keen on being one of the leanest revenue producing companies in the digital asset space listed on the NASDAQ. I'll pass it over to you, Paul.

Thank you, Olivier. Go into the financials. So starting with presentation currency, beginning with the second quarter of 2025, DeFi changed its presentation currency to the US dollar to better meet the needs of our US investor base following our successful NASDAQ listing in May. In terms of AUMs, DeFi closed June 30th with AUM of $773 million. Q2 average AUM decreased to $748 million from the $780 million in Q1 due to negative cryptocurrency price movements on our alternative coins. However, cash inflow into our ETPs remained strong with positive Q2 inflows of $27 million bringing total inflows for the six months ended June 30th to $77.4 million. In terms of revenue, our Q2 IFRS revenue of $13.4 million brought our cumulative IFRS revenues for the six months end of June 30th to $57.1 million. Company's revenue guidance for the six months end of June was $62.5 million, thus the actual revenue shortfall was $5.5 million. or 8.7%, due to DeFi Alpha trading revenues deferred into the second half of 2025. The minor miss was due to DeFi Alpha revenues being lower than planned in the first half. The company reminds investors that these trades are opportunistic and may not be realized on a straight line basis, but we reiterate that we do have a strong pipeline. Our IFRS reported revenues also include the effect of a movement in the discount of lack of marketability provision, DLOM, The acquisition of $18.7 million locked SUI tokens as part of our Q2 DeFi Alpha trade and crypto price increases on our existing locked Solana and AVAX coins, the DLOM increased by $18.7 million in the quarter and brought the total DLOM provision to $74 million. I remind everybody that that $74 million DLOM provision will unwind over the locked period of the coins, which goes until 2028. So it will come back into income and increase our equity. Talking about AUM monetization, our Q2 effective realized staking income was 3.6% on the average 748 million AUM. We staked 72.5% of our AUM during Q2. Staking revenue decline is due to the notable drop in on-chain activity, particularly on the Solana network. Lower average prices of key assets, Ethereum and Solana, which were both down about 20% quarter over quarter. Lower protocol reward rates in Q2 versus Q1. Protocol inflation and reward reductions across Solana. 4.4% down from 4.6% in Q1. And similar down reductions for Toncoin, Polygon and NEAR. Inflation reductions lead to lower baseline reward rates, resulting in lower staking yields. We also redeemed 71.6% of our unlocked coins within one of our equity investments in digital assets, which resulted in some of the coins becoming unstaked at the end of Q2. Our effective staking income burned for the full six-month period ended June 30th was 4.3%. Our effective management field yield earned during Q2 was 1.1%, down slightly from the 1.3% earned in Q1 due to positive price performance of Bitcoin and Ethereum, where we earned management fees of nil. People remember we earned a headline rate of 1.9% on most coins, but Bitcoin and Ethereum zero. So the effective rate was 1.1% in Q2. This brings our total effective AUM monetization, being staking income and managing fees in Q2 to 4.7%, down from 6.2% in Q1 due to the factors noted above on lower staking yields. Average AUM monetization for the six months ended June 30th was 5.5%. An adjusted EBITDA came in at 21.6%, reflecting a strong focus on profitability. Adjusted EBITDA includes adjustments to add back the non-cash DLOM and non-cash share-based comp. In terms of the balance sheet, the company focuses on maintaining balance sheet strength. We ended Q2 with $26.4 million in cash to provide ample liquidity to meet our obligations. In terms of new investments, the company's venture portfolio consists of eight private investments with the largest investment being our 5% stake in Aminabank. Aminabank continues to perform exceptionally well, growing its revenues in AUM while maintaining strong fundamentals. Readers can find additional detail on its performance in our press release and our MD&A. And lastly, to just reiterate what Olivier said, during Q2, we did repurchase 675,900 shares and returned $1.9 million. to investors and we are in the process of renewing our NCIB to continue doing so. I'll pass it over to Johan.