Exodus Movement, Inc.

Welcome, everyone, to Exodus's fourth quarter 2024 earnings conference call. I'm your host, Greg McNiff, and joining us today are Exodus co-founder and CEO J.P. Richardson and Exodus CFO James Gronatsky. During today's call, we may make forward-looking statements. The company cautions investors that any forward-looking statements involve risks and uncertainties and are not a guarantee of future performance. Actual results may vary materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our earnings press release and our most recent registration statement on Form 10 filed with the Securities and Exchange Commission available on the investor relations portion of our website. We do not undertake any obligation to update forward-looking statements. Please visit our social media accounts, X, or Reddit to submit your questions for the quarter for our investor relations team after our call. And with that, let's go to J.P. for the review of Exodus's preliminary fourth quarter and full-year 2024 results.

Hey, everyone. Thank you for joining us today. Our unaudited Q4 results represent yet another strong quarter for Exodus. As we continue executing on our strategy to bridge traditional finance and blockchain technology, we delivered record revenue while introducing innovations designed to make digital asset ownership frictionless and accessible to everyone. In Q4, we grew revenue 143% year over year to $44.8 million. We continue to scale our business by expanding on the partnerships we announced last quarter. We currently have 11 partners signed with Exoswap, with five of those already in the integration process. Exodus finished the full year with $116.3 million of revenue, and those are record revenues on the quarter and the year. Accordingly, we accomplished several milestones in the quarter, building on last quarter's momentum and aligning with our growth initiatives. Let's run through those milestones. First, we continue to invest in marketing and education. As many of you are aware, Exodus was the co-host of the first crypto ball in D.C. Expect to see similar marketing initiatives in the coming months as we shoulder increasing responsibility to foster awareness and adoption of Bitcoin, DeFi, and Web3, especially to the policymakers in D.C. Meanwhile, stealth custody remains the core of our business, as Exodus continues to empower users with a secure multi-chain wallet for Bitcoin, Ethereum, Solana, and beyond. Our exchange aggregator technology extends our natural multi-chain capabilities by connecting consumers with the most competitive rates and transaction speeds. While our newest launch, ExoPay, also simplifies fiat onboarding to improve the whole user experience. Now, the most exciting development this quarter was the very strong performance of our newly announced B2B2C swap aggregator, ExoSwap. This ExoSwap product leverages the exchange aggregator technology with its decade of refinement and reliability and serves to other industry players, including Ledger and Magic Eden. As a reminder, our exchange aggregator enables consumers to retain control over their crypto transactions while providing transparency and security. This aggregation is intended to enable consumers of other wallets to receive the best available rates and fulfillment times. ExoSwap is truly a -in-breed solution for any wallet or Web3 dApp looking for multi-chain swap capabilities honed, as I mentioned, in our own wallet over the past decade. And with ExoSwap contributing 12% of our Q4 revenue, we are enthusiastic about its long-term potential. We are closely tracking its momentum in 2025. Furthermore, the PESCE wallet launch marks a major step in simplifying crypto access with frictionless onboarding. PESCE's wallet is a self-custodial multi-chain wallet that can be embedded directly into dApps and Web platforms. Some call this technology smart wallets. We prefer the phrase instant wallets. With PESCE's wallet, consumers can create and access a crypto wallet without any friction. No need for downloads, no accounts, no email verification, no storing of a 12-word secret recovery phrase. Instead, the self-custodial wallet is seamlessly managed using FaceID, TouchID, a PIN, or even a password. This solution improves the user experience and offers developers a powerful tool to integrate crypto functionality into their platforms. Early adoption has been strong, and we are excited about its growth potential in the quarters ahead. PESCE's ended 2024 with over 200,000 users thanks to a marketing program we ran on X. Shifting gears, acquisitions remain on the table as Exodus continues to build its pipeline of targets. There is significant inbound interest from companies looking to join us on our journey, but we will not be sharing any names at this time. There is a longer-term vision we will share in the future earnings release that we believe partnerships and acquisitions will help to accelerate. And in December, we celebrated with an uplifting to the NYSEE American Exchange, where we are enjoying the increased liquidity, better opportunities to access capital, and improved visibility with investors. Beyond Exodus, our broader crypto ecosystem gained momentum throughout Q4, increasing mainstream adoption and institutional participation. The Trump election preceded major changes in the acceptance of our industry. Bitcoin ETF inflows were substantial, with $16 billion on the quarter, while Bitcoin reached $100,000 for the first time. And to put the cherry on this Sunday for Exodus, yesterday President Trump announced a crypto strategic reserve, by which the Presidential Working Group on digital assets would move towards creating U.S. investments in Bitcoin and other digital assets. As we say in crypto, LFG. And so Q4 was very strong as Exodus grew while innovating to make digital assets more accessible. Our NYSEE American uplifting, our major product rollouts like Exoswap and Paskey's Wallet, and our focus on superior customer experience. We believe all of these factors have Exodus solidly on track for a prosperous 2025. I just want to thank you all to our customers, partners, investors, and team members for joining us at every milestone. We are at the very early stage of this journey to make Exodus the leading Web3 technology platform that could be more exciting about our opportunities ahead. We look forward to reaching many more milestones as we seek to transform our visions into reality. And now I'll hand it to James for a financial

update. Thanks, JP. Q4 was a strong milestone quarter for Exodus and the market. But before jumping into Q4 and 2024 results, I'd just like to remind everybody we recognize the large majority of our revenue from fees we charge third-party API providers for access to our users. And in particular, revenue generated from our exchange aggregation API providers makes up the core of our business. We do have non-exchange aggregation revenue as well, which comes from API providers with other capabilities such as staking and fee onboarding. Given our model, business performance has historically been affected by the cryptocurrency market cycles, which can be volatile in the short term. However, when looking over a longer period of time, we have been able to scale our business across these cycles. So in the future, we expect to further capture our addressable market through strategies such as partnerships and products such as Exoswap. In Q4, we generated $44.8 million in revenue, representing 143% growth year over year and 123% sequentially. This year over year revenue growth was driven by strength in both our exchange aggregation and non-exchange aggregation revenues and further supported by increased user activity and continued positive momentum in the cryptocurrency market. Exchange aggregation accounted for 92% of total revenue in the full year 2024. And of that exchange revenue, 93% was from our users and 7% was from our Exoswap partnerships, while non-exchange aggregation, including fee onboarding and staking revenue, represented 8% of the total revenue. One of the key developments in the second half of 2024 was Exoswap, as the partnerships came fully online with meaningful contributions towards the end of the year. And this momentum has continued into the first quarter of 2025. Exchange provider process volumes for the quarter were $2.3 billion, reflecting 169% growth year over year and 139% sequentially, which was made possible as cryptocurrency valuations increased on the year along with Exodus's user base. Monthly active users in Q4 reached $2.3 million, which compares to $1.4 million a year ago and $1.6 million in Q3. This growth was driven by multiple factors. We enjoyed increased user engagement, new product launches, and ongoing marketing initiatives throughout the year. On our balance sheet, we ended the quarter with $265 million in digital and liquid assets, primarily composed of Bitcoin, Ethereum, US dollars, and treasury bills, while we remained debt free. We continued to be early adopters of ASU 2020-308, which as a reminder means our digital assets are now recorded at fair value. You can clearly see our long-term Bitcoin strategy and action on this chart, which highlights our accumulation over time. We held 1,941 Bitcoin as of the end of Q4, compared to 1,800 units in Q3. Looking back, we held 1,787 Bitcoin as of 2023 year end. Our Bitcoin holdings have grown over time as we have strategically managed our treasury to align with our long-term vision. Looking ahead, we intend to take a disciplined approach to treasury management, balancing operational needs with opportunities to strengthen our digital asset position. And to bring everybody up to speed on the new year, I'll provide preliminary Q1 highlights that demonstrate that this quarter is off to a strong start. Through the first two months of Q1 2025, we have seen volumes of $1.45 billion, which for comparison is already higher than the volume we saw in each of the whole first three quarters of 2024. Of that, 23% of the volume is related to ExxonSwap partnerships. We've also grown our digital asset holdings, ending February with over 2,000 Bitcoin units in our corporate treasury. So to wrap up our discussion, Q4 was another strong quarter for Exodus as we continue to capitalize on the growing digital asset market. We remain committed to maximizing shareholder value, and we thank you all for your support. With that, we'll take some questions.

Thank you, James. If you'd like to ask a question, please use the raise hand feature at the bottom of your screen, and we'll call on you to unmute your line and ask

a question.

Our first question comes from Ed Engel from Compass. Ed, if you want to unmute your line and ask your question.

Hi, how's it going? Can you hear me?

Loud and clear.

Great. Yeah, congrats on the NAISI Oblisty last quarter and also on a really strong set of fourth quarter results. So just kind of high level one first, just the industry experience from the biggest hacks ever last month when a centralized exchange was hacked for over a billion dollars. How do you kind of think of these events and how they kind of impact a man for self-conservative products like Exodus? And then did you see any notable impacts on user onboarding actions event?

Thank you. So yeah, absolutely. I mean, one of the biggest exchange hacks ever, as you mentioned, $1.5 billion happened through infiltration of the system. Now ultimately it was due, it was, the ETH was stored on a smart contract, but it was the hacks were customers funds. Now, fortunately, Bybit was able to, as far as I know, make whole on that kind of a hack, but it does continue to highlight the risk of custodial exchanges. And so for us, I mean, this continues to reinforce the value proposition of Exodus and that we are self custody. And so, yeah, absolutely. There was, there was influx of customers, but nothing that we're willing to report just at this moment. But again, these hacks are going to continue to happen. Custodial exchanges are going to get hacked again and again and again and again. And this points to the origin as to why Exodus was created in the first place. If you go back to 2014 with Mal Gox, and then if you wanted to store multiple assets and swap multiple assets, you had to use an exchange. But today, that's no longer true. And you can use Exodus to hold all of your assets in one wallet.

Super helpful. Thanks. And then one housekeeping one. I wasn't quite able to find it, but did Exodus disclose any gross margins in the fourth quarter or GNA expense? And then if you guys have that already, were there any one time costs related to the NYSE up listing?

There were costs related to the up listing. Obviously, as you can imagine in 2024, the Form 10 process, you know, generated some significant fees for our friends in the legal industry, as well as the accounting industry. And you'll see those, you know, when we file our 10K here shortly. In terms of, sorry, what was

the other part of that question? Did you guys disclose any gross margins or GNA expense overall in the fourth quarter? Are we still waiting for the filing?

I would just wait for the filing.

Okay, thanks. And then I guess one last one. At the beginning of the quarter, you guys announced kind of a change to your pricing structure or the pricing mechanism, or I guess the swap experience overall. I'm just kind of curious, what does that mean for, I guess, the product offering? Is it just kind of more options for users? And I guess, does that have a substantial impact on your overall fee rate moving forward?

I'll take the first part, and JP, feel free to jump in if I missed something here. The overall, I would say that that structure does not change the overall. I believe that is specifically related to some of the Solana fees. However, it just signifies our desire to continue to improve that exchange aggregator. You know, we've been working on that for, as JP mentioned in the opening remarks, 10 years now. And, you know, we continue to refine and improve that overall experience, as well as, you know, work to provide, you know, best execution and fee structure for our users going forward. The one thing, the other thing I would say on that is, in general, that did not necessarily change our margin structure at all on our base business.

Perfect, really helpful. Arne, again, thanks for the clarity, and I congratulate you on a great start to the year.

Great, thanks, Ed. Our next question comes from Kevin at HC Wainwright. Kevin, if you'd like to unmute your line and ask your question. Kevin, are you able to unmute your line? Yeah, yeah, can you hear me now?

Is that better? That is. JP, James. Thanks very much for having me on the call. Apologies for my ineptitude and handling zoom in these communal venues. Listen, JP, first, let's dive in a little, please, and offering maybe some more color on Exo to Swap. Understand there are 11 agreements, five have been integrated. You're seeing a benefit already through the fourth quarter and in through the arts so far this year. Can you talk about where you see that going versus your legacy aggregation business?

Absolutely. So if we look historically at some of the bigger current partnerships that we have, Magic Eden and more specifically Ledger, and you look at consumers that are using some of these products, specifically Ledger, right? So Ledger has, I think, close to 7 million customers, maybe close to 8, but 7 to 8 million customers. And today, these customers, what they're doing is they own a hardware wall and they're plugging it into their machine and they're using it. And despite the fact that a Ledger works with Exodus, and so does a Trasor works with Exodus, many consumers are happy using the Ledger software that they have today. And so what this allows us to do is it allows us to take our technology, the Exo Swap technology, the Swap aggregator technology, and bring it to other business partnerships so that they can offer it to their consumers. And since we see wallets as, again, as kind of a sticky for a customer base, it allows us to tap into other consumers without us having to go market to those consumers and actually have to bring them over to Exodus. So they can still use the platform that they know and love, say Ledger in this case, and then again, use the Swap aggregator technology. So beyond this, we see and believe that many other wallets will adapt Exo Swap as well because it is one of the best in class for providing swaps cross-chain for consumers.

It's hard to argue with your JP given the court's results, the grads on that. So let us stab at it. How do those users, the ones on Ledger and Tesor, Magic Eden, how do they see that Exo Swap technology? Is the Exodus movement brand in any way put to those customers?

Yeah, we like to create seamless and integrated experiences. So in the case of some of these platforms, so like Ledger, the brand is a little more pronounced, but in the case of let's say like Magic Eden, it's less pronounced. So it's going to vary on a -by-case basis because all we're providing is APIs that route to our third-party API providers. And so the actual branding is going to vary on a -by-case basis.

How do you look at the intellectual property that you've baked in, granted 10 years of hard work not to be dismissed, but how do you look at that in terms of Exodus having a moat?

Yeah, absolutely. So that's a great question because the way we're thinking about this long term is actually open sourcing a lot of the client side front end code of Exodus with the intention of making a wallet cheaper for developers, Web3 projects that come and build wallets. Because ultimately at the end of the day, if a consumer, if a developer builds a wallet with our APIs, then they're way more likely to integrate Exo Pay or Exo Swap. And so for Exo Pay and Exo Swap, these products are on the backend, they're on the server, they're not open source, they're not available to developers other than through an API. So it would be very hard for a competitor or another wallet provider to come along and say, hey, we're going to build our own Exo Swap because again, what we've done over the last 10 years is we've taken all the swap partners out there and we put them in one experience and behind these scenes, we are monitoring and controlling what the consumer ultimately experiences and we provide a backend interface of analytics and control for our partnerships. So from the aspect of a moat, the real moat is going to be through Exo Pay and Exo Swap, not the front end wallet itself. So I think that's really important to note that long term, we want as many wallets out there as there can be so that we can ultimately have more partnerships for Exo Swap and Exo Pay.

Last question for me, I promise. Let's talk a little bit about MoonPay and Banksa. I know that deal went south and listen, I've covered Banksa for years and years and the original figurehead of that company was an awesome guy. The most recent management change hasn't left me feeling very upbeat about where that company was going. I understand that they knew what they couldn't align and it makes sense, but I guess I would like to understand how that Exo Pay and the MoonPay integrate and how difficult integration is in delivering Exo Pay.

Great question. So long term, everything that we think about is through the lens of the consumer experience. So today, as a consumer using Exodus and then going and buying crypto with say a debit card or checking account, one of our biggest partners, MoonPay, and they've been a great partner, as a consumer you go and you see a completely different experience. It almost feels foreign to you as a consumer. So our path of building out Exo Pay is to provide a more customized and seamless and integrated experience. So as a consumer, you feel like you're just in one Exodus experience. Now at the end of the day, whether it's Exo Pay or MoonPay, we ultimately do not care. We just want to provide the best experience for our customers and you may look for more enhanced partnerships in the future that would help us to do that.

The Exodus user doesn't see the MoonPay and ramp on ramp or off ramp activity and then they have an alternative to use Exo Pay?

You can ask as many questions as you want. These are great questions. So right now... Well, James,

trust me. I went through an hour of this with James. He never wants to speak to me again.

No, I love it. Just keep throwing them out. So if you're a consumer and what you're presented with today is you are presented with a choice of MoonPay, Exo Pay, and other fiat on ramp providers, other ways to purchase crypto with Bitcoin or sorry, purchase crypto with a credit card or a checking account or what other fiat method you want to use. So you have that choice today. Long term, we're looking to create a very strong seamless experience so that as a consumer, you don't have to think about whether you're using Exo Pay, MoonPay, ramp or any other provider. You're just integrated in Exodus and it just feels like one cohesive experience. And this one cohesive experience really ultimately could be powered by a partnership with MoonPay or someone else. But that's ultimately what we're after is a seamless experience. And today it doesn't quite feel that way. It feels like as a consumer, like, ah, I want to use my debit card to buy Bitcoin. Okay, I have to choose between an Exo Pay, a MoonPay or some of the other providers.

Does that help? Yes, it helps a lot. So I guess it kind of becomes interesting as you look down the pike and integrating all this seamlessly. It's hard for me to see anything seamless in the crypto. I mean, it's absolutely probably one of the most awkward environments you can imagine. So I applaud the effort. How do you see that Exo Pay launching and its growth ramp?

Here's what's great about Exo Pay is that to those who already are partners with Exo Swap and they're getting value from Exo Swap, Exo Pay becomes a natural compliment for us to go in and say, hey, you have this swap aggregation technology from us already. Now we have this other service and platform for you called Exo Pay. And so we think that provides a strong channel for additional partners for Exo Pay. But at the end of the day, what we're really trying to do is remove all complexity from crypto. Because to your point, crypto is it is complicated still, right? Like the fact that you have still 12-word secret phrases, addresses, the fact that you have different, you have to worry about is this an L1, L2, which network am I on? Do I have enough ease to pay my gas fees? These are the things that we're looking to remove from the consumer experience long term. Thanks for

very well said, JP, for indulging me. It's a real pleasure being on the call. I appreciate it. And James, thanks for allowing me to join. I know it was a tough decision for you. It's fun to be included. Thank you.

I love the questions, just like JP. Thank you, Kevin. That ends our Q&A session. Thanks to JP, James and our analysts. Please visit our social channels on X and Reddit to submit your questions for our investor relations team. And with that, we're concluding our call. Thank you very much for joining us today, and we hope to see you in the future. Take care.