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spk00: welcome everyone to exodus's first quarter 2024 earnings conference call i'm alice lapato vice president of investor relations joining us today are co-founder and ceo jp richardson and cfo james granetsky during today's call we may make forward-looking statements actual results may vary materially from today's statements Information concerning risks, uncertainties, and other factors that would cause results to differ from these forward-looking statements is included in our SEC filings available on the investor relations portion of our website. Please visit our social media apps or Reddit to submit your questions for the quarter after our call. You can expect a response from our investor relations team within 24 hours. And with that, let's go to JP for the first quarter review.
spk07: Thank you, Alice, and thank you, everyone, for joining us on our call. I'm thrilled to be speaking with you today in this monumental time in our company's history. We had an extraordinary quarter with record revenue growth of $29 million, up 118% year over year, and are slated to be uplisted on the NYSE American Exchange on May 9th. which we are pleased to be part of as we continue to educate and grow awareness of Exodus. Since our founding, we've helped people take control of their own wealth by making it simple for everyone to enter a new financial system, one built on self custody and a decentralized future. We do this by offering a self custodial wallet with the best user experience in the market. This is the simple concept that drives a large impact, and we believe our platform is key to enabling people all over the world to enter the ecosystem of digital assets and Web3. Before we jump into the details of the quarter, let me take a step back to break that all down and talk what led to the founding of Exodus. Like many other crypto companies that have come to the market, Exodus was founded on the belief that the decentralization of our financial system on the blockchain, as well as the security and control of your individual wealth, would lead to a true democratization of monetary systems and a better world. For so long, the traditional financial system has been limited in its capacity as there are still many people in parts of the world with little access to dependable financial system that runs efficiently 24 seven and without intermediaries that cost friction and high costs. Imagine if the internet was closed on nights and weekends. Imagine if it was just limited to your country. That's the current financial system of today. Younger generations, the Venmo and Robinhood generations, the I-want-it-now generations won't accept this. They'll turn more and more to the world of decentralized finance. We believe there's a future in which cryptocurrency, Web3, and decentralized finance will rebuild the traditional financial system on the blockchain. This is because the blockchain is open, transparent, and operates 24-7, empowering the individual person as opposed to the custodian. What we've been seeing in just a few short years is the growing demand for this new world. Bitcoin has moved from a fringe experiment to active disruption. Adoption of Bitcoin and blockchain technology has spread like wildfire across numerous industries and even to Wall Street. millions of Americans own cryptocurrencies, and in countries such as Nigeria and Argentina, Bitcoin and stablecoins are used to preserve the value of wealth when traditional currencies are unable to do so. The market conditions for Bitcoin and crypto in Q1 were strong with the recent SEC approval of spot Bitcoin ETFs. The Bitcoin price is appreciated from approximately $40,000 to $70,000. It's clear that the market is entering into the mainstream and will likely only continue to mature. That said, while the world of Web3 and crypto markets have come a long way, we believe we are still in the very early days. A long runway for disruption. Like any early stage market, there's plenty of room for improvement in regard to usability, implementation, and adoption efficiency. In the beginning, cryptocurrencies were traded across highly complex and confusing interfaces with very little integration, management tools, and security and support, making them cumbersome to trade and drawing in mainly techies and fanatics to participate. People were also limited to downloading individual wallets for every asset as a wallet that supported multiple chains was nearly non-existent. Not to mention, these walls were typically low quality and didn't prioritize user experience nor security. We believe that by making it extremely easy for people to enter the world of digital assets and Web3 through a platform like Exodus is vital to our industry. We founded the company in 2015 with the initial purpose of enabling people to store multiple assets from different blockchains all in one single beautiful interface. We believe that by creating one wallet for everyone to send, receive and store multiple digital assets was extremely simple, elegant, intuitive to use, was critical in furthering mass adoption of decentralized finance. There were a number of key differentiators for our platform when we started that continue to prevail today. First, our focus and security is of highest grade. It's a number one priority underpinning everything we do as a company. Our beautiful user experience remains unrivaled today. The Exodus wallet is self-custodial, which means our customers have exclusive control of their private keys and wealth. Exodus does not have the ability to move customer funds. By working with multiple API providers, our customers have the most seamless experience to swap assets across chains. And this is actually very challenging to do under the hood. But given our years of experience, this being our focus from the start, it's one of the key technologies that sets us apart. And finally, we also offer unparalleled support services to make the experience even better. It's been nearly a decade since our founding, which is an eternity in the crypto world. And our experience as one of early innovators of blockchain technology has made us stronger than ever. A digital wallet has since become an absolute requirement as a gateway for anyone to utilize Web3. Today, we are making significant strides in our next phase of growth by building out our wallet as a service capabilities. to provide frictionless experiences when navigating the crypto landscape. We see our wallet as a service platform as the infrastructure or the plumbing that gives people access to decentralized applications and the benefit of having seamless onboarding experiences. These people no longer need to worry about which wallet to use or how to buy cryptocurrency or concerns about which blockchain their assets are on. Swallows the service, wraps all of this functionality in one beautiful software experience. As we announced earlier, our partnership with Magic Eden, now the largest NFT exchange in the world, this partnership launched in Q1 with tremendous traction out of the gate. This partnership expands our footprint to a larger audience by providing Magic Eaton customers access to our fiat and swap infrastructure, acting as a launchpad for many people into Web3. Also, as we mentioned previously, we expect to continue expanding our use cases with the launch of our fiat onboarding functionality, ExoPay, so users can buy crypto fiat currency natively on our platform, enabling our customers to onboard to the crypto landscape with unparalleled ease. We expect to launch this capability in limited jurisdictions in the second quarter. Looking ahead, we're working to create a world in which people can seamlessly onboard and offboard across multiple chains without having to remember any daunting 12-word secret phrases that lack the feel of modern technology. We are excited to share that we will be launching a product this summer that will not only address these challenges, dramatically change the game in how people enter the world of Web3. but also change how we're able to expand our market reach. Now, as a result of all of our hard work since our founding, we have achieved a number of major milestones as of Q1. As I mentioned, we've achieved all time high revenue, million up 118% year over year, driven by swap volumes and strength in our new well-as-a-service capabilities. We have approximately 1.7 million monthly active users who trust our platform to deliver the best experience and who found us through word of mouth and social media. These accomplishments are no small feat. Our history of investing responsibility and staying agile in a volatile market is core to our DNA. And we expect to focus on profitable growth while investing strategically to build the best wallet as a service platform on the market. Along with other Q1 announcements, we are happy to share that once again, We are going to be available in the app stores in the UK. As you may recall, in Q3 of last year, we disclosed that we were placed by the FCA on a warning list for unauthorized firms, along with a broad range of other crypto companies that were mainly asset custodians. We work closely with the FCA to ensure we're in compliance with their regulations and have since been removed from the list. We take regulatory compliance very seriously and we'll continue to work with the regulatory agencies to stay on top of the regulatory landscape. Finally, we are delighted to share all these accomplishments that have led to our impending uplisting on the NYSE American. And we will be one of the very small number of companies to provide the tools to serve the crypto market and list on a major exchange. Once again, we are making waves, which aligns with our history of being the only company to ever go public through regulation, a crypto only stock offering back in 2021. And with our funds completely raised using the excess wallet software, we believe in building credibility and trust in our market and being a public company on the exchange. Like the NYC American will drive further awareness of our brand. And on that note, before I turn it over to James, I'd like to thank our customers, partners, and employees for a great Q1. We believe we are only at the beginning of our journey to capture this aggressively growing market that will disrupt many industries over the long term. We appreciate all of your support and have a long runway for growth in the future.
spk06: Over to you, James. Thank you, JP. Thank you, everybody, for joining us today. As JP mentioned, it was an extraordinary quarter in many ways. We saw the strength in Bitcoin prices. We saw strength in the overall crypto market. We also saw growing momentum in our non-swap offerings, and that resulted in a record revenue number this quarter. We also achieved strong profitability, and that demonstrates the inherent leverage in our business model. It sets us up for durability in bear markets and strong growth in bull markets. We continue to add to our already strong balance sheet, and I'll go into more detail on that in a little bit. But that gives us the flexibility to further invest in providing the best possible experience for our user base. Now, before I jump into the results, I want to reiterate the power of our business model. As JP mentioned, our platform leverages our strengths by enabling seamless access to a wide range of decentralized applications. And we recognize the large majority of our revenue from the fees that we charge third party API providers for access to our users. The primary application provided by third party API providers is crypto to crypto swaps. And we report the volumes that pass through these APIs. And this has been our core business model. We also have our non-swap revenue, and that consists of other capabilities such as staking, fiat onboarding, and wallet as a service. For wallet as a service, we provide that to decentralized applications such as Magic Eden for NFTs. That's a prime example. So the broader our reach across our market, the more we can improve our user experience and the more we grow. Through this business model, we align our interests with the interests of our users, and that has resulted in extremely loyal users who love and trust our wallet. In Q1, revenue increased to $29.1 million. That's up 118% year over year and 57% from the prior quarter, an all-time high for Exodus. Our swap volumes, which drove the majority of our revenue, came close to 2021 bull market levels and drove 92.1% of total revenue. We also credit our record revenue to the traction of our wallet-as-a-service capabilities, driven by our B2B partnerships. We also saw higher fiat onboarding and staking revenue, which in the aggregate are becoming a growing part of the business at 7.9% of total revenue. So as you can see here, our swap volumes for the first quarter came in at $1.3 billion, nearing those 2021 levels. We benefited from improved cryptocurrency market conditions, including the rise in Bitcoin's price and the enthusiasm around Bitcoin's halving event, which contributed to the surge in our platform usage. Adjusted EBITDA came to a total of $13.2 million, or 45% of total revenue. Continued discipline on the expense side paired with record revenues attributed to these strong results. We have minimally used traditional marketing and advertising platforms and have grown our number of users through word of mouth and our high-quality YouTube channel. That said, we'll continue to focus on investing strategically in the expansion of our wallet as a service capabilities, innovation of our native platform, and high ROI marketing campaigns while maintaining a stringent level of operational discipline with an eye for profitability. Our monthly active users of 1.7 million and quarterly active users of 2.9 million were very strong in Q1, driven by strong market dynamics and the success we have seen in our wallets as a service business. Our monthly funded users, which differs from monthly active and quarterly active users in that these monthly funded users actually have money in their wallet, hence the funded part. It's also at an all-time high at 1.1 million. Now, we believe that the MAU metric better aligns with our technology industry peers and also better highlights our footprint. And therefore, we will be retiring this MAU metric going forward. We ended the quarter again with an extremely strong balance sheet, this time $207 million, consisting of both digital assets, and that's again mainly Bitcoin and Ethereum, as well as traditional fiat holdings, and those are primarily in U.S. treasuries. and we continue to have no debt. New accounting guidance adoption has led to a mark-to-market accounting charge this quarter, and coupled with the appreciation of Bitcoin, we did have a gain of over $50 million that's gonna be reflected in our net income. This mark-to-market adjustment is expected to be more normal and more normalized in terms of our overall size as a percentage of our balance sheet in the next quarter and following quarters. But given the large size of our digital asset holdings, we do expect crypto market related volatility to continue to impact our financials. Our healthy corporate treasury provides us with the flexibility to invest in technology and services, as well as those high ROI marketing initiatives. Given the nature of our volatile market, the scale of our company, we have not been providing specific guidance. That said, we expect to continue to invest strategically in our people, marketing, and products, while maintaining positive adjusted EBITDA. So, so far in Q2, we have seen volumes ahead of the start of Q1. And while Bitcoin prices are well above the lows that they were at this time in the beginning of Q1, they have trended lower in recent weeks. But that said, volatility in the crypto market is not new to us. Through our endurance, we've built a sustainable business that can weather all the ups and downs, regardless of what cycle we're in. And we believe the crypto market will continue to grow, and we're excited by the opportunities that lay ahead of us. We expect to keep innovating in our technology and delivering a best-in-class user experience. We're going to expand our business-to-business partnerships, build out more wallet-as-a-service capabilities. We'll grow adoption and make it extremely easy for people to onboard our platform through our fiat onboarding services.
spk00: you know we're very excited to be part of the community at the nicy american and we expect to continue to showcase our brand and product innovation with that we'll take some questions our next set of questions are related to our magic eden partnership launch the first one how has the magic eden wallet been performing does the wallet support bitcoin nfts and have wallet downloads benefited from magic eden's increasing market share
spk07: this is a fun one because yes first of all the magic eden browser extension supports bitcoin nfts and it's doing amazingly well so let's take a step back and just kind of talk about the partnership in general many times people have asked jp why would you guys want to build competitors building other wallets is building competitors you guys have a wall and now magic is going to have a wall that you're going to build competitors Gotten that question from out of time. So the reason for that is that we've been building wallets for almost a decade. Me personally, I've been building walls for 12 years and not many people can make that claim. So we have the expertise to build great wallets and great user experiences. And at the end of the day, when it really comes down to it, we monetize through our infrastructure, our swap aggregator and our Fiat on ramps and off ramps. That's how we monetize. So we're not building competitors. What we're doing is building distribution partners, cuz that's effectively what's happening. All of these wallets that we're building become other distributions for our infrastructure that people around the world will be using these wallets. And effectively, these people become people that generate revenue for Exodus. So yeah, Magic Eden, like I said, it's doing phenomenally well. And we're not ready to reveal numbers outside of what's publicly available. But you can see from the installation page of the Magic Eden browser extension, it has over 200,000 users. installations and it's just a few months old i think we haven't even released the magic eden mobile wallet yet so we anticipate that's going to do insanely well our next question does exodus plan to offer support for bitcoin ordinals brc20 coins or room This is an interesting one. So do you remember way back in the day, back, I don't know, 2013, 2014, Bitcoin had two protocols, one counterparty and the other one was MasterCoin renamed Omni. And these protocols were all about creating assets on top of Bitcoin. And they never really took off. They were just, they were kind of fads for a little while, but Ethereum came along and Ethereum ate everybody's lunch in terms of creating assets on top of L1 blockchain. Now, BRC20 runes or BRC20s and runes are interesting developments, but it seems to me that they're going to be more in the realm of just like pure speculation, given that to transfer assets, transfer fungible assets on either using either BRC20s, and I understand runes are more efficient and kind of a modified protocol from the same person that created BRC20s, these protocols generally by using the bitcoin l1 are going to cost consumers a lot of money so what we're seeing right now is a lot of speculative behavior and there's there's nothing wrong with speculative behavior by the way is you know we understand that as a business that speculation happens with crypto assets but we like to get behind protocols that we think are going to have some staying power and so we're going to be watching BRC20s and runes and even ordinals. And if they have staying power and they're still popular within six months, nine months, and our customers are really coming at us and saying, hey, guys, you got to support those BRC20s. You got to support those runes. then that's something we will absolutely do. But in the meantime, with our partnerships, with our wallet as a service, and specifically with Magic Eden, we're helping to build that innovation directly into their platforms. And again, we will ultimately make money through the infrastructure. So, We can play an approach here where we still maintain a little bit of a cautiously optimistic approach with Exodus, but work with our partners to support some of these more leading edge capabilities and still ultimately benefit as a business.
spk00: Next, how does Exodus view recent regulatory actions against Bitcoin privacy wallets and MetaMask's swap product?
spk06: Thank you for that question. For such a small question, there's really a lot to unpack in it. I think I will start with from an Exodus perspective and then give a higher overview. So from an Exodus perspective, Exodus takes regulatory compliance very seriously. And these mixing technologies and features that the regulators appear to be going after in some of these other products and wallets, Exodus has never had it. We've never had any of those technologies or features in our wallet. On the security side of the question, for many years now, Exodus actually has treated clearly non-securities like Bitcoin essentially the same as the other or unknown bucket of things. And that is large and due in large part for operational reasons, not having to have bifurcated systems, one for one path in the US for clearly non-security, one path for unknowns. It's just overly duplicative. So it's just been easier to treat everything as if it was a security for us. But that also has the positive impact of allowing us to better navigate some of this regulatory uncertainty that we've seen now for some time. So that's it from an Exodus perspective. You know, from an overview and somewhat personal perspective, I personally believe that people have privacy rights. And I believe that financial privacy is a key component of overall privacy rights. But I also, you know, understand and appreciate respect that regulators have to go after bad actors and try to prevent them from doing bad things. But there's hope in my mind because I've seen a clear precedent of this in my lifetime. When I was younger, the emerging technology was pagers. And there were only two types of people over generalization, of course, but there were two types of people that I saw using them, drug dealers and surgeons. The government did not end up shutting down Verizon and killing the pager technology because some bad actors used it. they found other ways to go after those bad actors and still allow that technology to grow and thrive. So from my perspective, there is still hope for financial privacy.
spk00: Our next question, does Exodus have plans to integrate real-world assets into its wallet offering?
spk07: This one comes close to home in that Exodus has been offering assets on-chain tokenization of off-chain assets since 2021. You may recall we provided thousands of Reg A investors the ability to tokenize their Exodus shares on the blockchain. This is a really exciting space and we're seeing tremendous investment and use cases emerging. Now I'm not gonna comment on any imminent plans to integrate RWA technology or offerings, but know our team is routinely evaluating all RWA opportunities. And so whether that's providing transparent on-chain access to sovereign private debt markets, real estate, or even hard commodities. And as we evaluate these opportunities, there are two things that come top of mind. Do these products resonate with the customers, our customers? And number two, can we offer this emerging asset class in a safe and compliant manner? So are RWAs, are customers going to care about them? And we offer them in a very safe and quiet manner. So that's how we think about it. So we'll be paying attention. We'll be watching closely. There's a lot of cool developments happening in this space. And we will be paying attention. We'll be plugged in.
spk00: Thanks, JP and James. Please visit our social channels to submit your questions for management for the first quarter. And as I mentioned before, you can expect a direct response from our investor relations team to each of your inquiries within 24 hours. Thanks for joining us today.
spk03: Welcome everyone to Exodus's fourth quarter 2023 earnings conference call. Joining us today are co-founder and CEO JP Richardson and Chief Financial Officer James Gernetsky. Now during today's call, we may make forward-looking statements. Actual statements may vary materially from today's statements. Information concerning risks, uncertainties, and other factors that would cause results to differ from these forward-looking statements is included in our SEC filings available on the Investor Relations portion of our website. Please visit our social media, Axe, or Reddit to submit your questions for the quarter after our call. You can expect a response from our Investor Relations team within 24 hours. And with that, let's go to JP for the fourth quarter review.
spk07: Thank you, Chris. And thank you to all viewers for joining us today on Exodus' fourth quarter call. The Magic Eden Wallet is the first iteration of our wallet as a service strategy. Wallet as a service went from first thought to business partnership to live product in less than a year's time. Watching users and adoption of the Magic Eden wallet grow has been great to see, and we're thrilled to continue development of the premier wallet for the NFT collector. XS looks forward to signing and announcing future partnerships as we are proving our economic value today. Every day, alongside Magic Eden, who is an amazing partner, they're a talented crew, and we invite you to check out all their magic and creativity in the Magic Eden wallet. Exodus is also building new wallet as a service products and tools. We see opportunities not only in the digital asset in DeFi space, but also in more traditional sectors. Stay tuned and we look forward to updating you on our progress. Exodus shares stopped trading on the T0 ATS at the end of the fourth quarter. And in January, we began trading on OTC markets. While it's been a limited rollout in traditional brokerages so far, we've laid the groundwork to reach the mainstream stock investor. And Exodus's filing of our Form 10 is a big part of that strategy. James will talk later about the Form 10. Another step towards mainstream stock trading has been adding independent directors to our board. We welcome Carol McKinley and Tyler Skelton, who each bring significant experience in the cryptocurrency industry to their board roles. Our vision for an ideal crypto wallet experience includes a better way to buy and sell Bitcoin into your local currency. Last quarter, I introduced ExoPay. Making entry to Bitcoin fast and easy is a fundamental skill in our industry. ExoPay will perform for Exodus' customer as well as for MagicIn wallet and other initiatives. We are working on some finishing touches to the initial version of ExoPay and planning its launch in limited jurisdictions in the second quarter. The general crypto market at the end of the year was driven upward by anticipation of a spot Bitcoin ETF, which became a reality in January. A multitude of spot Bitcoin ETFs are now traded in US stock markets. And across the crypto industry, money appears to be flowing into Bitcoin. The Bitcoin halving is expected in April, which has historically been a time of great enthusiasm in our industry. Those tailwinds had excess in enabling 2023 on a strong note as our fiat and swap services increased revenue 26% and 52% from the third quarter, an outstanding fourth quarter. And so for more detail on our fourth quarter and finances, let's go to our CFO, James. James?
spk06: Thank you, JP. Let's jump right in. 2023 revenue increased 11% to $56.2 million. And this came as markets turned bullish at the end of last year. And so Q4 itself saw $18.5 million in revenue. And that was driven by our best quarter of swap volume since 2021. And I will highlight a little more than halfway through the first quarter of 2024, we have seen volumes keep pace with how we ended 2023. From an adjusted EBITDA perspective, for the year we had $17.6 million, $8.1 million of that was in Q4. Our expense reduction efforts at the end of 2022, combined with the continued expense discipline in 2023, provided that steady expense base that we have now. The pop in Q4 revenues that scaled very well on that expense base. And so while we do expect to grow our expenses in 2024 as we invest in new growth strategies, we will not do it at the pace that we did in 2021. So even if the market gods smile down and grace upon grace us with 2021 level revenues, it is very unlikely that we would have 2021 level expense increases. So as Exodus and the digital industry have continued to mature, we evaluated and looked at some of the business metrics that we use and have shared with you, particularly around user activity. Historically, Exodus has defined monthly active users, or MAUs, as a user who has funded their wallet and opened up an instance of their wallet during a 30-day period. However, most companies in our industry consider an MAU any user, whether they funded their wallet or not, who opens up any platform and counts each platform user separately, even if it's the same person. So to help provide you with a more apples to apples comparison, we're going to be changing our QAU and MAUs to match others in the industry. And then what we're going to do is we're going to rename our historical definition of MAUs. We're going to call that monthly funded users or MFUs. So this slide here is a look at the new methodology for QAUs and MAUs, and it gives history going all the way back to 2020. You'll see that in Q4 of 2023, we increased our MAUs by 150,000 or 13.6% versus Q3 of 2023. And those MAUs were just shy of the first quarter of 2022 level. So that's the closest quarter that we had recently. So by way of comparison, let's take a look at MFUs. Q4 MFUs were up by 165,000, or 22% from the previous quarter. From an MFU perspective, Q4 was stronger than Q1 2020, where MAUs were not. We see the increase in MFUs vis-a-vis MAUs in Q4 being driven by two items. First, funded wallet users are inherently more stickier than unfunded users. They actually have money on the platform. So while MFUs, they might not always be active, they are present and they are very willing and able to jump back in and make that jump from a quarterly funded user to a monthly funded user when the markets start to get fun like they have been recently. Secondly, the team has been working diligently on the onboarding experience and then also our Fiat OnRamp products. And this drives wallet funding, which decreases that delta between MAUs and MFUs. For a comparison, our fiat onboarding revenue, that increased over 300% in 2023. So it really highlights the efforts of the team there. Here's our treasury slide. Our balance sheet continues to remain very strong, and we ended the year with a market value of $138 million. Since year end, I just wanted to highlight that this has gotten stronger as digital asset prices have positively impacted our holdings so far. For the next two slides, I wanted to visually highlight some of the aspects of the Magic Eden partnership that JP described earlier. The first slide here highlights the beautiful product design. You can see the design of the wallet. It highlights some of the value added features that You can only get when you combine a Magic Eden and an Exodus, such as the cross-chain ability of Exodus with the NFT portfolio management of Magic Eden. And together, we're able to create an amazing experience for both of our users. And finally, I just wanted to highlight just how well this was received. Just this announcement had over 400,000 views shortly after it was launched. And so we're really grateful for that, the Magic Eden partnership and the success that they've had, especially just telling the world about it. And this final slide here shows how well the world has loved it. The customer reviews have been solid. It's had a great rating. And we're very, very proud of the work that we've done here. From a financial perspective, I would like to highlight that the Magic Eden Wallet is already generating revenue. And for both of us. And we look forward to sharing more about our wallet as a service growth and maturation, as well as our other infrastructure as a service products as they gain traction throughout 2024. Finally, I do want to highlight that you may have noticed we filed our financials on a different form than normal with the SEC, Form 10-12 . We did this to comply with Section 12 of the Securities Exchange Act of 1934, which dictates that Exodus become a reporting issuer under Section 13. And that's a very complicated and legal way of saying that the rules are forcing us to become a fully public company that files standard forms such as 10-Ks and 10-Qs. Now, when we conducted our Reg A public offering in 2021, we had over 6,800 individual investors. So we knew that this day was coming and we've been preparing ever since. For example, we've been reporting quarterly results that were not necessarily required to be reported under Reg A, but it did align us with the Section 13 reporting cadence. And it also gave you guys more information, which we thought was very helpful for everyone. And another thing we've done is we've really focused on governance. And so you've noticed that we've appointed a majority independent board and that will meet fully meets the New York stock exchange standards. And finally, we've made that move to the traditional market with our OTC QB listing. Now, we expect the Form 10 to become fully effective at the end of April. And during the 60-day period before effectiveness, our team, together with outside securities counsel, will be evaluating a national exchange listing, so a NICER NASDAQ listing. And really, that's because it's the next logical step for a 12G public company. Obviously, a NIC listing would be a major move for the company, so we'll keep everyone up to date as much as we can on our progress. And with that, I'll send it back to you, Chris.
spk03: Thank you, James. At this point in the call, I'd like to take time for a couple of questions from Singular Research Analyst, Edward Engel. Ed starts by asking, how has Magic Eden's new wallet been performing and what segments of B2B customers are most interested in the wallet as a service offering?
spk07: We're still in the first phase of our build out, but the early results have exceeded our expectations. And more importantly, Magic Eden's users have thoroughly embraced the product so far. We've seen comments such as, the premier wallet for all NFTs, regardless of chain, have been common and warm our hearts. Our initial market for wallet as a service is the Web3 space and the DeFi applications or DApps. In order to access a DApp, a wallet is a must. Right now, DApps have to rely on third-party wallets, which does not allow them to control the onboarding experience and also causes friction for users who do not already have a wallet. An Exodus built wallet with the Dapps branding and some level of customization solves this problem.
spk03: Thank you, JP. Ed also asks, is Exodus seeing mass market users regain interest in crypto or are volumes mostly driven by traders that were active throughout the bear markets?
spk06: So as I discussed in my remarks about MAUs and QAUs and then MFUs, the funded wallet is a lot stickier than a nonfunded or an unfunded wallet. And in the question that you mentioned, that's kind of the trader who stuck with us through the whole time. And that's definitely in the funded wallet category. So what we see, though, is, you know, the less than active or the quarterly funded units users who, you know, in times of interest and fun in the market will move to monthly funded users. And we definitely saw that in spades with that hundred and sixty five thousand quarter over quarter user swing. So, yes, definitely part of it is traders, if you will, coming back into Exodus and just becoming more active. They're there. They're just becoming more active from Exodus. But that's not that entirely. If you look at the MAUs in the QAU slide, you'll see that they have grown as well. And that is an indication of general increase in interest in Q4 for Exodus, its product. And that likely is an indication of general increased interest around digital assets.
spk07: Okay, so those who have been in the digital asset industry for a while unscientifically measure mass market user interest in terms of how many and how often our friends and family ask about Bitcoin or crypto. And I will say that metric has picked up a lot of steam over the past few months. Thanks to Ed for the questions. Of course, we continue to offer world-class customer support. So you can try reaching out through our app and through our website. And at Exodus, we are truly excited for everything that 2024 will offer. Magic Eden, mainstream Bitcoin ETS, and another Bitcoin having the fourth in history. These are historic times for our company, and we thank you for joining us. Chris, over to you to wrap things up.
spk03: Thanks, JP. Please visit our social channels to submit your questionings for management for the fourth quarter. And as I mentioned before, you can expect a direct response from our investor relations team to each of your inquiries within 24 hours. Thanks for joining us today. welcome everyone to the exodus third quarter 2023 earnings conference call joining us today our co-founder and ceo jp richardson and chief financial officer james granetsky during today's call we may make forward-looking statements now actual results may vary materially from today's statements information concerning risks uncertainties and other factors that would cause results to differ from these forward-looking statements is included in our SEC filings available on the investor relations portion of our website. Please visit our social media, Twitter or Reddit to submit your questions for the quarter after our call. You can expect a response from our investor relations team within 24 hours. And with that, let's go to JP for a third quarter review.
spk07: Thank you, Chris, and to everyone watching, thank you for joining us today for X's third quarter call. We talked about Wallet as a Service last quarter. Building resilient business requires sector dominance, and Wallet as a Service embodies our commitment to a blue ocean strategy. What sets us apart is our active involvement in the development process. Wallet as a service is not just about providing software. It's about crafting unparalleled, secure, and visually captivating wallet mainstream experiences for Web3 dApps. This is not merely a B2B revenue avenue. It's a gateway to partnerships and distribution channels for our B2B infrastructure, our white label, aggregator, and fiat services. Exodus is proud to announce our first wallet as a service deal with Magic Eden as our first customer. We are thrilled to partner with Magic Eden to provide wallet software as well as infrastructure access to our fiat and swap services. Let's zoom out more broadly and talk about macro. In third quarter, Bitcoin and U.S. crypto companies continued their walk towards the mainstream. United States SEC delayed its decision on a spot Bitcoin ETF for all applicants, including BlackRock and Fidelity. Bitcoin and Ethereum prices declined slightly in the quarter, with Bitcoin down 12% and Ethereum down 16%, with both assets remaining well above their prices at the beginning of the year. All of this was before the fourth quarter, when continued speculation about a potential Bitcoin ETF sent crypto prices generally higher. On the regulatory front, Exodus has been proactive in preparing for the new regulations which recently took effect in the United Kingdom. Last month, the UK Financial Conduct Authority set strict guidelines regarding how financial services can be advertised. We prepared for these guidelines and worked to ensure we were in compliance before they went into effect. Unfortunately, when it comes to enforcement, the UK FCA appears to have cast a wide net for many crypto companies, utilizing the broad language of the regulations to place companies on a warning list for unauthorized firms. Exodus is one of the companies that has been named by the UK FCA on that list. Now, Exodus is invited to register with the FCA to clear everything up, but there's currently no way for a self-custodial crypto wallet to register because the laws are focused on asset custodians. Our best legal minds are working on this problem currently. The most immediate impact on our UK customers is that Exodus Mobile is not currently available through the UK App Store, but we're working to get this restored. So from a corporate perspective, our users are widely distributed globally, which includes the UK. There's not an immediate effect on our current expected revenues, but the situation could reasonably impact our future revenues if it continues without any resolution or improvement. So this matter is something we have taken seriously in the past and we continue to work on today. And to be clear, the application is still working for those in the UK who have already downloaded Exodus. It's just those that are located in the UK that are trying to download Exodus that have never used Exodus before that are unable to do that because Exodus is not available on the UK App Store currently. This broadly applied government regulation is another reminder of the importance of self-custody. I will always urge you to take custody of your own Bitcoin and digital assets using a self-custodial wallet like Exodus. Those who control their own wealth will not find themselves at the mercy of their custodian. They have the best chance of adapting successfully to an unpredictable future. Our CFO James is here to review our third quarter finances. Take it away, James.
spk06: Thanks, JP. We'll start with Q3 results, but then at the end, I will give a little bit of commentary around how we see things shaking out for the full year 2023. Digital asset markets took what I'll call a short breather in Q3, as prices and activity in general decreased slightly. And as such, our revenue is down versus Q2, but it's up from a year ago when the bear market was going full bore. And you'll see that in general in our results, Q2 of 23 versus Q3 of 2022, but let's look deeper. So our revenue for the quarter was $12 million, which is down 3% from the $12.4 million in Q2, but up 8% versus the same quarter in 2022. And moving along to swap volume, similar trend, we ended at $569 million on the quarter, which is down 3% from the prior quarter, but up 4% versus Q3 of 2022. MAUs were at 741,000. That's down 4% from the prior quarter. The interesting thing here is that our user base has shown us many times that while they may not be active in any given month, they usually do not leave Exodus. And we've seen some direct evidence of this in the last month or two. And I'll talk more about that later when I go over some thoughts around 2023. So moving on to the next slide, this is really where we demonstrate our commitment to delivering profitability during all phases of our company's growth. So our adjusted EBITDA was $2 million for the quarter, despite the market taking its short breather, if you will. And I'll repeat last quarter's expectation that we will remain adjusted EBITDA positive in each quarter of 2023. And as such, we have managed significant increases in profitability versus 2022. And even better, we're in a great position to scale further should 2024 see a bull run. And it certainly appears that we're on a good start. Obviously, we're all crossing our fingers that it continues that way into the Bitcoin happening. And finally, as always, our balance sheet continues to be strong with no debt and $106 million in cash and digital assets at quarter end. We are always open to looking for opportunities to deploy this capital and accelerate our mission, as I've mentioned in previous quarters. So now if we jump to 2023 thoughts, JP had mentioned earlier in the call that cryptocurrency prices increased early in the fourth quarter and have stayed elevated thus far. And having taken that breath in Q3, the market is really back to running. And our Exodus users who maybe they took a little time off at the end of September, they're back too. Our monthly active users metric has measured over 850,000 MAUs the past few days, and November is shaping up to be our highest swap volume month so far this year. And while it remains to be seen exactly where we'll end up in terms of MAUs at the end of Q4 and what December will bring for volumes, the increases have been really phenomenal to see. Overall, on the year, we expect full-year 2023 revenues to land somewhere in the range between $51 and $54 million. Of course, these predictions are our best expectations at this point, and the final numbers for Q4, they'll be released next quarter, but we're looking to finish the end of the year strong. With that, back to you, JP.
spk07: Thanks, James. As a reminder, our mission is to help the world exit the traditional financial system. And to me, there's always meant innovation, creating new products and new experiences. Even the oldest cryptocurrency, Bitcoin, has yet to turn 15 years old. Innovation was at the heart of our 2021 crypto-only Regulation A stock offering that solidified Exodus's finances and put us on a path to become a fully public company. Many of you may recall that $75 million was raised, 100% in crypto, and all of it by using the Exodus wallet. I'm sure many of you know that Exodus shares can be digitally represented on the Algorand blockchain and industry first. Now the time has come to find our company stock, homework, and trade efficiently. And as a first step toward that goal, Exodus has applied for the OTC Markets Uplisting, and our application is in progress. An OTC Markets listing will allow Exodus to trade on many popular stock brokerage websites. For those of you who prefer to keep your blockchain-based shares in your Exodus wallet, that's no problem. You'll still be able to do so and know you'll be happy in our flagship product, Exodus. Listing on OTC markets is a solid first step towards an eventual listing on the NYSE or NASDAQ. A lot of those listing requirements are taken care of during the OTC markets listing process. So with our work in the current quarters, we are laying the foundation for the future moves to benefit the company and its shareholders. And as our company learns and grows from these moves, it brings Exodus one step closer to being the only wallet you'll ever need. So we can imagine a future where traditional markets trade inside of Exodus. Today, I'm excited to unveil a game-changing addition that will propel us towards that vision. In Q4, we'll be introducing ExoPay, our new fiat service to the Exodus ecosystem. Before I delve into details, let's explore why ExoPay is not just another payment solution, but a revolutionary force within Exodus. Our journey towards ExoPay began with the realization. We acknowledge that mainstream customers prioritize a frictionless experience. ExoPay is designed to provide the most frictionless experience for buying and selling crypto. We're not just aiming for one-click solution, we're crafting an environment where users can easily navigate the crypto landscape with unparalleled ease. As we embark on this journey with ExoPay, we're not just introducing a service, we're creating a competitive advantage. ExoPay aims to exceed mainstream expectations with a phased approach to market on-ramps and integration with platforms like Apple Pay and Google Pay. Looking ahead, ExoPay represents a strategic move aligning seamlessly with our vision of guiding the world toward an exit from the traditional financial system. And it all comes down to making this easy for the mainstream. The mainstream consumer should be able to use the world of Web3 directly from their credit card or bank account. And that's what ExoPay is going to help to unlock. Shifting gears, for those who have questions or need help, Exit's support team remains the industry's most helpful by solving any problems that arise quickly and effectively. They can act as your trusted friends in crypto and are standing by around the clock to support you. Please feel free to reach out. Our support staff makes an excellent reason to share Exit with family and friends this holiday season. And as always, I'd like to send my heartfelt thanks to our loyal customers and investors. You have empowered yourselves and you have supported our mission to help the world exit the traditional financial system. Folks, that's all for me this quarter.
spk03: So Chris, please take us to the finish line. Thanks, JP. Remember to visit our social channels to submit your questions for management for the third quarter. Now, you can expect direct responses from our investor relations team to each of your inquiries within 24 hours. And that being said, thanks for joining us today. Welcome everyone to the Exodus second quarter 2023 earnings conference call. I'm joined today by co-founder and CEO, JP Richardson, along with James Gernetsky, our chief financial officer. I'd like to remind you that during today's call, we may make forward-looking statements. actual results may vary materially from today's statements information concerning risks uncertainties and other factors that would cause results to differ from these forward-looking statements is included in our sec filings available on the investor relations portion of our website please visit our social media twitter or reddit to submit your questions for the quarter after our call you can expect a response from our investor relations team within 24 hours and with that i'll now turn it over to jp thank you chris and thank you everyone for joining us today as exodus wraps up our second quarter with today's call we'll be looking back at q2 while also looking ahead to our future as always
spk07: Exodus continues to build on an impressive body of engineering and technical achievements. Specifically, in this quarter, two major Ethereum Layer 2 networks were added, Arbitrum and Optimism. That's direct support for those entire blockchain networks, not just their governance tokens. Matic staking is live on Exodus Mobile. It's been a popular request. And we launched Robinhood Connect in June. You can buy crypto and receive it in Exodus with your Robinhood accounts, cash, or buying power. And more broadly, we put work into our fiat and swap services in the quarter. Now, fiat and swap are already proven revenue drivers for Exodus. We're investing in our infrastructure for other crypto businesses to license. Let me elaborate. we are now providing our leading technology in infrastructure to crypto businesses some people will call this wallet as a service or infrastructure as a service they're right and I also call it common sense Exodus has massive experience building wallets 11 years for myself in eight years for the company We go way beyond offering your business just an SDK or an API. Our experiences are crafted to delight the customer from the first encounter. And we also follow through, go beyond the wallet creation to holistically support our customer to their journey. Accordingly, our sector-leading customer support team added a premium experience in Q2. Support Plus connects team members with customers to offer expert assistance over video. In rounding things out, Q2 BitRefill app integration delivers a classic crypto use case, gift cards, inside your Exodus wallet. I know you'll love it. On a national level, the second quarter saw U.S. government action continue. Crypto markets remained steady throughout the quarter's turmoil. Bitcoin and Ethereum both ended up holding on to a Q1 price advances, with Bitcoin up 6% on the quarter and Ethereum also up 2%. The U.S. Securities and Exchange Commission made headlines in Q2 with lawsuits against Coinbase and Binance, two of the largest crypto exchanges. To be clear, unlike Exodus, both of these companies are custodial, meaning they hold control of their customers' funds. And so SEC enforcement seems to continue. While custodial companies in our crypto industry are fighting back against possible overreach, Exodus remains a self-custodial solution. Holding on to other people's money isn't our style. Our economic landscape has also changed. As the Fed raised rates throughout the year, while these changes caused bank failures in the first quarter, things may have settled down for now as the Fed measures if inflation is really under control. And beyond everything the Fed controls, there's something crucial that you control. Taking custody of your Bitcoin and cryptocurrency using a self-custodial wallet like Exodus. This recommendation for crypto investors has never changed since you control your assets within excess. You have the power to decide when your funds move and where they go. This is the strongest possible position, keeping 100% of control of your own wealth. And in our experience, when you control your own wealth, control of your own future is likely to follow. And now let's go over to our CFO, James, to review our second quarter from a financial perspective. Over to you, James.
spk06: Thanks, JP. It's good to be back. Let's take a look at Q2. So the markets for the first half of the year were generally stable. And that lack of market movements, good or bad, and the volatility that comes with those movements, it's reflected in our revenue. So for Q2 of this year, revenue was $12.4 million, down from 8% from $13.5 million in the previous quarter. Swap volume of $592 million correlates with revenue, and that's down 8% from the prior quarter and 15% as compared to Q2 of 2022. And you can see this stabilization actually started in Q3 of last year, but it's trended upwards over the past 12 months. So while Q2 was slower than Q1, the longer term trends are positive for our core businesses. And let me give you two quick examples. First, market conditions and volatility drive swap volumes for everyone. And generally, a rising tide is welcomed by all. But our API providers, they've seen market share gains versus both custodial and DeFi competitors. And that's helping our boat rise a little better than the rest of the tide. And the second, and a little bit of a broken record here, but we'd love to talk about it, our fiat on and off-ramp revenue has continued to outperform. We're pleased with fiat's first quarter performance, and the second quarter was even better, showing an approximate 6% increase. Now MAUs of 773,000 followed that same general trend, down 6% from the prior quarter and 6% year over year. And we've consistently seen stability, that word again, around 800,000 MAU mark. So we bounce up and down over that over the past 12 months. And we've also seen that generally upward trend for the past four quarters in MAUs as well. I will note that volatility has returned in Q3 of this year. And so far this quarter, we're seeing improvements as you would expect in all of these metrics, revenues, volumes, and MAUs. Moving on. As we've discussed many times the past couple quarters, we believe in delivering profitability and growth. From a profitability perspective, our adjusted EBITDA was $4.1 million for the quarter. I'm going to talk about growth in more detail here in a little bit. So going to our balance sheet slide, as you can see, our balance sheet remains very strong. As of the end of the quarter, we had no debt, $107 million in cash and digital assets on hand. And as we consistently say, this balance sheet provides investors and management with peace of mind. And it also positions us well to take advantage of opportunities as they may present themselves. So let me conclude by circling back to growth and profitability as we look at the remainder of 2023 and as we position ourselves for 2024. From a profitability perspective, we reiterate our expectation to remain adjusted EBITDA positive through the balance of 2023. And to expand on growth, I mentioned that our core business revenues are trending positively. But we're also actively building our wallet as a service and infrastructure as a service pipeline. And deals that close and are implemented in 2023, they will, of course, have some positive revenue impact in 2023.
spk07: but we are going to see the full impact of any deals that we get through our pipeline in 2023 in 2024 so there's more to look forward to with that back to you jp thanks james our mission is to help the world exit the traditional financial system and in order to accomplish this exodus is looking to partner up with other companies on similar journeys Let's look at the core features of our wallet software from the partnership angle. I'd say that security is the aspect of our wallet software that is most difficult for other companies to replicate. Well, you could say X's distinctive look and feel might be the hardest to copy. but our unique design features can be seen by everyone. While many security features tend to be invisible, Exas has spent liberally on security and security research since our inception. For years now, our focus on security has granted us a safer path to walk while some of our oldest competitors have run into trouble. This accumulated value and wisdom has real impact and drives us to share this value by pursuing licensing agreements of our wallet technology to other crypto companies. Again, helping other companies accelerate their product roadmap by leveraging our expertise is one of our top priorities. We believe there is potential for significant growth. Another strength that comes bundled with our software is self-custody, especially when it comes to money. It's safer to cut out the middleman for crypto in particular, which was always designed as a way for individuals to control their own assets. This means that self-custody is the native path and the safest way forward. That's true both for Exodus and for those companies working with Exodus and licensing our technology for their customers. The biggest crypto companies that failed in the last year's bear market, such as Celsius, Voyager, FTX, and BlockFi were all custodians. They held their customers' money. And I'd say that they failed because they were custodians. That holding customer funds on their corporate balance sheets led to their downfall. Custodial models are avoidable and Exodus is proof Finally, stable finances are key to long-term partnerships. I'm sure James would agree. Me personally, I've been in crypto since 2011. I've been through three full crypto market cycles already. So the next full will be my fourth. During that time, many projects have launched and a lot of them have departed. Many of the survivors have some things in common. Survivors recognize crypto's core value as the decentralized and global peer-to-peer electronics payment system. The first system like this in the world. And they tend to lack debt because liabilities can come due at the worst times. Survivors resist the temptation to be on short-term price movements in the crypto markets. They embrace self-custody. We've already talked about self-custody. So when you think about Exodus' balance sheet, $107 million, approximately half cash, half crypto, the way that we run our company to be nearly always turning a profit, or as James would say, positive adjusted EBITDA. It's all designed to keep us up and running regardless of the expected and the unexpected. All this might seem like an overkill, but after this much experience in the crypto industry, sound finances are something we insist on. Therefore, Exodus is positioned to serve our customers and share our knowledge with the industry for the long haul. Now, switching gears to the traditional market side, Exodus continues on the strategy of pursuing an OTC markets uplisting. We're putting the team together that will need to list OTC. OTC markets trading is attractive to us because it will make our stock available on most of the brokerages where stock investors keep their capital. We also see it as a positive step towards a future NYSE, or NASDAQ listing, as many of the OTC market's listing requirements are also the foundation for future listings of Exodus stock in America's most famous stock markets. And I'd like to mention that even as we work towards making Exodus stock available to all investors, we'll be keeping our blockchain-based stock token, which of course can be stored in your Exodus wallet. All of this work is building towards a future where Exodus stock trades seamlessly in traditional markets while also developing Exodus into an app that can store all of your digital assets, not just cryptocurrencies in the blockchain, but stocks and bonds and traditional investments all in one place as Exodus becomes the only wallet you'll ever need. As always, we remain your trusted friend in crypto. Our support team is standing by to offer you assistance with anything you need. Please feel free to reach out to us as we are here for you with expert assistance around the clock. And once again, our thanks goes out to our loyal customers and investors. You support our mission to help the world exit the traditional financial system. That's all I've got this time around. Let's go over to Chris to close things out.
spk03: Thank you, JP. Please visit our social channels to submit your questions for management for the second quarter. Now, you can expect a direct response from our investor relations team to each of your inquiries within 24 hours. Thanks for joining us today. Welcome, everyone, to the Exodus First Quarter 2023 Earnings Conference Call. I'm Chris Merkel, and I'm joined today by co-founder and CEO JP Richardson, along with James Gernetsky, our Chief Financial Officer. I'd like to remind you that during today's call, we may make forward-looking statements. Actual results may vary materially from today's statements. Information concerning risks, uncertainties, and other factors that would cause results to differ from these forward-looking statements is included in our SEC filings available on the investor relations portion of our website. Please visit our social media, Twitter, or Reddit to submit your questions for the quarter after our call. You can expect a response from our investor relations team within 24 hours. And with that, I'll now turn it over to JP.
spk07: Thank you, Chris. And thank you everyone for joining us today. I'm excited to share with you our Q1 results and what's to come here at Exodus. As you know, Exodus is not just a mission, it's a movement. Our legal name is Exodus Movement, Inc., and our movement has always needed to be self-custodial. 2022 should teach the world that controlling your money through self-custodial wallets like Exodus should be your top priority. Giving exchanges custody of your money means putting your money at risk, particularly from a regulatory perspective here in the US. Giving banks over $250,000 of your money also means you're putting your money at risk as it's not covered by FDIC insurance that protects you against bank failures. While this may not be a concern for many individuals today, this is a real concern for businesses. These factors ruled the news cycle in Q1. Silicon Valley Bank and its $210 billion in assets collapsed in two days after serving the tech sector for some 40 years. This was the largest bank collapse since 2008. Signature Bank followed two days later, a leading bank serving the crypto industry. And we saw other banks like First Republic fall within weeks. Equity markets suffered from this news. But thankfully, just this once, Bitcoin didn't follow the stock markets. Instead, in Q1, Bitcoin posted its best quarterly price performance in two years, up a scorching 68%, moving from 16,000 to 28,000. Ethereum also rallied from 12,000 to 18,000. Both cryptocurrencies bucked the downtrends of traditional equity markets that moved sharply downward in the same news. rate hikes from central banks continue to stress the economy in order to fight inflation ironically the loose monetary policies of central banks caused the inflation in the first place And we empower people to control their own wealth by using Exodus to harness the immense power of self-custody and the blockchain. Today, over 3.5 million people use Exodus. What we're most excited about is the future of Exodus and where we're headed this year. Looking even further ahead, we envision Exodus as the app to store all of your digital assets. Of course, your Bitcoin, crypto, your DeFi, your NFTs, but also your stocks, bonds, and ETFs. All in one place, all side by side. But before I get too far talking about the future, let's pass this over to James, who will review our first quarter financial results. Over to you, James.
spk06: Thanks, JP. With that, let's get right into the numbers. So our metrics tend to reflect market conditions with Q1 of last year, first quarter of last year, being the tail end of that 2021 bull market and Q4, the last quarter of 2022, still being part of the bear market. And hopefully we've turned the corner of that bear market. However, it was definitely the height of the bear market Q4 of 2022. So looking at revenue, our Q1 revenue was 13.3 million. That's up 17% from 11.3 million in the previous quarter and down slightly from Q1 of last year. Exchange volume was similar to revenue, up 15% from the prior quarter and down about 12% as compared to Q1 of 2022. Our fiat on and off ramp offerings really continued to improve in Q1, and that contributed to the greater than exchange volume revenue improvement. So we saw 17% growth quarter over quarter in our revenue and only 15% growth in our exchange volume. And that difference, a large part of it, has contributed to our fiat on and off ramp products. and the growth they're in. And we like to see that because of the, one, our mission, getting more people into crypto and out of the traditional finance system, and two, because of revenue diversification. So as we move to monthly active users, we ended the quarter with 822,000. And that's up 11% from the prior quarter and down about 6% year over year. But if we look back further and beyond the quarter and look at this whole trend in front of us, we see that we more than doubled our 2022 revenues, while our MAUs are over three XOs of 2020. And we're pleased to see that this very large cohort of users who joined us in 2021, you can see that big jump from 20 to 2021, and look how they've stayed with us. Now, they might not be as active as they were in 2021. That's really to be expected because of all of the events and turmoil of 2022 and the decline in the crypto asset prices that came with all of those events and turmoil. I mean, it's kind of obvious that our loyal users are going to be key to our future prospects and our ability to capture revenue as the market improves and we build new products. But again, I just really want to highlight how pleased we are with the stickiness of our users and their general loyalty in general. Now, we believe in delivering profitability and growth. And you can see that for the full year last year, you know, we had 1.5 million of adjusted EBITDA. We course corrected Q2, as we've discussed in previous calls. And for Q1, we had 3.5 million of positive adjusted EBITDA. And this was obviously due in two parts. One, general market improvements from that bear market at the end of last year, as we mentioned, as well as our reduced expenses. As a company, we ran leaner in Q1 and have a leaner trend going forward due to last year's layoffs. And we also ended the last year with some bonus cuts as well. And I should mention that we expect to remain positive in terms of adjusted EBITDA for the remainder of the year. And as always, you know, we have maintained a very strong balance sheet. We have no debt and we have at the end of March and one hundred and one million dollars of cash and digital assets. And we continue to believe in Bitcoin and crypto as a store of value. And our strong balance sheet ensures that we can continue to aggressively execute our product roadmap, keep delivering that world-class customer support. And generally, as Warren Buffett says, we want to be and we are in a position to be greedy when others are fearful. So with that, back to you, JP.
spk07: Thanks, James. Our mission is to help the world exit the traditional financial system. The 2008 financial crisis first showed the world why this is so important. Unfortunately, key institutions in crypto chose to build themselves exactly like traditional custodial financial institutions. As mentioned earlier, recent high-profile failures have showed the whole world once again the dangers of custodial products. Before looking forward, let's take a step back. In 2015, we wanted to make it easy to manage a crypto portfolio without using an exchange to hold your funds. We delivered on this vision, so now it's easy to swap multiple assets across multiple blockchains. Meanwhile, our customers maintain self-custody, your keys, your crypto. 2019 brought the Exodus Mobile app, another self-custodial and multi-chain wallet to complement our similar desktop product. Our current financial results reflect the success of Exodus Mobile. We tripled our revenue in 2020 and then rode the crypto bull market to $95.8 million of revenue in 2021. Then the bear market of 2022 hit our industry. Practically every crypto company felt the pain, with many crypto businesses writing off bad debt, entering bankruptcy, or ceasing operations entirely. For Exodus, adjusting financially meant steep spending cuts with an agonizing layoff round. While we survived, I wouldn't wish this experience on anyone. Despite all the turbulence, Exodus still seized the opportunity to continue doing what brought us our first success. We headed back to work, building more beautifully designed products for our customers. We saw that tremendous long-term opportunity of Web3 to shift crypto's use case away from just financial speculation towards a world of financial utility, like lending, borrowing, and even insurance. Web3 is the gateway to direct participation in all projects and financial services being created on many blockchains. But just to explore Web3, Web3 users had to install multiple browser extension plugins to navigate all of the different blockchains. This reminded us of 2015 all over again, with a different wallet software for each cryptocurrency. So we built Exodus Web3 Wallet, a self-custodial and multi-chain wallet navigating Web3 across many different blockchains without ever leaving your web browser or breaking a sweat. It is the only Web3 wallet you'll ever need. And in Q1, we launched the Exodus Dapp Browser for Exodus Mobile. So today, blockchain's greatest hits fit in the palm of your hand. This is another example of Exodus building in 2022 nonstop alongside our entire industry, as the current concept of Dapps did not even exist when we started Exodus in 2015. This story of constant progress for years holds true for all of our company's major features. Another example of this is our swap aggregator service, which drives most of our revenue today. If you'll indulge me, let's go back in time once more. Today, the swap aggregator is robust and powered by numerous third-party API providers competing for Exodus' customers. But when we started offering swaps in 2016, it was a single exchange API provider. Despite having an industry-leading first API provider providing swaps for our users, we came to realize that offering multiple swap API providers was a win for our customers. Not only did our customers get to access more pairs with less downtime, but they also benefited from competition between various providers, as each swap API provider brought strengths such as geographic coverage and unique liquidity sources, fast or even zero confirmation swaps, and the ability to fill very large orders, and of course, competitive pricing. All of this history is to show that Exodus has built some industry-leading components into our business. We believe these components make us uniquely positioned to help the wider crypto community by offering access to these components. As DeFi and Web3 projects grow, we are seeing them face the same technical and design challenges that Exodus faced many years ago. For example, we are working with Sovereign to assist them in building a wallet unique to their ecosystem. To show our commitment to this ecosystem, we have even allocated a portion of our treasury to the Sovereign Dollar stablecoin. Now, Sovereign is a unique community project. They all got started from a thread in Bitcoin Talk Forum three years ago. sovereign is creating all types of d5 products with real world utility all using bitcoin as the central asset whereas most of the major d5 projects historically have been built on ethereum you can use sovereign zero to take out loans against your bitcoin while paying zero percent interest you can trade your bitcoin and you can even hold bitcoin back dollars and earn yield Now, the Sovereign team is fully remote and global. Everything they make is self-custody. They're all Bitcoiners. They love shipping new products, and they're dead serious about security. Yeah, I'd say we have a lot in common. This is the very beginning of our outreach efforts, and we look forward to growing our relationships with numerous Web3 projects as we help the world embrace all the broader Web3 ecosystem that has to offer. Keep an eye out for our regular investor updates as these efforts progress. And as always, we'll continue to be your trusted friend in the crypto space. Reach out to our support team anytime. In fact, I'm personally spending time in our customer inbox weekly so I can stay close to the voice of the customer. So I encourage you to reach out with any questions you might just hear from me. And thank you to all our loyal customers and investors for supporting our mission to help the world exit the traditional financial system. That's all I've got. And now I'll turn it over to Chris.
spk03: Thanks, JP. Please visit our social channels to submit your questions for management for the first quarter. You can expect a direct response from our investor relations team to each of your inquiries within 24 hours. Thanks for joining us today. Hello, Exodus investors and the greater Exodus community. I'm your host, Chris Merkel, and it's my pleasure to bring you this company update. Exodus has filed its financial results for the 2022 fourth quarter and full year. For those of you who are invested or just interested in our results, please review our official filing, which is the form 1-K on the investors page of our website. There you can view our 2022 audited financials. You can also review our quarterly shareholder letter and press release available at Exodus.com forward slash investors. The Exodus Management team will not be discussing our company's financials as originally planned in today's video. That being said, the Exodus Investor Relations team is taking all of your questions right now on Twitter at Exodus underscore IO. So please feel free to jump in and ask away. We will return to the usual video format with Exodus' CEO J.P. Richardson and CFO James Gernetsky for our upcoming Q1 2023 earnings call. Thanks for watching everyone. And without further ado, let's move the discussion and the party over to Twitter.
spk04: Thank you, everyone, for joining.
spk01: I'm Devin Ryan, Director of Financial Technology here at J&P Securities. Looking forward to this next conversation with Exodus. We have Exodus CFO James Renetsky. James, great to see you. I'll let James give the background of Exodus. But Exodus movement is a multi-asset software wallet that removes the geek requirement. and keeps design a priority to make cryptocurrency and digital assets easy for everyone. Available for desktop and mobile, it allows users to secure, manage, and exchange cryptocurrencies like Bitcoin and Ethereum. So that's a very high level. James, first of all, great to see you. Thanks for doing this with us. I think a good place to start would just be in layman's terms, what does that mean? And what do you guys do as a business model?
spk06: Sure, so what that means, and I'm going to throw out a couple terms here just to make it even more clear. complex, it's we are a self-custodial, and they'll get into reasons why all this is important in just a second. So we're self-custodial, multi-asset, multi-chain, digital wallet, right? And to think about that, our founders in 2015 when they started the company, they wanted people to control their own wealth. And so in order to control your own wealth, you had to do a couple things. It's self-custody. So you think of a leather wallet. I've got one in there. I won't pull it out. I don't have any money in it. You compare that to a bank where if you have $500,000 in your bank account and you want to try to go get it, you have to ask permission to get your money out. So they really wanted to give the control to the user. And the other thing was, if it's wealth, like you mentioned the Bitcoin and Ethereum, you have one place. You don't want your wealth fragmented across different products. And then the other thing that they really wanted was for... have the best possible customer experience. So great design, you mentioned the geek factor, great design, great user experience, a lot of thought goes into when we design products and we implement products, how does this make the user feel? It's a really important part for us. And we also have 24-7 customer service. That's just because in crypto it can be complicated, and if you happen to run into something that requires a geek, we want to be there to make sure that we help you.
spk01: So talk about the company being founded. You gave a little bit of background. But what was the catalyst to start the company? And then also, if you don't mind, just given your background, what brought you to Exodus?
spk06: Sure. So to start the company, JP, he's got an engineering background. And Daniel, he's got a real design background. He's done designs for really big names, Apple, Louis Vuitton, things like that. And they wanted to make a wallet and put it together. And if they're watching, I'm sorry. Hopefully I'm not butchering your story. They came together and they said, hey, I can write great code. And I can make this a safe, secure, self-custodial. JP's posted a lot of GitHub's. And Daniel's like, I can make it beautiful. And we can really make this work. And so that was the thing. And they had, like I said, they had different wallets for everything. Back in 2015, new coins were just coming out. You're starting to get into the ICO phase. and there's like, every time there was a new coin, you had to go get a new wallet. And they just said, that's just not gonna work. They went first to desktop, just because that was a really underserved market at the time, and then we grew into mobile, and now into the browser extension. So, yeah, I mean, that's just a little bit of background. How I ended up here, I have a background in just a lot of healthcare payments and just payments in general. I've got some experience at old school companies like First Data and then healthcare payments tech. I think I shared with you earlier, it's kind of a weird story how I ended up at the company. I was the first finance hire and they were realizing they were growing really fast and they said, hey, we need to bring in someone with finance and A recruiter called me and said, hey, I've got this really risky opportunity for you. I was like, risky? Why? And they said, well, how much debt do they have on the balance sheet? Well, they don't have any debt on the balance sheet. Well, how much money do they have? They've got great treasury. OK, what's the burden? Well, no, they're profitable. So I said, well, why is it so risky? They said, oh, we get paid in Bitcoin. So I was like, you know, you realize you can sell Bitcoin in 10 seconds. And he said, OK, fine. So that with I mean, you get a head on a call you with that opportunity.
spk01: I mean, you have to explore it. Right. Absolutely. So so I cover Coinbase, obviously a large public company in the space. They have a wallet. How would you guys explain? compare to Coinbase, or how do you guys think about where you fit in the ecosystem today?
spk06: I think there's actually, there's a number of similarities. I guess I'll start with the similarities. You know, we're both US-based. You know, we both have SEC reporting requirements. And, you know, we both, we actually have the same auditor. So that's, and I think the other thing from an investor perspective, our revenue has trended, you know, the pattern, the trends are pretty much, pretty similar, especially on the retail side of their business. Where we're different is really in that self-custodial aspect. Coinbase is more of the bank. We're definitely more of the wallet, and it changes how we do business because we are a wallet. We don't do swaps. We don't do fiat on-ramps. We don't do those types of things. We have providers that come in, and they provide those services to our users and pay us essentially... It's really complicated, but essentially a referral fee. What that allows us to do is it allows us to, as cryptocurrency moves very fast, right? In the digital world, it moves very fast. Constant new inventions, new things coming to market, new things taking off. And so they take NFTs, for example, because we didn't have to invent all of that ourselves. We have to create our own marketplace and we didn't have this custodial solution. We were able to just go to like a Magic Eden and say, hey, plug into our wallet. And so we were able to get that to market much, much faster. Sorry, I keep going on the differences. The other thing is, Because we're self-custodial, we don't carry customer funds on our balance sheet. We can't touch customer funds. So we don't... That SAB 121, you know, we are not required to put that money on the balance sheet because we can't touch it. So we can't do bad things with customer money. And so that's also very helpful, especially lately. And then finally, I think the biggest one is we're profitable. So in... Early 2022, rough year, but we saw where things were going, and we immediately changed. We said, hey, we're not getting the ROI on some of the initiatives that we want, so we stopped them. And in Q3, we had positive adjusted EBITDA and are keeping that going forward. So we're not trying to break even in 2023. We're trying to grow our profitability.
spk01: Mm-hmm. Can we talk a little bit about how many customers are using the platform today and also how you're going after new customers?
spk06: Yeah, so, you know, with 2022 and how we're, you know, and how that shook out, you know, we typically see somewhere between 700 and 800,000 monthly active users at any given point. You know, we saw, but we stopped and, you know, with all the everything that's been going on, we stopped and we looked at the data and the trends. And, you know, in 2020, you know, before the boom of 21, you know, we picked up, obviously, we had some growth from 2019. In 2021, we 5x'd our users. And that's come down a little bit. But our users are still staying with us. They're not as active as they were. So we have a lot of quarterly active users. We just don't have as many monthly active users right now. And that's just because of that experience. They're loyal. I mean, the people aren't necessarily interested as they were in, well, anything financial. I mean, 2022 was a train wreck for just about any asset class. But they're still there. Sorry, I forgot the second part of the question.
spk01: And just the customer acquisition, how are you guys getting the brand out there? How are you bringing in, obviously that's a 5X in growth and having what is actually a pretty good critical mass of customers on the platform today. How have you guys been able to do that and what are you doing to get new customers?
spk06: Yeah, I mean, I think the challenge that a lot of people are seeing is, and as I alluded to earlier, with the state of the economy and the general bearishness that people are feeling right now, you know, it's tough to do a lot of traditional advertising and get that ROI that we're looking for. And, I mean, just look at the Super Bowl. You know, compare this Super Bowl and the last Super Bowl. And... So what we're focused on is, you know, we're focused on getting those quarterly active users to get monthly active users and our loyal customer base and having them spread the word. So we've got some referral programs we're working on, a lot of social media, trying to work with the actual communities because in crypto there's a Bitcoin community, an Ethereum community, you know, et cetera, et cetera. And so we're working with a lot of those different communities and engaging them and just let them know, hey, you know, we love you.
spk01: Yeah. Martial law is a little bit, obviously, you mentioned 2022 was full of a lot of events in the space, a lot of regulatory uncertainty clearly in the market right now. And we'll see which direction we go. But has the regulatory landscape affected how you guys have built your business at all? And, you know, is there headwinds to that or are there tailwinds? How are you guys thinking about this complicated regulatory landscape?
spk06: So with being self-custody, it's actually, the whole concept that the founders had of setting up a company that the user controls their wealth, not us. That has been, and then the customer service focus on top of it. I remarked on a company call the other day, it's like, the idea of regulators is consumer protection, right? Well, that is always, that's how Exodus was founded. We were founded to help customers and not to do bad things with their money, but help them take care of themselves. And so that really aligns. Because of our business model, we can't take customer funds and give it to politicians or buy real estate in the Caymans or anything like that. We're literally the anti-FTX. So US-based. I mean, I've been in the company for four years as a CFO. Deloitte's our auditor. I mean, I could go on and on.
spk01: Mm-hmm. Talking about the evolution of the wallet and the broader platform, what else are you looking to do? Are there other use cases that you feel like could be ancillary to the business model today as you think about growth opportunities for the firm?
spk06: Yeah, so anything that can be, anything that's represented right now by a piece of paper eventually will be tokenized and that ownership will be represented on the blockchain. It's just gonna be, some areas are gonna be quicker than others, it depends on how much the incumbents, you know, push back against it, et cetera. So, I mean, that's really wide opportunity. You know, anything from a car title can be on a smart contract, on an NFT, if you will. I mean, a lot of these things were so early in crypto that some of these use cases, they're just still developing. And sure, like NFTs, it's... A lot of people don't understand it. I didn't understand it at first. I have no interest in a Bordet, but at the same time, I guess I don't really have an interest in a Picasso either. But the underlying technology, that smart contract technology, is extremely useful, and even governmental agencies will start to use it in the future. As that happens, we're there.
spk01: Just to stay on that topic, you used one example. Where do you feel like that some of the use cases are developing this. I think just generally for the audience, sometimes there's that kind of like, it's not as transparent to your point, NFTs, this perception of like, it's a digital art and that's all it is. What are some of the things that you're seeing or expecting with the technology?
spk06: Yeah, I mean, my go-to is always a car title. You know, if you go to a dealership, The way smart contracts work is the dealership will take the title, they'll put it into the smart contract, and you'll take your money, and you'll put that into the smart contract, right? When those two things happen, they will then transfer the title, to you, since you put the money in, and then the money will be divvied out to all the people. So the state will get the sales tax, the city will get the wheel tax, and then the rest of the money will actually go to the dealer. And then, since it's a NFT, if I go to sell, if I sell my car to you, the exact same thing happens, and the smart contract can be written in such a way that the governments will still get their money. So it can be a very efficient, a very easy way with, you know, the verifiability of the blockchain so that even, you know, even governments can help and, you know, gain from the tax piece. You know, one other use case that we actually have right now is our stock is actually digitally represented on the blockchain. Our stock is on the Algorand blockchain. And, you know, when we did our our Regulation A offering. You know, we did it through our wallet, and our users actually can have their shares of Exodus in their self-custodial wallet. Yep.
spk01: Terrific. I want to talk a little bit about just the operating environment as a CFO of a company in this kind of new world of 4% or 5%. Interest rates, this mentality of, you know, growth at all costs is obviously in the rearview mirror. Now it's about... operating profitably or having a credible path towards that. You talked about getting disciplined and maybe getting a little bit ahead of that. How have you managed the business through this? And then also, does that set up the firm for maybe opportunities in the future being profitable today? Yeah, absolutely.
spk06: Yeah, I mean, unfortunately, we did have to have a layoff last year. And That was obviously tough, but again, we were a little bit ahead of the curve, and we went and managed our expenses very closely. And now we're getting more and more sophisticated into where our options and where we're looking for the growth stories that we talked about earlier. But I think having that foresight, and especially in early 2022, getting ahead of it. And our treasury is still really, really strong. We still don't have any debt. And our assets, I mean, I haven't looked at the prices this morning. It's probably down a little bit. Market value of what we have on the books today is probably around $90 million. So, you know, for a company of our size, you know, that is a lot of dry powder, you know, that we can put to use. And, you know, I think, you know, we'll see a lot of consolidation this year, you know, in the crypto space. And so, you know, should we find, you know, some companies that, you know, we don't have anything, you know, I don't have any deals on the table exactly just yet, but I can see that probably happening.
spk01: Yeah. Just to stay on that theme, are some of the things that might be interesting, getting more engineers to develop faster, or are there kind of ancillary capabilities that maybe could accelerate the roadmap that you guys have? I think either or both.
spk06: Yeah. We have a pretty... You know, almost the hardest part for us is just focusing on the right next step because, again, with the whole world where assets are becoming digitized, it's, you know, trying to figure out, okay, you know, what are we going to do next? You know, then, of course, you mentioned regulatory. It's like, okay, well, where do we think the regulators are going to go, you know, and take all of that calculus and put it together.
spk01: Yeah. Yeah. How are you guys engaging on the regulatory front? I mean, is there anything kind of proactive that you guys can think about? Or is it more, given the size and scale of the firm, to watch some of the larger companies in the space and help them shape? Is there a way that you guys can participate in that and have your voice heard?
spk06: Yeah, so we work with the Blockchain Association, and then our legal team, they do a really good job of working with the industry trade groups and the various regulatory agencies, whether that's state, federal, international, et cetera.
spk01: And are you seeing in D.C., Obviously, the SEC has its position, and that's becoming a little bit more loud in the market. At the same time, on the legislative side, there are certain legislators that I would say are anti, but at the same time, it's not a very partisan topic. You're getting support on both sides of the aisle here, because I think that you have 20% of Americans alone that have support. some exposure to crypto. And so it feels like there's some building momentum there. So are you guys seeing any maybe positive developments or are you hopeful on maybe the legislative front that policy can be crafted that would be maybe less restrictive than what I think is in the narrative right now? Yeah.
spk06: I mean, we keep an eye on it and we watch it and we work with the trade groups to help influence where we can. I think the It's going to be very interesting. I mean, Washington doesn't necessarily move as fast as the crypto industry. But I think that overall, as a proud American, I mean, I'm confident that our government will work to... to understand the industry, understand the technology, understand where it's going and just how important it is, and to make sure that you don't force good actors out of the United States and force that innovation out. Because I think there's been a number of different industries where that has happened. But I think the good thing is, as you mentioned, 20% of Americans, that means a lot. That means that crypto isn't going to go anywhere. It's how people interact with it, how the government interacts with it, etc. That will change. but it won't disappear completely. Hopefully my confidence in our elected representatives isn't misplaced, but we'll see.
spk01: What is the international ambitions of the company? How do you think about this? Obviously it's a global industry, global capital. How are you guys positioning to think about kind of the global opportunity versus the U.S.?
spk06: That's a good question. So we actually are right now, the vast majority of our users are already international. So for us, it's more along the lines of localization, of understanding any different specific product mixes or things of that nature. So, yeah, so we're already there.
spk01: Yep. We'll talk about 2023. So 2022, behind us, hopefully, we start to get a little bit better conditions here. But what do you guys kind of head down most focused on for 2023? What are the top priorities? And we talked a little bit about the roadmap, but where are some of the areas that you're most focused?
spk06: Yeah, it's definitely moving those quarterly active users to monthly active users. So anything we can help with, education piece, Helping our users understand what's going on in crypto, how they can take what's going on in the crypto world and actually do that and benefit from it inside the Exodus wallet. That's going to be a big piece. How we notify in our notification systems and how we let users know what new things are and what's going on in the wallet. Those will all be big. So a real engagement focus. And otherwise, just continuing to improve and get that customer service focus better because a lot of our advertising has been word of mouth. And we've come a long way with that. And now we're starting to work on actually referral programs and things of that nature to help push us forward.
spk01: We'll talk a little bit about the stock. So I know something you guys have talked about is kind of a national uplisting to a national exchange. Is that still, I guess, in the thought process? And what would be the catalyst to drive that for you?
spk06: Well, the short answer is yes. We're definitely still looking at that. We... It's the number one thing that our investors want. Obviously, our investors, they want the liquidity, and they want access to a national exchange. But to get there, I've got to take a step back, and I mentioned the Reg A. So we did a Tier 2 Regulation A in 2021. We raised $75 million. Again, it was 100% in our wallet, 100% with crypto, and it was with our users. So you had to be an Exodus user in order to participate. So we got 6,800 different investors, over 6,800 investors, most of them not accredited. Right. So that has a bunch of ramifications. One, our exemption will run out. It's a three-year exemption, and we will be a public company just because of the number of investors that we have. The other thing about that Reg A was it was a great tool, and it was wonderful to be able to do it in our wallet, but we could only offer it to 47 states. And so since most of our user base is overseas, the push to go to a national exchange, one of the reasons, besides the liquidity piece, is also that our users who love us, in order for them to buy shares, the national securities exchange, that's really where to do it. It's a lot easier on the NYSE to... for international people to invest than it is in some of the platforms where we're trading now.
spk01: Great. I think we're pretty much at time here, but James, really appreciate the overview. Great to catch up on the Exodus story, and please come back and give us an update next year. All right, happy to. Thanks so much. All right, thank you. Thanks, everyone.
spk04: That's great.
spk03: Welcome to the Exodus third quarter 2022 earnings conference call. I'm your host, Chris Merkel, and today we have our co-founder, JP Richardson, and our CFO, James Gernetsky. JP and James will review the financial and operating results, after which we will host a Q&A session. I hope you have had an opportunity to review our shareholder letter, which you should have received via email and is currently available on the Exodus website. Now, before we get started, I'd like to remind you that during today's call, we may make forward-looking statements. Actual results may vary materially from today's statements, information concerning risks, uncertainties, and other factors that could cause results to differ from these forward-looking statements is included in our SEC filings available on the investor relations portion of our website. And with that, JP, I am turning it over to you.
spk07: Thank you, Chris. And thank you everyone for being here today. Let me start by providing a state of the union. Our mission is to help the world exit the traditional financial system. And we continue to believe in a future where the financial system should be one that is open, censorship resistant, permissionless, and transparent. And at a time like this, transparency is needed now more than ever. This is a financial system that is better for humanity. 2.98 million people, almost 3 million people, trust Exodus to self-capacity their assets. Let's briefly talk about our business year-to-date. Year-to-date, our revenue is down 39%, and monthly active users are down 15% year-over-year. This is our second consecutive quarter of lower revenue. The reality is that we are focused upon delivering upon our mission by being relentlessly obsessed with supporting our customers and by building and delivering beautiful products our customers find useful. However, given the performance of our business, we have made the tough decision to say goodbye to 59 of our colleagues, which is a workforce reduction of 22%. Let me walk you through how we got here. We saw market conditions changing in Q2, and we knew we needed to take action to match our expenses to a shifting market. We eliminated all unnecessary expenses. We reviewed every single contract line by line to find additional cost savings. We reduced marketing expenses from $40 million planned to the $12 million already spent. We even paused hiring. In Q3, we realized that these conditions would persist beyond one to two quarters. So we began a thoughtful approach to our headcount, understanding that the team we planned regarding in the raging bull market of 2021 is not the team that makes sense for us today. In short, I allowed myself to get caught up in the euphoria of 2021 growth at all costs. We expanded our team from 75 to well over 200 at 2021 year end. They say the golden rule of hiring is that you should never hire more than double the company in one year. We shattered that rule. I believe any failures in a company are a direct reflection of the CEO's choices, my choices. And this is no exception. While layoffs are gut wrenching, this decision will leave us better positioned to accomplish our mission. We will not stop delivering great new products and product updates every two weeks. We will not stop providing fast 24 seven human customer support. We have a seasoned crypto savvy leadership team, one that has lived through bear markets before. And Daniel and I have been in this industry for more than 10 years. We have critical roles in place to aggressively execute upon our product roadmap. 70% of our customers are outside of the United States. This is a great opportunity for us to continue to bring Exodus in their native language. Exodus has never had the ability for customers to sell crypto in their local currency, and this is all coming. We're going to deliver the first cross-chain exchange inside of a browser extension Web3 wallet and more on this later. Bull or bear market, we continue to execute by building and delivering beautiful, easy-to-use software. We continue to ship every two weeks and have done so since 2015. Internally, we have a saying, shipping is our religion, dates are our gods. Long-term, we're optimistic for recovery. We made the hard decision to reduce our workforce to ensure Exodus thrives in all market conditions. The workforce reduction is a key action to further reduce expenses. And we are also taking action to drive revenue growth by acquiring new customers, which I'll touch on later. Unlike other tech companies, we have been profitable in the past and we're confident we can return to profitability in the future. We expect adjusted EBITDA growth in Q1 of next year. And so with that, I'll pass it over to James for the Q3 results. James?
spk06: Thanks, JP. I'm just going to jump right into the numbers for our Q3 and year to date. So revenue year to date was $39.4 million, including $11 million in Q3. Year to date revenue was down 43% over the prior year. And our Q3 revenue was down 39% year over year and 15% from Q2. Our exchange volume is very similar story to revenue Q3 exchange volume was approximately 550 million down from the peak that we saw during the bull market last year that peak was $1.6 billion in 2021 and that represents continued downward trend from Q2 exchange levels. Turning to our monthly active users, we ended Q3 with MAUs of just over 764,000, which is a decrease sequentially and year over year. But that said, we're still on track to deliver the second best year in Exodus history. Year to date, our revenue is nearly double the revenue for the full year of 2020. And this demonstrates user growth and importantly, the customer attention from the frenzy of the 2021 bull market. Our MAUs are approximately three times our 2020 year-end levels. And we did manage positive adjusted EBITDA in Q3. So just say that again. So we did manage positive adjusted EBITDA in Q3. Turning to our final slide, we continue to have a strong balance sheet with no debt and about 77 million in cash and digital assets, approximately 30 million of which is in Bitcoin, ETH, and ALGO. We continue to believe in Bitcoin and cryptocurrencies to store a value long term. Since 2021 year end, we have held 1,322 Bitcoin and right around 2,538 Ethereum in our treasury. And this strong balance sheet ensures that we can continue to aggressively execute on our product roadmap, as GP mentioned, and support our customers without interruption, even during periods of intense volatility. So on the expense front, you know, we've thoughtfully approached the dramatic changes to the market conditions in 2020. So beginning in Q2, we paused the bulk of our marketing strategy and the $40 million that we had allocated to it. We reduced that, excuse me. So the advertising expense in Q3 is primarily related to satisfying the contractual obligations from earlier in the year. In addition to our marketing spent, we also cut and renegotiated third party contracts, reduced software subscriptions to the minimum necessary. So as a result, our overall operating expenses decreased 38% from Q2, but that was not enough. It became clear to us that we needed to do more to manage our costs. At the end of Q3, we had approximately 275 FTEs, which is actually lower relative to Q2, and that's due to not replacing natural attrition and also eliminating almost all new hiring. Our headcount now stands at 216 after the workforce reduction, and that's lower than we actually began the year with. Because of that, we expect to incur a million dollars in severance costs in the fourth quarter and longer term, we expect to save over $6 million in overall operating expenses on an annual basis. Given these expense reductions, we are well on our way to improve adjusted EBITDA in Q1 of next year. And now that we're deeper into 2022 and the market shift that accompanied the start of the year, we believe that the consumer will increasingly be open to hearing about the Exodus story. In fact, our business model has and continues to be validated by this craziness. If 2022 has taught the world anything, it's that self-custodial and decentralization are imperative. So over the next two quarters, we expect to test a number of marketing initiatives. The first one being our referral program that will offer customers USDC incentives to sign up their friends. We expect that to come later this month. And the overall success that we have as we find the right mix of initiatives, that's going to drive our MAU and our revenue growth. So with that, back to you, JPB.
spk07: Thank you, James. And we are relentless in our pursuit to help the world exit the traditional financial system. Our focus, bull or bear market, is to achieve our mission, all by delivering customers beautiful experiences to manage their portfolio of assets. As James mentioned, we are focused on driving revenue growth via customer acquisition. We are creating a new referral program. This referral program is built on our blockchain stocks. We will be the first to leverage this technology to bring in new customers, empower them to be shareholders and reward them for being a part of our future VIP program. No other company has this ability. Our stock is tokenized on the blockchain, and this can unlock a world of possibilities, but we're starting by building the referral program first using this technology. Let's talk about social. We're going to continue to leverage our 125,000 YouTube subscribers to produce content for our Dapp partners. And we'll be working with YouTube influencers to showcase the Exodus Web3 wallet. Now let's talk about our Web3 wallet, our latest safe and beautifully designed product. It's the only Web3 wallet customers will ever need. And Web3 is taking the world by storm on multiple chains. And remember, multi-chain is in our DNA. We are empowering our customers to explore the world of Web3, and we're leaning into underserved ecosystems that we believe have massive potential. For example, almost all major Algorand dApps now support Exodus. And we believe long term, this can be a viable customer acquisition strategy as customers that want to experience these dApps will see Exodus as one of the very few options. Other underserved markets, but markets with big potential, are that of Bitcoin and Cardano. Bitcoin is the number one asset by market cap, and there is no good product to experience the world of Web3 with Bitcoin today. And since multi-chain is in our DNA, we'll be one of the first to deliver a beautiful integrated cross-chain exchange that supports all major chains in the browser extension. But we haven't left out mobile in 2023 one of our biggest focuses will be bringing the web three experience to our mobile customers. This will empower new customers and our existing customers, not to mention our largest customer base to experience web three on the go. And given that our mission is to help the world exit the traditional financial system, this means helping crypto become mainstream. And Web3 is core to that strategy. Web3 helps bring utility to crypto and makes crypto useful. We will remove the complexity of Web3 for the mainstream and rain or shine, bull or bear, we believe we can win this by continuing to be your trusted friend in the crypto space. And within the last 48 hours, people will be seeking self-custody products more than ever. We'll be standing by ready to help them. And now let's turn it over to Chris for your investor questions.
spk03: All right. Thank you, JP. Thank you, James. We have a whole host of questions here. Some of them are a little more hard hitting than others. They're all questions that we've received via email from investors. We're going to just jump right into it. The first question is with the lower headcount, can you target all of the revenue generating opportunities you were expecting to pursue?
spk07: Thank you, Chris. I'll take this. Our focus is going to be to prioritize on what's most important. And so as I mentioned, Web3 is going to be one of those primary focus points. So in the browser extension, continuing to support additional chains. and in the mobile wallet, continuing to enable our customers to experience Web3 on the go. And so this is going to be critical for the success of Exodus to prioritize. And as a wallet, another important aspect is we are going to continue to focus on ensuring that our customers feel safe and secure. And so it really comes down to prioritizing and focusing. That's what's going to be most important.
spk02: All right. Thank you, JP. So what do you want to achieve with Exodus in the next few years?
spk06: Yeah, let me take the financial perspective and kind of the easy part. I mean, we want to see growth. We want to see revenue, adjusted EBITDA, monthly active users. We want to see those grow. And doing that will also, of course, lead to an even stronger balance sheet. JP, I don't know if you want to talk about how we're going to get there.
spk07: I mean, I think, okay, it's gonna start with, I see a future where people will choose self custody over these custodial platforms that hold your money. And so we have to make Exodus so easy to use that you don't have to think about any of the complicated things with using a wallet. So what does that mean? That means that, first of all, when you download a wallet, you should not have to think about a 12-word secret phrase. You should not have to think about any complications with sending to addresses. Web3 should be easy. And we want XS to be the go-to app to experience Web3. So when you think about a mainstream consumer coming along to use Web3, they should not have to worry about what assets they have. If they want to buy an eight JPEG, it should not matter whether they have Bitcoin, Ethereum, Dogecoin, or US dollars. It should not matter. They should be able to do it all with one click and feel safe while doing it. So it all comes down to making Exodus the go-to app to experience Web3. That's what we're thinking about. That's what we're focused on.
spk02: All right. Thank you, JP and James.
spk03: Next question is a financial question. The investor asked, why not make a commitment to allocate a percentage of net profit to the share repurchase program? Can you do more or better than the two million you've currently allocated?
spk06: Yeah. So there's a number of different things that go into this and what we can and can't do. So bear with me for a minute. Our trading volume, it kind of starts there. The trading volume on our stock is it currently is really low. And this limits how much we can buy in the market. And that's due to the protective rules we have in place. And those are outlined, obviously, in the program documents. You know, and those rules are designed to protect any type of artificial market movements. And because of this, you know, we haven't even used 10% of the $2 million that we had allocated. And obviously we won't because the program is going to end here in December. So uplisting, we've talked about that on previous calls, and that should solve this issue by increasing the liquidity of our shares. So if we list on the New York Stock Exchange or NASDAQ, something along those lines, that is right now where the liquidity is. But that said, ultimately, we are confident that the best use of our funds and the funds that you have entrusted with us as investors is to use them to delight our current customers and to attract new customers. We think we're going to get the best return by doing that. And so that said, the program, as I mentioned, it ends next month. And we have such conviction in our company and Exodus and in our future that Daniel, JP and myself, we're actually going to finish out the buyback with our personal front funds rather than company funds. So, Chris.
spk02: Excellent, James, thank you so much for that.
spk03: Here's a question about our customer support, which deals with part of the heart of the company. It says, I've heard your response time is good with customer support, but how good is it really?
spk07: In the past, if you've been on these investor earnings calls, you've heard me talk about how we will respond to you in less than 10 minutes. And there's been a lot of market turbulence over the last couple days. And I was pleased when the team told me this morning that our median response time is still at 9 minutes and 31 seconds. But more important than speed, speed is important, but more important than speed is quality. When customers write into us, We act and be their trusted friends by helping them with any issues they have with Exodus or cryptocurrency. And so the quality is what we really stand by. And we are going to continue that commitment by delivering the best customer support experience in the industry. So we're very proud of that accomplishment.
spk03: Thank you, JP. And if anybody wants to test that out, they can just email support at exodus.com to verify what's going on there. I'm sure you'll be delighted. We know we see a lot of, there's a lot of people having some kind of negative sentiment with what's happening in the markets. So this question is pretty pertinent. It says, how are the finances looking? And does Exodus seem to be sustainable in terms of operations?
spk06: Yeah, I think the finances are good. I mean, we have, I would argue that we were sustainable even before Q2 when we did these expense reductions. And that's because we have a strong balance sheet. Now, those reductions did lead to a positive adjusted EBITDA in Q3. So that's definitely a strong sign. But I think that even more important than just being sustainable is we want to grow. And we are going to... be focused on delivering innovative products. And as you mentioned, that our current customers and our future customers are just going to love. So and those innovations and those products and our customer service, as we mentioned, they are going to drive our growth.
spk03: Excellent. Yeah, thank you so much, James. um this is a very relevant question with the timing um investor would like to know with the ftx news of late what is exodus's current exposure there and should i be concerned let uh james talk about our our financial exposure but ftx has been a part of our story since 2021 and we're grateful for what ftx has done for us
spk07: However, our priority always remains to ensure our customers are protected, so we're keeping a close eye on what's happening. We believe there is an opportunity, though, for FTX to embrace the world of self-custody, and we will be standing by to help FTX do that if they so choose. James, do you want to talk about the exposure?
spk06: Sure, JP. It's really more of a lack of exposure. You know, we have we have no money in FTX as of today. So no exposure whatsoever on our balance sheet. But the interesting thing is, obviously this year has been a very interesting one and we've been through cycles before, but this goes back almost to other times with centralized exchanges and centralized processes. And the thought, it really proves the value of transparency and the decisions that the founders have made. So let's start with some of those decisions. The first one, self-custodial multi-currency wallet. JP mentioned those advantages. We'll keep talking about those advantages. But a little less obvious is that decision to do the Regulation A and to do that fundraising and to self-decide, to self-elect, to become a publicly reporting company with our SEC filings and everything else doing these calls. and there definitely are costs to doing that you know as a public company we have to pay auditors we have lawyers we have our internal accounting team you have regulatory filings internal controls time spent on earnings calls all of these things but what that does is it it it shines a light it's it's you know we value transparency jp mentioned at the top of the call that's one of our values is transparency and that light of transparency it it shines into the box. And so we've seen on these calls, the good, the bad, the ugly, and today's definitely no exception, but it's transparent and you can see it. We are not a black box. We're as far as you can get from that. And 2022 has shown the danger of black boxes in crypto. So being public and transparent, it's not easy, but we find great value in it. And we think that you, our investors do as well.
spk03: thank you James thank you JP what is Exodus main this is a another it's kind of a a longer question it says what is Exodus's main selling point to you meaning the features of all competitors combined and why why Exodus does this better like what um others what would make people want to switch to Exodus
spk07: Well, let's talk about the elephant in the room first. And that's what's happened over the last 48 hours. Not to mention the last 48 hours, this whole year of 2022. I think the theme of self-custody continues to be reinforced. That self-custody is more important than ever. Not your keys, not your coins. This is a phrase that has so much meaning that we wish more in the ecosystem would embrace. In addition to that, when you use Exodus, and if you have issues that I've mentioned before, I've said it over and over and over again, you can reach out to us and we are standing by ready to help you. Also, Exodus is the most beautifully designed cryptocurrency wallet in the industry. And we have three products unlike any other wallet out there. There is no other wallet that has a browser extension and a desktop app and a mobile app. So the browser extension, the Web3 wallet allows you to easily navigate the world of Web3. The desktop allows those that are hyper concerned about security to integrate with a Tracer wallet and leverage that cold storage. And the mobile allows a person to experience their portfolio on the go. Now all three platforms have an integrated swap service that makes it so easy to swap one asset to another asset with just a click of a button. And over $10 billion has been swapped using these services. So Exodus has one of the most beautiful products in the world, and we're gonna continue to reinforce these benefits for our customers.
spk02: Thank you, JP.
spk03: Let's talk more about the this question is wants to know more about the chrome extension says you guys created a chrome extension wallet but most protocols mainly support metamask and a few other wallets how will the team improve support for their chrome extension.
spk07: It's a little bit more of a technical question, but a lot of people don't know this, that by default, when you install the XS Web3 wallet, you can go to the most popular dApps out there today. And if you click on the MetaMask icon, it will work with Exodus. It will actually choose Exodus and it will just work. Now, that being said, we're not resting on this for our success. We have other initiatives in play here. So our business development team has gone out and they've built relationships with many dApps in the ecosystem. And you can see that these relationships have manifested themselves in the Algorand ecosystem, given that most Algorand dApps support Exodus. You click on Connect Wallet and you see Exodus as one of the few options available. In addition to that, for the very popular dApps, people can go to the popular dApps like Uniswap or PancakeSwap, and you can see a big banner that Exodus has up front for you so that you know easily just to connect Wallet with just one click of a button. So we're going to continue these efforts to make the Exodus browser extension the easiest browser extension to use.
spk06: And let me jump in real quick too, JP. I've used our competitors' wallets and I obviously have used our Web3 wallet. And I'll take the Pepsi challenge against those competitors any day of the week. So I encourage everyone on the call, go and encourage your friends, try it. If they're using it as a competitor, have them try it. If you yourself are using a competitor, try our wallet. You'll love it.
spk02: Matt Ramey, So we can rename that the exodus challenge James.
spk03: Matt Ramey, and be more popular than the pepsi challenge. Matt Ramey, Regal regulatory question says is an investor wants to know, are there any regulatory hurdles that could hinder the business.
spk07: I think this is one of the major value propositions of being a self-custodial platform. Exodus does not have access to any customer assets. We are not in a position to hurt our customers by taking their assets and using them elsewhere. So I think that's really important for people to understand that since Exodus is self-custodial, that is not something that we have to worry about. James, do you have anything to add about the SEC?
spk06: Yeah, absolutely. Like I mentioned before, one of the costs of going public, it also adds transparency. So we are not a black box. And that also, you know, our balance sheet is, it comes out every three months. So it's on the website. Go to SEC Edgar and check out our financials. It's in the investor letter, et cetera. You know, that transparency and that also is very helpful in terms of a regulatory space.
spk07: I just want to jump in and add that with our balance sheet, I personally think it's really cool to see it on the SEC website. And you can literally see how much Bitcoin, how much Ethereum, and what other crypto assets Exodus holds. It's there. So it's really cool to see.
spk03: Excellent. Thank you, guys. It's a lot of visibility. Another financial question. How is Exodus doing on the cash front? And in particular, what does your cash burn look like in Q3 relative to Q2?
spk06: First of all, Chris, thanks for the props, the heads up on the financial questions. So, yeah, so we have crypto, as I mentioned earlier, you know, in the presentation, we've got crypto holdings and various current assets comprising roughly $77 million in our treasury. so first the crypto holdings you know we've been able to completely avoid dipping into into those so our holdings actually have grown since we started the year in terms of crypto units On the fiat front, I think it's really helpful to look at our current assets. So the line item on the balance sheet of current assets rather than an individual line item, as those have changed for a number of reasons, you know, we are in different tax position this year than we were at the end of last year. So our prepaid expenses are going to be much higher at the end of last year than they're going to be this year. And also just risk-free returns, risk-free in terms of the US Treasuries and the interest rate environment. So that will change how we take advantage of our fiat assets. So if you look at our balance sheet, our current assets are just over $8 million lower than they were at the end of last year. If you consider that our marketing expenses and our generally higher expense base that we had earlier in the year, and then take the positive adjusted EBITDA that we had in Q3 and the lower expense base that we have going into 2023, I'd say that we're in a really good position to actually generate cash next year rather than burn it.
spk03: Great answer. Thank you so much. Thank you so much, James. Well, that is all the questions that we have time for, for our investor questions. It was extremely enlightening to me. JP, I think that's it. I'm going to turn it back to you to close us out.
spk07: Thank you all for joining us. We remain fired up for the opportunity that lies ahead for Exodus. We have over 200 teammates remotely working their tails off in over 50 countries. All of us are mission driven, taking our salaries 100% in Bitcoin. Exodus is the only company in the United States to have its common stock tokenized on the blockchain, available to both accredited investors and the retail. At the end of Q3, we have $77 million on our balance sheet and close to 3 million loyal customers. And given we are the only self-custodial company that has a wall offering on the desktop, the mobile, and in the browser, and multi-chain is in our DNA, considering all of these factors, we are positioned to create one of the best Web3 experiences, both on your desktop and on the go using your mobile phone. No other company builds beautiful experiences like Exodus. And with recent events, the world needs self-custody more than ever. And Exodus will be ready. Thank you all to helping the world exit the traditional financial system.
spk04: We'll speak to you soon.
spk03: Welcome to the Exodus second quarter 2022 earnings conference call. I'm your host, Chris Merkel, and today we have our CEO and co-founder, JP Richardson and CFO James Gernetsky. JP and James will review the financial and operating results, after which we will host a Q&A session. I hope you've had an opportunity to review our shareholder letter, which you should have received via email and is currently available on the Exodus website. Now, before we get started, I'd like to remind you that during today's call, we may make forward-looking statements. Now, actual results may vary materially from today's statements. Information concerning risks, uncertainties, and other factors that could cause results to differ from these forward-looking statements is included in our SEC filings available on the investor relations portion of our website. And with that, JP, I'm turning it over to you.
spk07: Thank you, Chris, and thank you, everyone, for being here today. We are excited to share a recap of the second quarter of our 2022 results and what's to come the rest of this year. Our mission is to help the world enter the traditional financial system. We believe the promise of an open financial system is better for humanity, a financial system that is transparent, permissionless, censorship-resistant, and predictable. and we're making clear measurable progress 2.75 million people trust our apps to help protect their wealth and these apps empower our customers to be their own custodians exodus is a self-custodial wallet you have full control of your wealth And recent market events highlight the advantages of our self-custodial business model. Many major custodial players and exchanges gone bankrupt because they've been gambling with customer funds. You could even call them hedge funds masquerading as banks. Investors and customers are now the ones holding the bag from their poor risk management. This serves as a reminder. This is the risk that comes from allowing anyone to be the custodian of your funds. Again, Exodus is self-custody. We can't gamble your money. In fact, we don't even gamble our own money. It's alarming. There's no transparency in what these companies do with your money. Recently, we met with a big investor and you know what he told us? He said, guys, I had my money on one of these platforms and now I've lost it all. Fortunately, this is not our story. Remember, you hold your keys with Exodus. Your keys, your coins. Not your keys, not your coins. But it's not enough to be self-custody. We are deeply committed to security. We've seen how important this is with the recent hack of a popular Solana wallet. How did this hack happen? From what we've read, they accidentally leaked private keys through their login software. And many of you already know that my background is in engineering, and I now personally have 10 years of experience building wallets. And not many people in this world can make that claim. When Daniel and I started Exodus, we instituted security processes that very few companies do. We audit third-party code, and I've been told from security professionals that many major financial institutions don't even do this. For new lines of code that come into the product, we have two auditors that inspect the code to ensure it's safe for our customers. We employ some of the best security professionals in the industry, and one in particular has a top 10 ranking on the popular white hat hacking site, HackerOne. For the customer that doesn't want their private keys stored locally on their computer, Exodus supports the Tracer hardware wallet, and this gives an extra peace of mind. And because we care so much about transparency, later this year, we'll be making our security initiatives public on Exodus.com forward slash security. There's a lot going on and we don't have control over what's happening with our peers, but we do have control over building and delivering safe, easy to use products, products that can enable the best web three experience. Our latest delivery is the browser extension. And we told you in the last earnings call that we would release it on May 17th. And we did just that. We see the browser extension as your gateway to Web3. Let's talk about why Web3 is so important. For us to help the world exit the traditional financial system, we must make crypto useful. Before Web3, people treated crypto as speculative, buy and hold. According to DeFi Llama, there are 15 DeFi platforms with over $1 billion in total value locked. All of Web3 has an estimated $50 billion to $100 billion of total value locked. Lending, earning, trading, shopping, and even ape NFTs. That's real utility. Today, our browser extension supports only Solana and Ethereum. Exodus was the first browser extension to support both of these popular Web3 chains. And this year we're going to continue to add more chains. And later on this call, I'm excited to reveal to you the next supported chain. Do you have any guesses? Here in a minute, James will get into the financial results. Short term, over the last two quarters, declining revenue, it's not good. But long term, we're optimistic in our abilities to continue to deliver beautiful, easy to use products with the relentless focus on delivering customer value. And we know that by doing this, our revenue will follow. And with that, I'll pass it over to James to review our financial results.
spk06: Thanks JP. Yeah, so today I will say that our results reflect the fact that there are some terrible storms that have hit our industry and the financial world in general lately. There's fear out there. With all of the bankruptcies and pause withdrawals from centralized exchanges that you mentioned in the past few months, I think it would be good to take just a little bit more time than normal to explain our business model, how we operate, and how that has provided tremendous benefit to our customers in these turbulent times. So first, to reiterate JP's comments, our business model is built around Exodus being self-custodial. From an investor standpoint, this means that you will never see customer money on our balance sheet. It also means, as JP mentioned, we cannot gamble with customer money. We cannot pause withdrawals. We were never tempted to put customer money in Three Arrows Capital because we cannot touch customer money. Not our keys, not our money. And the investors and others that we've spoken to that have lost money to these centralized exchanges, our heart goes out to them and the fact that they had to learn such a lesson in such a hard way. And speaking of lessons learned, this isn't our first rodeo. We have a seasoned crypto savvy leadership team that has lived through bear markets before. In fact, coming out of previous bear markets, we set up internal weekly metrics that show what our business would look like if the world returned to January 2019. And if you don't remember, January 2019, Bitcoin barely reached $4,100. So every week we look at our current business and say, what would it look like if we went back to this ultra bear case scenario? And this has really helped to ground us during 2021 in that massive bull market. And at the same time, it's really given us comfort lately, knowing that for Exodus, at least, the markets are not as bad as they could be. Another lesson we learned is, and we've mentioned this a lot, is to maintain a strong balance sheet. We are a proven business. We have a history of generating positive cash flows, but we're still growing and we're still investing in the product and the people that build and support our product. In fact, we continue to grow our team and therefore our expense base in the first half of 2022. With bear market revenues, there will be some periods with negative adjusted EBITDA. But our balance sheet allows us to weather these periods and continue to focus on building our product and supporting our customers without interruption. So with all of that said, let's get into the numbers. OK, so revenue for the first half was $28.4 million, and that includes $13 million in Q2. First half revenue fell by roughly half over the prior year. And our Q2 revenue was down 53% year over year, but just 16% from Q1. Now, this is a great slide where we can just pause and go a little bit broader and deeper than we usually would with your standard quarter over quarter metrics. There's just a number of stories that can be told from this slide. First, 2021 was obviously a standout full on bear market or bull market, excuse me. If only that was a bear market, I'd love to see it again. But obviously in the current market and compared to 2021, our first half revenues, as JP mentioned, they were disappointing. But lost in that perspective is that even in the current environment, we've already topped 2020 revenue, which guarantees that 2022 will be at least the second best year in our history. This next slide, basically I just removed the 2021 numbers so you can highlight optically what that looks like. So if you take a look at the chart, you'll see that our Q2 and first half revenue has more than tripled in 2020, despite the bear market. And we'll touch on this a little bit more, but if you look at where we ended in Q4 2020, and then where we're going now, that'll be important. Our exchange volume has a very similar story to revenue. Q2 exchange volume was approximately 700 million, which is down from the bull market exchange volume peak of 1.6 billion, but relatively steady compared to Q1. Our monthly active users slide deserves some extra commentary as well. We ended Q2 with monthly active users of almost 818,000. which is a decrease sequentially and relatively stable year over year. But what we saw is that not only were we able to grow our user base, substantially grow our user base during that frenzy of 2021, but we've been able to keep the vast majority of these users engaged in our product. And so we don't feel any danger of returning to pre-2021 levels. In fact, we have continued momentum with downloads of 696,000 in Q2 as compared to just 328,000 in Q2 2020. That's more than double. And our share of downloads versus other crypto apps is growing as well. And so data from our Fiat onboarding service providers indicate that our customers are buying the dip and they're huddling. And we view this continued engagement of our user base and the adding of funds to our platform as extremely positive. Oops. So when the market turns, not if, but when, we will go into it with a much larger user base that is holding significantly more funds in Exodus wallets compared to when we first entered the most recent bull market. And we have also continued to grow our team to support and continue to grow our customer base. We had approximately 290 full-time team members at Q2, a slight increase from 276 in Q1. We continue to hire, albeit at a slower pace, given we already have the key talent in place to deliver our product roadmap. And our team is ready for whatever the market throws at us. Now turning to our final slide. As I mentioned earlier, we continue to have an incredibly strong balance sheet with no debt and about $80 million in cash and digital assets, approximately $30 million of which is in Bitcoin, Ethereum, and Algorand. We always have been, and we will continue to be deliberate in our spending in all market cycles. So with that in mind, I need to mention that we have adjusted our marketing plans to reflect the reality that sentiment for any financial product, crypto or otherwise, is exceptionally weak right now. Thus, our $40 million marketing spend target has been lowered by over 75%. So our focus today, storm or no storm, bull or bear, fear or greed, recession or no recession, it hasn't changed. We continue to build safe, easy to use, beautiful products that help the world exit the traditional financial system. With that, back to you, JP.
spk07: Thanks, James. And storm or no storm, you're right. We're focused on building beautifully designed products. In our latest product release, our browser extension will be the gateway to Web3. And thank you to those that have downloaded the beta. This beta allows us to perfect the product while getting it into the hands of our most loyal fans first. The browser extension will be out of beta this month and available to all very soon. Now I'm excited to reveal the next chain supported on the browser extension. It's Algorand. Did you guess this? Algorand support will be in customer's hands by September 15th. And we believe that like Solana, Algorand holds the promise of delivering a fast, efficient, and scalable blockchain that can be the cornerstone of Web3. And as many of you already know, our stock is the only common stock with a digital representation on a blockchain, the Algorand blockchain. And we see a world where all stock will inevitably make their way to the blockchain, the Algorand blockchain. Imagine a world where crypto and blockchain stocks live side by side. Blockchain stocks still bring so much possibility, blending loyalty and equity together. Minute by minute dividends, NFT airdrops to stockholders. So many possibilities. But we're not going to stop with algorithms. Multi-chain and multi-asset is in our DNA. The browser extension will support all major Web3 chains. And we believe that there's a real opportunity to own these ecosystems since so many popular chains don't even have a browser extension. Exodex is our newest and greatest product for crypto enthusiasts. Many popular decentralized exchanges average over $1 billion a day in trades. A cross-chain decentralized exchange aggregator hasn't been done well. And decentralized exchanges are more secure than centralized exchanges because you don't have to give custody of your assets to make an exchange. And most are fast with exchanges completing in under 30 seconds. So Exodus is uniquely positioned to deliver this because we've delivered 10 billion in volume to date in our existing exchange aggregator. So there's a lot of opportunity here. The Exodus browser extension and Exodex are the building blocks to make Exodus one of the most successful players in Web3. These building blocks will help to open up the possibility of mainstream experiences, whether that's buying an NFT without even caring about the crypto that you have or earning interest while lending your crypto and using that interest to pay your bills. The browser extension and exodex are these building blocks that set up access for a bright future and even unlock something bigger to come. What is that you say? You'll have to join future earnings calls to find out what that is. Now, let's turn it over to Chris for Q&A.
spk03: All right. Thank you, James. Thank you, JP. Very exciting news. And I will certainly be there at future earnings calls to hear what's happening. So it's the time of the call where we get to move into Q&A and answer questions from real investors that have emailed us in lieu of getting questions. getting answers for how the company is doing. So the first question is, what does Exodus have planned at a time when your peers are declaring bankruptcy or massively cutting staff?
spk07: I'll take this one. We remain focused on Web3 and delivering both in the browser extension and Exodex. So despite market conditions, we're well positioned to weather the current market regardless of what happens. But it's all about continuing to focus on our mission and creating the best experience of entering into Web3. It's really what it comes down to.
spk03: Excellent. The next question we have is, how have your customers reacted to the downturn, and how do you see them acting in the future?
spk06: I'll take this one. So it's a good question, Chris. We've been through this before, as I've mentioned. We've seen a lot of cycles as a management team. And so we've got a couple of things that I'll just reiterate that we've seen and are seeing, and then I'll go into one new thing. So I think the first thing we're seeing is just standard behavior. As prices drop, there's usually a movement into stablecoins and people are just waiting the storm out. and then as the storm starts to clear and they feel the markets recovered they move out of stable coins and we're seeing that exact behavior right now and we expect to see it again um you know as the storm clouds clear people will move back out of stable coins um the other thing and this is a little bit a little bit longer but uh you know our one of the advantages of our business model is that we're multi-chain, as JP mentioned, especially in terms of the browser extension. But we've always been multi-chain, and we have numerous exchange providers. And what that does is allows us to have hundreds of assets and over 10,000 trading pairs. So while Bitcoin or Ethereum, you know, the two big heavyweights, like their trading volume might be slow and depressed based on last year's highs, there will be assets that are going to be hot during any given period. And because we have so many assets, we'll still see hot assets trading on our platform. The best example of this we've used in previous calls, but it's going to be Doge. We supported Doge long before Elon Musk started tweeting about it. And so when he did tweet about it, we were able to capture a lot of that Doge volume that our competitors couldn't, and they were kind of stuck with slow Bitcoin and slow Ethereum at given periods. So we're seeing that behavior today. At any given moment, we're going to have assets up significantly on our platform. You know, the other behavior is a little bit new, and that is our fiat on-ramp providers, they're able to show us, you know, some of the volume and what happens when we can correlate that to the price of Bitcoin in the general market. And what we see is people are buying the dip, and then they're hodling. and um it's great to watch uh but since our one of the things i'll say is that with the advantage of all of this work we've done on our fiat on ramp over the past year um our platform is greatly improved from where we were in december of 2020 which is kind of that key mark of going into the 2021 bull market so with the with all of this fiat onboarding this buying the dip and this hodling You take that with where I mentioned the monthly active users, you know, we are going to be in a great spot right before, you know, as we go into the next bull market, because we'll have a lot of users and they'll have put a lot of assets onto our platform. So that's exactly where we want to be. Thanks a lot, Chris.
spk03: It's great answers. Very intuitive to keep an eye on what the market and customer behavior is doing. It's actually really, really good to hear that we're seeing kind of their tactics evolve as the ecosystem evolves. So here is a hard question directly from an investor.
spk02: It's very short. They ask, is Exodus safe?
spk07: I'll take this one. Exodus has been around since 2015 and we are an established self-custodial wallet. And when you look at the issues with recent exchanges and recent custodial services that offer these high rates of return, you have to ask yourself, is storing your money in software where you don't control your private keys, you don't have that custody, is that safe? So I think that our security track record speaks for itself and knowing that 2.75 million people trust our software to keep their money safe.
spk03: Thank you, JP. That's the biggest question on everybody's minds just recently. The next question here we have, how has the vision or direction of or for the company changed from last quarter given the current market conditions?
spk07: It hasn't changed. We remain focused on Web3 and delivering the browser extension, delivering Exodex, making it easy long-term for you to take your Web3 portfolios on the go in the mobile app. So the strategy hasn't changed. The direction remains unchanged. And to help the world exit the traditional financial system, we believe that Web3 is that promise because it makes crypto useful. So it remains unchanged.
spk03: Excellent. The next question we have that we heard on a previous call was talk about uplisting. What's the current status of Exodus going public?
spk06: Sure, I'll take this one. And it's pretty simple. You know, the timing just isn't right for us to list right now. Unfortunately, it's a casualty of the broader market conditions. So we're still planning on listing, but we just need the broader market to improve first.
spk03: Yeah, very prudent. Thank you, James. This next question is what future steps from the team can investors expect in order to sell shares easily with good liquidity and better prices than today?
spk06: Yeah, so you know, we are evangelizing Exodus to new investors regularly. So this includes traditional and crypto centric investors, retail as well as institutional. And What this does is the more investors that know about Exodus and they know what we're doing, the more folks will want it. And as more and more people learn about us and the great things that we've got going on, that will drive demand for our stock and that demand will provide both liquidity and price improvements. And then also we've got some other things that JP had mentioned earlier that with our stock being traded on the blockchain that we're working on as well.
spk02: Well, thank you.
spk03: Here's a follow-up question kind of that relates to the security question earlier. Will Exodus be coming out with its own hardware wallet in the future?
spk07: I'll grab this. No, no, we maintain a focus on software and our strength and expertise is in building beautiful, easy to use software. And quite frankly, we believe that long term hardware wallets don't offer the promise of keeping the keys safe. We think that long term, there will be a convergence between the world of hardware wallets and your mobile phone. And we've seen initiatives of this right now. And so we're really excited about those initiatives. So but we're going to continue to remain focused on software.
spk03: That's very good. Thank you, JP. Are there any other functionalities that XS is working on?
spk07: It's like this as well. So, yes, long term, we remain focused on building mainstream customer experiences. And so what that means is there's a lot of problems today that self custodial wallets haven't quite solved yet. So to give you an example of what one of those is. is that when a person downloads a self-custodial wallet like Exodus, you have to write down your 12 word phrase, your 12 word secret phrase. And for most mainstream consumers, that's not a friendly thing. That feels kind of foreign. It feels kind of weird. and so we've got to make it so easy that when you download exodus you don't have to think about a 12 word secret phrase it's always there if you need it it's always there if you need it but you shouldn't have to think about it you should be able to download exodus and not even to think about it and know that even if you lose your phone your assets are still safe so that's one major thing that we're working on behind the scenes in addition to that We think that crypto addresses are not mainstream friendly either. And so there's a lot of initiatives out there that are that people are working on to make these these crypto addresses easier and more memorable. And we think that sending crypto should be as simple as sending a text message or sending an email. And so we're thinking about these sorts of things and how to bring these mainstream experiences. In addition to that, of course, long-term Web3, still very focused on Web3. And so you're going to see Wallet Connect for the mobile phone. You'll also see a mobile DAP browser. That's all coming to Exodus as well.
spk03: Wow. Thank you, JP. And just to remind all of you, if you're watching this, you are still extremely early. The Web3 ecosystem is growing day by day, and it's taking up a larger portion of the whole crypto ecosystem all the time. This is almost a tongue-in-cheek one, but it's been kind of forever question is, where can I get some merch?
spk07: Okay, so as much as we would love to get you some merch in the near future, we're not going to offer any merch in the short term. And the reality is we want to be prudent with our financial spending. And we believe that we've got to bring this company back to profitability. And then we will start offering merch at some point in time. But we're not going to offer merch until we get back to profitability.
spk03: Very, very prudent. Although everybody would love a t-shirt with the new Web3 logo. It makes sense.
spk07: I just want to say, you guys have seen, everybody's seen me before wearing an X's hoodie and now I'm sitting in this blazer. So I want some merch more than anybody. Yeah.
spk03: Yeah. Okay. Thanks, JP. You mentioned earlier that we're going to have a $40 million marketing budget. Where are we at right now with that?
spk06: Yeah, I'll expand on that a little bit more, although I really do want to say I have been in tech way too long to have to wear a collar now. So I also want the merch. But yeah, I'll expand on that question. So I mentioned in the opening remarks, the sentiment is just really bad out there right now for anything financial product related. and you know this did impact the roi that we were getting earlier in the year and so you know i also mentioned this isn't our first rodeo we saw this we adapted you know we don't want to blindly follow a low roi capital intensive path um in a market that's got some bearish headwinds so um so we've adapted and you know we've lowered it 75 as i mentioned But I do want to say that doesn't mean we've stopped all marketing. Crypto adoption is still on the rise. And now folks have learned, unfortunately, a lot of them the hard way, that custodial solutions can be very dangerous. And that means us as a self-custodial solution, multi-chain, everything that we've got that JP's mentioned, we've got a great story and a great message to share. And so our marketing team is absolutely still out there sharing that message.
spk07: I'd like to add a little bit to that. Our early growth was fueled by guerrilla tactics on YouTube. And now today we are armed with 124,000 subscribers on YouTube. And so we can leverage a lot of YouTube and other platforms like YouTube to continue with our marketing messages.
spk03: Thank you, guys. As a familiar face on YouTube, I can definitely back up both of those statements. All right, guys, thanks for answering all those questions. They're very insightful. And JP, I'm going to turn it over to you for closing.
spk07: Thank you, Chris. When we kicked off today's call, I shared our deep commitment to security here at Exodus. So speaking of security, to our customers, a quick reminder. We do not know, nor do we have access to, nor will we ever ask for your 12-word secret phrase or private keys. So stay safe out there. And it's my sincere hope that you choose self-custody, that you choose to trust yourself And know that I'm personally invested alongside you and appreciate your support. And a reminder, Algorand support on a browser extension is going to be in customers' hands by September 15th. Thank you all for supporting our mission to help the world exit the traditional financial system.
spk04: Talk to you all soon.
spk03: Welcome to the Exodus First Quarter 2022 Earnings Conference Call. I'm your host, Chris Merkel, and today we have our CEO and co-founder J.P. Richardson and CFO James Gernetsky. J.P. and James will review the financial and operating results, after which we'll host a Q&A session. I hope you've had an opportunity to review our shareholder letter, which you should have received via email and is currently available on the Exodus website. And before we get started, I'd like to remind you that during today's call, we may make forward-looking statements. Actual results may vary materially. from today's statements. Information concerning the risks, uncertainties, and other factors that could cause results to differ from these forward-looking statements is included in our SEC filings, available on the investor relations portion of our website. And with that, JP, I'm turning it over to you.
spk07: Thank you, Chris, and thank you, everybody, for being here today. We're excited to share a recap of our first quarter results and what's to come in 2022. But first, let's talk a bit about the state of the world. Well, as you know, inflation is that 40 year highs. The US stock market is in turmoil and crypto is traded at 90% correlation to the market. But We have the second country to adopt Bitcoin as legal tender. As you know, the first was El Salvador, and the second was the Central African Republic. And so it leads us to think, how many other countries are going to adopt Bitcoin as legal tender? Who is going to be the third, fourth, and fifth? Speaking of El Salvador, El Salvador recently bought 500 more Bitcoin on Monday. In California, Gavin Newsom signed an executive order about state institutions adopting crypto. Mass adoption of NFTs is happening with Starbucks, Disney, and major brands. Instagram is on the cusp of allowing NFTs on its platform. Regulatory views continue to evolve, but the not your keys, not your coins continues to hold true. You may have seen in the news yesterday, recently a centralized exchange has made it clear that any custodial assets could be seized in a bankruptcy proceeding. Exodus will always remain self-custodial so that you have control of your wealth. Our business is strong even with the state of the market. Over $100 million today is on our balance sheet, and our quarter one revenue was $15.4 million. And now we have 287 full-time team members. Exodus is entering a new era, an era that is a shift from speculation to an era of utility. For cryptocurrency to go mainstream, we cannot think about cryptocurrency to be just about speculation. It must have utility and be useful. And so in this new era, we have created a new logo that represents an evolution of Exodus as we move towards the focus of Web3. This logo is going to be iconic. When people think of Web3, we want them to think of Exodus. This logo is futuristic because we envision a future where you control your wealth. And this logo is going to confer strength so that you feel safe with Exodus. And today on this call, you will have a sneak peek of the logo. As I've mentioned in previous earnings calls, our 2022 goal is that access will be the go-to app to experience all that Web3 has to offer. And we're delivering enhancing multiple products to fulfill this. Our NFT offerings expanding. We're going to enable more people to easily buy crypto with credit card or bank account. And our focus is going to be on Web3 and more on that later. For that, I'm going to pass over the mic to our CFO, James Grimanski. James, over to you.
spk06: Thanks, JP. Having just hit my three-year mark at Exodus, I can safely say that there is never a dull moment in crypto. Now, that said, the finance portion of these calls is probably the dullest, and unfortunately, it's going to be a little bit longer than normal today, so I will apologize in advance. But bear with me, and let's get into this. Okay. So you know, as we mentioned on the last call Q1 revenue came in closer to Q3 than the Q4 of 2021 at the $15.4 million JP mentioned. So that's 35% lower year over year. And that was caused by the expected decrease in exchange volume. Now, the bright side of this is that the volume decrease we saw, it was smaller than what we're seeing in the rest of the industry. And that really highlights our loyal and engaged user base. Another bright spot is staking. We saw a 231% increase in staking revenue year over year. Our API providers processed $730 million of exchange volume for the quarter. And while softer than quarters in 2021, this does highlight the overall growth, our overall growth as this volume would have been an incredibly strong quarter as recently as 2020. And the strength of our customer base is demonstrated by our monthly active users increasing 11% year over year to 875,000. And while MAUs decreased slightly quarter over quarter, the small decrease again shows our users have remained engaged in our platform despite the recent market conditions. And as you may have noticed, those market conditions, they've continued to struggle in Q2 and the last few days. And certainly we're starting to see the impact on our revenue. And we recognize that the scale of our plans will need to adjust if these market struggles continue. Now, obviously we hope they don't, but if they do, we're ready. At a high level, this means a couple of things. First, we're not slowing down the delivery of our product. You know, our product pipeline has been performing above expectation. And a prime example of this is our Fiat honor amp. It launched in Q2, and it has yielded promising results. Our customers have moved just over $2.7 million. We're that close to $2.75 million, and I really want to say it, but I looked right before the call, and it was $2.74 million that came out of the traditional financial system and onto our platform in just the past couple months. And that's just the beginning. We've got some great plans to keep improving this product and making it even more accessible and functional for our users over the next few quarters. So really excited about that one. From an expense perspective, our ROI calculations do reflect the software market. And this will raise the hurdle by which we judge our spending plans while overall plans have not changed. So we do remain committed to growing our team and increasing our marketing spend, you know, the pace of this spending, it might be slower than anticipated. And we continue to be well positioned with a war chest of over $100 million and no debt. The financial strength, along with our leadership team that has experienced many market cycles, means that our team is able to focus on what's really important. We're able to stay focused on our customers. And as mentioned earlier, our customers have remained engaged throughout the past few months and past few days of market turmoil. And our roadmap calls for a number of valuable new products that will help us not only maintain that engagement, but grow our user base and our revenue. Additionally, this will position us well for when the markets inevitably turn around, and they will turn around. Finally, for Exodus, market cycles bring opportunities. Our strong balance sheet, our experience management team, our vision, not only allows us to stay focused, but it also provides a potential to be greedy when others are fearful. Now I know the Warren Buffett quote, I really think Warren Buffett's a wise man. Just as long as you just ignore anything he says about technology and don't follow any technology advice that he might give you. Other than that, I think he's great. But the spirit of that quote, so we can be greedy when others are fearful, it really does apply to us. And if there is a protracted market downturn, it could bring opportunities for us to add great products to our team inorganically. And for my last slide, I just want to talk about some things that were in the news just yesterday. These stories completely reinforced a major advantage that Exodus has for our customers by screaming the importance of self-custody of your assets. Let's take a look at that first quote. Now the Exodus advantage here is we do not custody your assets. We don't market make, we don't even touch your funds ever. So commingling customer funds with Exodus funds is just not possible. We do not have your keys. Self-custody, not Exodus custody. If we move on to the next quote, Again, since we never touch your funds, if anything were to happen to Exodus, your funds are still your funds. You have your keys. You control your wealth, not Exodus. And aside from the customer advantage, which is obviously the most important thing here, The self-custody model that we have, it also impacts our financial statements. So if we look just a little, so we'll look a little differently than a custodial exchange. None of your money shows up on our balance sheet. So none of your money shows up on our balance sheet as a liability. And we do not have any custodial risk since we don't custody anything. So sorry that took so long.
spk02: JP, back to you. Thanks, James.
spk07: There we go. Warren Buffett, I can say, so being from Nebraska, I am not a fan of Warren Buffett, but I understand why many are, especially though when he's saying that, you know, Bitcoin is rat poison squared. Get out of here with that. Anyways, yeah, not your keys, not your coins. And the recent announcement yesterday really, I think, goes to demonstrate how important that phrase is, that belief, that statement, not your keys, not your coins. This is critical. Now, our leadership team has been through multiple crypto cycles, and our relentless focus on customers is unchanged, as James mentioned. We're going to continue to deliver beautifully designed, easy-to-use products. Our customer support is the best in the industry. How many of you have written into customer support, and you will get a response in less than 10 minutes? Do it. Try it right now. Try it right now. And we are going to continue, though, outside of customer support, focus on Web3. We expect to add even more customers and put our balance sheet to work. We're going to enable people to easily buy crypto with a credit card and bank account. We've already done that. We're going to continue to do that in jurisdictions all around the world. We're going to continue to add more and more assets and chains. We're going to expand our NFT marketplace. But the big focus is that of Web3. As I mentioned before, early days, crypto was mostly about speculating. I'm gonna buy Bitcoin and I'm gonna get rich by selling it later. But for cryptocurrency to go mainstream, it must be useful. And I think this is the importance of Web3. So later this year, we're going to introduce Wallet Connect support in the phone so you can connect directly to DeFi from the Exodus mobile app. We're also going to introduce a mobile DAP browser so you can experience DeFi and Web3 on the go. But the big aspect of what we're really excited about is our browser extension. This is the next evolution of Exodus. In early 2015, I had multiple wallets on my computer. I had a Bitcoin wallet, shame to admit, a Dogecoin wallet, Litecoin wallet, I had a number of different wallets on my computer to manage a portfolio of cryptocurrency. I teamed up with Daniel and we asked ourselves, what if we could build one application to manage your portfolio of cryptocurrency and allow people to easily swap between assets? And we've proved that people love the product that we have created today, that Exodus has created today. When I think about today, though, and I think about how I personally interact with Web3, decentralized applications, I personally have five browser extensions. And it reminds me back to those early days of Exodus. There should only be one browser extension, one place to navigate the entire world of Web3. So would you like to see this browser extension? I've been warned that I should not do a live real-time demo, but I'm going to do just that. I'm going to do a live real-time demo right now. But before we do this live real-time demo, let's talk about the logo. As I mentioned before, I want to give you the sneak peek of this new logo that we have created. So as you see, this is the logo that you know and love and that represents our brand Exodus. Everybody loves this logo and it's been an amazing, beautiful logo that was designed here in-house. We thought, okay, we are moving to the world of web three and our brand is evolving. So let's go out and let's hire a number of agencies and people to help us create a new logo. And so we stacked all the logos that they had created together. There's 50 some logos. And we compared them with the logos that we had created. And of course, this will not surprise you, we ended up choosing one of the logos that are designed here in-house that Exodus has created. So I am pleased to show you the new logo, the new brand that represents Exodus and our focus of Web3. Do you see its iconic field and its futuristic look? Do you see any of this symbolism in this logo? There will be an article coming out next week that's going to highlight all the features and symbolism, but this gives you that sneak peek today, so you can see where we're going with our brand. Now let's take a look at the Exodus browser extension so again i'm doing a live DEMO here, I am connected to radium. And I'm going to open up the Exodus browser extension. And as you see, the browser extension takes you to a home screen that allows you to explore the world of Web3. Right now, today, if you want to experience the world of Web3, you have to hear it through word of mouth. And so we want to provide an easy way for all of the hot web three Apps to come directly inside of access to give our customers that quick access to those applications. In addition, you see all of your assets, as you would expect in the familiar exodus look. and We support Solana to start on May 17th, and then Ethereum is coming on June 15th with more and more chains supported throughout the summer. Directly inside of Exodus, you can swap your assets for any other asset, and you can buy cryptocurrency easily right within Exodus. And of course, as you would expect, Exodus supports NFTs, and we're going to do this across chain. So this morning I picked up and purchased a party parrot because I felt affinity to that party parrot. It's a lovely bird. So what do you think? What do you think about this browser extension? I think it's really important to highlight that multi-asset, multi-chain is in our DNA. when you go out and you lend assets to DeFi products, say if you lend assets to Orca, Uniswap, and you're looking to get yield, it can be very easy to forget what those positions were. And so Exodus is going to solve that problem. It's going to make it so easy so that you can see in one unified interface, all of your positions across multiple chains, across multiple apps. In addition to that, you're going to be able to view NFTs across chains as well. And we're going to be introducing other features that browser extensions just have not thought of yet. But this is set up something for something really great and big that we're going to tell you more about in future calls. You're going to have to stay tuned for that. But I want to close out and talk about how Exodus is set up for success and how I think us as a company, we're different. As I mentioned before, our customer service, we're the best in the industry and we'll help you in less than 10 minutes. As a company, we think about our employees first and we're remote only. We've been remote only since day one. Our salaries, 100% of the salaries of everybody in the company is paid in Bitcoin. Our products, as you can see, they're the most beautiful wallet products in this ecosystem. And we continue to ship value every two weeks. And we've done this since 2015. In fact, I'll never forget. It was our co-founder Daniel's wedding that fell on a day that we were supposed to, that we, that we shipped and we did not let his wedding stop us shipping value to customers. In fact, we've even, we've even coined a mantra internally that shipping is our religion and dates are our gods. And we've demonstrated that since 2015. We are the only company where our stock is digitally represented in the black blockchain and it's available to the public. So this provides unique opportunities for us. And we have brought, we've a person we've brought a person internally to focus just on this, to provide more value here. So this could open up the world of potential loyalty and stock, maybe NFT airdrops that'll be coming. We'll see. We were the only wallet company with a desktop app that supports hardware wallets, a mobile app, and now a browser extension. And so we can build a cohesive Web3 experience. So now I'm going to turn it over to Chris for your investor questions.
spk03: All right, JP. Thank you so much, James. It wasn't long. It was actually very insightful. I'm pretty jazzed. Like, I don't know, for everybody who's watching this call, like we've gone over this a little bit. And today I am more excited than I have been before. even more excited than yesterday for Exodus. So we've got some, we're going to flip over to Q&A now. These are actually questions that investors have sent in to us. So with that, let's go ahead and just start rolling. The first question is, some of the users in the Exodus community passionately hate Solana. What drives the interest over at Exodus in Solana? Is there something that Solana offers that makes it especially pertinent towards development?
spk07: I'll take this. Yeah, look, I understand that recently with some of the Solana blockchain woes, how it's gone down as a blockchain, that's been problematic for customers and for people that want to use the blockchain. But what we admire about Solana is that they have put performance as their number one goal and that they're going to create a blockchain that is targeted towards the mainstream. This is why we like both Solana and Algorand. Both Solana and Algorand have focused on optimizing their layer one. And providing cheap fees for people to interact with the blockchain. So it was, I think it was about a year ago when Daniel and I first experienced both Algorand and Solana. And Solana, a lot of the Solana dApps looked just absolutely beautiful. And we experienced it, and it was the first time when we were like, oh, my gosh, this is how a DeFi and Dapp Web3 experience should feel, instant experiences. So, yes, there are roadblocks right now, and Solana is facing a lot of scaling challenges. But we believe in time they will figure this out. But that's why we started with Solana first.
spk02: All right, thank you, JP.
spk03: This next question, how is Exodus achieving a goal of increasing exit shares class A price? Is there any news about the strategy and actions you have taken recently?
spk07: So I'll take this. Outside of us delivering more products and services and focusing on customers, as I mentioned earlier, we have a unique strategy differentiator across any American company. And that is that our stock is digitally represented in the blockchain. And so we can do a lot of things with that that no other company has done. Like I said, whether it's a loyalty program, whether it's NFT drops, maybe it's dividends paid every minute. I don't know what it's going to be yet, but we have that ability because of the technology. And so, as I mentioned before, we have a person in-house now that is going to focus exclusively on this and making the blockchain stock experience the best, because we think the future is blockchain stocks. So that's one, I think, really important key aspect. In addition to that, on previous calls, we have mentioned that it is our intent and plan to uplist on a major national exchange, whether it's the New York Stock Exchange or the NASDAQ. This is still our intent and plan. And again, this will give us another opportunity being the only American company to be able to say to the public and say, hey, look, we're going to list on X date, whatever that is, But today, you can still go buy the stock on whether it's T0 or securitized marketplace. And so you can buy the stock today before we uplist on the New York Stock Exchange or NASDAQ. And there will be no other American company that will be able to make this claim. So I think the focus on these things, the focus on making our blockchain stocks a success remains. And I think long term, as we focus on the fundamentals of product development and customers, The stock price will follow.
spk03: All right. Thank you, JP. Good news for us stockholders. We've got a question from a Doge fan. It gets pretty technical, too. So whoever's got some technical hats, put them on because this question gets pretty deep. It says, it's been over a year since the Dogecoin 1.4.5 network update was released, reducing network fees to 0.01 for all transactions. This has not been implemented in Exodus. Exodus users that use Dogecoin are paying 100 times more fees than if I used any other wallet. This is unacceptable to see. Will this ever get fixed or even have the possibility of getting looked at?
spk07: This sounds like a financial question, James. You want to take that? Kidding, kidding, kidding. Yes, we will fix this. In fact, actually, let me just publicly commit right now. In the vein of shipping his religion and dates being our gods, we will have this fixed by Friday, May 27th. We will improve the fees on the Doge network. So hopefully that'll make this person happy.
spk03: And a lot of other Doge holders that love to trade Doge and send Doge in Exodus. Next question is a significant portion of your treasury is in Bitcoin. How do you think about holding crypto with the downturn in market as of late?
spk06: Everybody wants to hear me again after that long one. Look, we are a cryptocurrency wallet. So, you know, how we feel about it, you know, we have both philosophical and practical reasons for holding crypto, especially Bitcoin, right? Philosophically, if you think about crypto, if you think about Bitcoin and think about the massive inflation that we're seeing and it's just news today came in worse than expected again. And the amount of vast amounts of money that's just printed just out of thin air in the past couple of years, especially in the United States, but around the world as well. So every dollar that we would have sitting in a bank account is a depreciating asset, right? So that's, but Bitcoin, you know, everyone knows Bitcoin, you know, is essentially inflation proof. So, You know, that's the overall philosophical reason, you know, from the practical perspective, we are a cryptocurrency wallet. And if there is a cryptocurrency company out there that doesn't have some crypto on their balance sheet or was late to put in another balance sheet, I mean, for shame. The you know, but we run our business with crypto. So JP mentioned we pay all of our salaries in Bitcoin. that's our biggest expense by far our revenue is earned primarily in bitcoin and other cryptocurrencies 100 crypto all of our revenue so we will always no matter what have some portion of of our balance sheet uh in crypto because like i said our revenue and our major expenses are paid in that way um you know finally there is a a kind of a more
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