DeFi Technologies Reports Q2 2026 Results: Full Earnings Call Transcript

DeFi Technologies (NASDAQ: DEFT ) released second-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below. This content is powered APIs. 2 million.

8 million in net inflows despite challenging market conditions, reflecting continued demand for ETPs and structured products. The company is set to launch its first hedge fund soon, aiming to expand arbitrage strategies and institutional capabilities. Efforts to establish a UCITS platform in the EU continue, with a parallel appeal on the Swedish FSA's decision. Development of the Valour Custody Platform is on track for a beta launch in H2 2026, aiming to reduce third-party custody costs.

2 million in the prior period, primarily due to lower AUM and unfavorable mark-to-market adjustments. 8 million in cash and cash equivalents, despite a $20 million investment in MicroStrategy preferred shares. 6 million in Q1 2026. Strategic focus remains on expanding institutional capabilities, product offerings, and leveraging AI for operational efficiency and product innovation.

Management is optimistic about long-term growth opportunities and plans to capitalize on market share during the current downturn. Full Transcript Curtis Laughman, VP of Marketing and Communications Hi everyone. Welcome to the DeFi Technologies Second Quarter 2026 Financial Review and Shareholder Call. I'm Curtis Laughman, VP of Marketing and Communications.

Joining me on the call today are Chief Executive Officer Johan Wattstrom, Chief Financial Officer Paul Bozoki, and President Andrew Forson. We'll begin with opening remarks from Johan, followed by a review of our second quarter 2026 financial results from Paul. We will then provide an update on growth initiatives and strategic priorities from Andrew, and we'll open up for Q&A after that, a mix of retail from the chat and invite analysts to come on and ask questions live. Before we begin, I'd like to remind everyone that certain statements made during today's call may constitute forward-looking information under applicable securities laws.

These statements include, but are not limited to, comments regarding expected financial performance, business development, strategic initiatives, market expansion, product growth, and future opportunities. Forward-looking statements are based on management's current expectations and assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied. With that, I'll turn it over to Johan. Johan Wattstrom, Chief Executive Officer Thank you, Curtis, and thank you everyone for joining us today.

The second quarter was shaped by continued volatility across digital asset markets as lower crypto asset prices affected assets under management which, together with the mark-to-market adjustments, weighed on our reported financial results. While those market conditions impacted our financial numbers during the quarter, they have not changed our conviction in the long-term opportunity or the progress across the business. Our focus remains on executing our strategy, strengthening the platform, and creating long-term value for our shareholders. More importantly, the underlying business continues to move in the right direction.

Our core business is becoming more scalable and efficient as we invest across our existing businesses, pursue strategic opportunities, and advance product innovation. We believe these efforts are strengthening the platform, enhancing our competitive position, and expanding our long-term growth opportunities across all the business areas. Valour has listed over 100 listed ETPs and structured products across multiple exchanges globally, aiming for another eight more during Q3. 8 million in net inflows, reflecting continued customer demand for our products despite the challenging environment for the broader digital asset industry.

We view these positive net inflows as an encouraging sign, demonstrating continued demand for our products despite a weaker market environment and reinforcing our confidence in the long-term opportunities ahead. Beyond Valour, we continue to broaden our institutional platform and product offering. The launch of our first hedge fund remains a key priority. With all obstacles now removed, we are days, or at least at worst a week or two, from the actual launch.

We also expect to expand our arbitrage strategies during the second half of the year with a goal of further strengthening our institutional capability and diversifying our revenue streams. While the Swedish FSA did not approve our initial UCITS structure, we have appealed the decision and are simultaneously working hard to establish a UCITS platform in another domicile within the European Union. Those efforts are moving ahead quite quickly. Development of the Valour Custody Platform also remains on track for a targeted beta launch in the second half of the year.

The initial deployment will focus on bringing custody capabilities in house, reducing third-party custody costs, and improving margins over time. The platform is expected to support a broader range of products and services. AI is also becoming an increasingly important part of our business. We are leveraging AI to improve operational efficiency while developing AI-enabled investment products which we believe complement our existing crypto product offering and support future growth.

From a financial standpoint, the company continues to operate from positional strength. Our balance sheet and liquidity provide the flexibility to invest through the market cycle, support product innovation, pursue strategic acquisition opportunities while also maintaining a disciplined approach to capital allocation. Stillman maintains strong momentum in onboarding larger clients and remains on track for a second record year of revenue as market conditions improve. We believe the business is positioned for asymmetric upside supported by continued growth in key operating metrics that are not primarily dependent on market volatility.

Looking ahead, our priorities remain unchanged. We are focused on expanding our institutional capabilities, broadening our product offering, and building a more diversified business aligned with the long-term growth of digital assets. While near-term market conditions remain challenging, we believe the investments being made today are strengthening the business, expanding our capabilities, and positioning the company to capitalize on the next phase of growth. Our main focus during this market downturn is to aggressively take market share in our core markets.

With that, I'll turn over to Paul to walk through the financial results. Paul Bozoki, Chief Financial Officer Thank you, Johan, and good morning everyone. I'll begin with an overview of assets under management. 2 million.

Lower digital asset prices continued to weigh on reported assets under management during the quarter, consistent with conditions across the broader digital asset market. Our effective management fee yield was approximately 1% compared to approximately 1% in the prior period, primarily reflecting the larger weighting of Bitcoin-related products within our AUM which carry lower or no management fees, as well as continued weakness across many altcoin markets within Valour. 4% also moderated during the quarter as lower digital asset prices, compression in lending rates for Bitcoin, Ethereum, and changes in the composition of staking assets reduced overall monetization.

Client activity remained encouraging despite these market-driven headwinds. 8 million of net inflows during the quarter, reflecting continued demand for our products despite the broader market environment. These inflows provide a solid foundation for future growth in assets under management as digital asset prices recover. 2 million in the prior period, reflecting lower average assets under management and unfavorable mark-to-market adjustments on our digital asset holdings which are recognized through revenue under our broker-dealer accounting structure.

Excuse me. 8 million. For clarity for our investors about the obvious drop in our cash balance from Q1, we bought $20 million of MicroStrategy Stretch preferred shares, or 200,914 shares, to achieve a higher yield on our treasury cash reserves. These preferred shares yield 12%, or $1 per month.

We also purchased a smaller position in RWUSD product. S. 5%, so these other products yield significantly more. These investments are disclosed on the face of our balance sheet as other investments at fair value through profit and loss and, again, management.

We view these as essentially cash equivalents, but they're not classified as such under IFRS rules. We believe this strong financial position provides flexibility to continue investing in strategic initiatives while maintaining a disciplined approach to capital allocation. Turning to product activity, we ended the quarter with 102 ETPs and structured products across our platform. We continue to expand our institutional product pipeline and distribution capabilities while advancing several new investment products and fund structures.

Stillman Digital maintained an important diversification component of the broader platform. 2% year-over-year growth. We remain encouraged by the business's trajectory and its contribution to the overall platform as it paces for a record revenue. We remind our investors that Stillman revenue growth is not dependent on cryptocurrency prices increasing, but rather on trading volumes and realized trading spreads.

6 million incurred in Q1 2026. Of these costs, we remain focused on disciplined cost management and continue working towards our targeted annualized cash operating cost structure of 36 to 39 million while continuing to invest in our business. 3 million negative mark-to-market adjustments on our venture portfolio as well as our Stretch preferred shares. Most of the negative adjustment is from the markdown of our 5% investment in AMINA Bank to reflect lower AUM and a compression in EV-to-AUM multiples across a valuation peer group.

We are aware of publicly available information that AMINA Bank has engaged Cantor Fitzgerald to explore a potential public listing for it. With that, I'll turn— I'll turn Andrew Forson, President Thank you, Paul. As we discussed last quarter, our focus remains on expanding the institutional capabilities, distribution relationships, and operating infrastructure needed to support the next phase of growth for DeFi Technologies. Throughout the quarter we made progress across several strategic initiatives designed to broaden our product offering, improve monetization, and expand access to the platform.

A key priority remains the development of regulated fund structures and institutional investment products. We are working to bring these initiatives to market in a disciplined manner with an emphasis on products that are fully operational, commercially ready, and available to investors. An organization like DeFi operates in a complex regulated space which requires the building of trust through relationships. Initiatives often require work months and years before the results are seen by the general public.

In our case, Q2 saw increased adoption by partner organizations globally of our DVO Index platform, which provides a strong, broad narrative to discuss the unique strengths of each product within the Valour platform. Q2 also saw us systematize and execute on approaches for interacting with institutions and onboarding institutional capital into our Valour products. Over 40% of this quarter's inflows are directly attributed to our institutional events and outreach. To give a clear example, deals that began as discussions at our Abu Dhabi event in December 2025 closed during Q2.

We have built an institution-focused marketing and outreach strategy that uniquely and interestingly enables us to communicate the power of our products and the services offered by our portfolio companies and our pipeline of future products on our terms, efficiently and economically, to a global audience of bona fide investors. We built this capacity which has enabled us to be competitive and generate positive net inflows despite compressed digital asset prices and poor market conditions in less than 12 months. What we've created plays an important role. We finally have an all-important institutional sales platform.

The beauty of what we do and how we do it is it is global and flexible enough to accommodate all the innovative products in our pipeline that have been discussed by Johan in a CEO letter and his earlier statement in science and in finance. To be effective, we must categorize the factors we deal with as independent or dependent variables. I remain heartened by our team's focus and our company's resilience in unfavorable market conditions. I am bullish on DeFi Technologies, Valour, and Stillman Digital because we are demonstrating increased efficiency and effectiveness with the dependent variables.

These elements we have control over, like net inflows, visibility, product development, clarity of the financial story, optimization of our corporate venture holdings. Those areas we do not have full autonomy or control over, like asset prices and regulatory approvals, which can be impacted by anything from war, interest rates, holiday seasons, and broader asset prices, we monitor closely and have a dedicated team that responds quickly and professionally to all requests. And in an attempt to ensure we give ourselves the best shot at success, I ask listeners and viewers to note when Johan speaks of creating a platform, these are not empty words.

He's done it before and the evidence of this is in our world-leading portfolio of over 100 digital asset underlying ETPs. Now we are entering into a new era of product with the objective of expanding our platform into structured instruments that have the potential for performance-based upside increases. It is not a question of if these products will be delivered; they will be, and when they come online, the nature of many of these products are higher returning with great potential for upside to the firm. These initiatives are important not only because they broaden our product offering, but also because they expand the ways we can monetize the platform.

Historically, our revenue model has been driven primarily by assets under management, management fees, and staking income. Over time we believe these new institutional products and investment strategies can add performance-based returns, institutional mandates, and other revenue streams that are less directly tied to the direction of digital asset markets. Since November 2025 we've worked hard to develop our innovative business intelligence system that provides granular views of key competitive and operational metrics.

This has grown into a system of proprietary data-driven tools that give unique insights as to how specific Valour single or index products interact with the financial world around us. Such research and development efforts leverage our infrastructure to provide unique insights. This serves as a proving ground for potential new products that can be created for third-party asset managers for deployment by their internal risk desks or wealth management platforms.

This new capability enables us to expand distribution through the provision of valuable insights, enables us to create new institutional partnerships, and improve monetization across products and assets already supported by the business, whilst using data to define the products of the future. The positive net inflows generated in Q2 are proof that our model is working, demonstrating the strength of our product offering and our ability to attract institutional and other customer assets through challenging market conditions. We also continue to invest in the long-term capabilities of the platform.

As tokenization becomes more widely adopted across financial markets, we believe our technology and operating infrastructure can eventually support a broader range of financial products and asset classes, including tokenized real-world assets. As the new products come online, I'm excited that the firm will be in a position to speak with institutional capital allocators worldwide.