Galaxy Digital Hldgs Q2 2026 Earnings Call Transcript

Galaxy Digital Hldgs (TSX: GLXY ) reported second-quarter financial results on Wednesday. The transcript from the company's second-quarter earnings call has been provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary Full Transcript OPERATOR Good morning and welcome to the Galaxy Digital Hldgs' second quarter 2026 earnings call.

Today's call is being recorded. To ask a question, you may press star then one on your touchtone phone, and to withdraw your question, please press star then two. At this time, I would like to turn the conference over to Mr. Jonathan Goldowski, Head of Investor Relations.

Please go ahead. Jonathan Goldowski, Head of Investor Relations Good morning and welcome to Galaxy Digital Hldgs' second quarter 2026 earnings call. Before we begin, please note that our remarks, including answers to your questions, may include forward-looking statements. S.

Securities and Exchange Commission and on SEDAR. Forward-looking statements speak only as of today and will not be updated. Additionally, we may discuss references to non-GAAP metrics, the reconciliations of which can also be found in our earnings release. Finally, none of the information on this call constitutes a recommendation, solicitation, or offer by Galaxy Digital Hldgs or its affiliates to buy or sell any securities.

With that, I'll turn it over to Mike Novogratz, Founder and CEO of Galaxy Digital Hldgs. Michael Novogratz, Founder and CEO Good morning, everyone. Listen. The second quarter was transformational for Galaxy Digital Hldgs.

Behind the numbers is a single idea: the economy is increasingly running on code. Finance is moving on-chain and AI is remaking every industry. Both run on infrastructure—the financial rails on one side, the power and compute on the other. Galaxy Digital Hldgs is one of the few companies building at both ends of it today.

This quarter, both sides delivered. On the data center side, I couldn't be more proud of our team. We delivered phase one at Healios on schedule and on budget, and that's not easy. The campus is now generating cash flow.

We acquired three new data center sites, bringing our development pipeline to 5-plus gigawatts of potential power capacity and positioning Galaxy Digital Hldgs as one of the largest data center developers and operators in the world. 5 billion high-yield financing, the largest in our history, ensuring we have the capital to execute on our developing roadmap. 2026 is also an inflection point for our digital assets business. Crypto bear markets are the best time to build, and we certainly are in one.

While token prices and trading activity remain subdued, we're seeing tremendous demand for the infrastructure that will power the next generation of financial markets. Today we're working with some of the largest financial institutions in the world as they build out their digital asset capabilities. Last quarter we signed our first major infrastructure engagement with Bank of New York, one of the largest custodians in the world, to further develop its digital asset infrastructure. We believe this is just the beginning.

Across both segments, the through line is the same: transforming finance and powering AI. Data centers and digital assets are each strong businesses in their own right. And today we're building the infrastructure underneath both of them. I want to give you a few quick thoughts on Clarity.

Of course, you know everyone would have been happy if it had been passed already. Things aren't that easy. We're all sitting here waiting to see the White House's response to the ethics compromise that's been put forward—a bipartisan compromise between Senator Gallego and Senator Tillis. It's late.

It does not look like anything will happen before the recess, and so there is some hope still that these guys will get together in September. I know from speaking to senators daily that all these issues are very close, and so we'll see where the political will turns out. If Clarity doesn't pass, it's not the end of the world. We've been living without it since this business started.

There's been a commitment from both the SEC Chair and the CFTC Chair that they will work really hard and quick to put out rules of the road to regulate crypto in a much more direct way. Finally, I'd love to welcome Steve Van Der Zack to our board. Steve has built and scaled some of the world's most complex technology companies, bringing more than three decades of senior operating leadership across IT infrastructure, large-scale M&A, and capital allocation. This combination of operating expertise, capital discipline, and deep technology experience will further strengthen our board as we continue expanding our digital assets and trading center infrastructure platform.

And with that, I'll hand it over to Tony. Anthony Paquette, Chief Financial Officer Thanks, Mike. And thank you everyone again for joining the call today. As in previous quarters, I'll start by walking through our consolidated financials, then dive into our operating businesses before turning it over to Chris to go into a bit more detail on data centers.

As Mike mentioned, Q2 unfolded against a challenging macro backdrop for digital assets, but our business continued to perform. It's quarters like this that building a diversified business model with recurring revenue that is uncorrelated to market activity becomes especially valuable in Q2. Phase one of our Helios data center came online with the first 133 megawatts of critical IT delivered to CoreWeave. That's the start of a real shift in our earnings profile, which I'll speak to in a few moments.

09 per share, and firm-wide adjusted EBITDA of negative $77 million. These results were driven primarily by the depreciation of digital asset prices during the quarter, with our Treasury and Corporate segment reporting an adjusted gross loss of $42 million. Combined operating businesses adjusted gross profit was $86 million and adjusted EBITDA was $1 million, both up significantly from Q1.

Firm-wide operating expenses excluding grossed-up transaction costs, the impairment of digital assets, and pass-through data center operator expenses were $172 million in Q2, up $25 million quarter over quarter, driven primarily by previously capitalized interest and depreciation expense that is now being recognized alongside data center revenue. 8 billion in total assets, up 9% from the prior period. 7 billion, essentially flat quarter over quarter, with 72% of our equity capital now allocated to our two operating businesses.

That mix has shifted towards our operating businesses over the past year and, as we've said previously, we expect data centers to represent a growing share of our capital base as we continue to invest in the build-out. 5 billion, down 6% from Q1, reflecting cash deployed into our operating businesses during the quarter, primarily around the Helios build. 2 billion in net digital assets and investments at quarter end, down 15% from Q1, reflecting both the depreciation of crypto prices and a modest reduction in our overall net digital asset exposure.

Turning to our operating results, beginning with digital assets, crypto prices declined double digits in Q2 with a corresponding moderation in trading volumes and on-chain activity across the industry. Despite the weaker environment, our Digital Asset segment generated adjusted gross profit of $66 million, up $17 million or 34% quarter over quarter. Delivering top-line growth despite lower digital asset prices and weaker industry activity reflects continued market share gains and further demonstrates that our earnings are becoming less dependent on the overall direction of the market.

Within Global Markets, adjusted gross profit was $49 million, up significantly from Q1 despite trading volumes declining 7%, driven by strength in our electronic trading business and disciplined risk management across the desks. In Lending, our average loan book increased modestly from the prior quarter despite the softer environment. That growth was driven by strong originations toward the end of the quarter along with the successful prelaunch of our Galaxy On-Chain Financing Rate offering, which I'll discuss in more detail in a moment. We also continued to expand in areas where we're seeing growing institutional demand.

During the quarter we launched our OTC Prediction Markets offering, extending our derivatives platform to enable institutional clients to implement full multi-asset hedging strategies around event-driven markets. We believe this is an area that will continue to see increasing adoption over time as more companies and institutions seek to manage business-specific risks that are difficult to hedge with traditional instruments and require 24/7 risk management.

Separately, we launched the Galaxy On-Chain Financing Rate, or Gopher, a fully managed, risk-controlled lending solution that provides clients with efficient access to on-chain credit markets through a single Galaxy counterparty at an optimized borrowing rate. This product removes the operational complexity of interacting with decentralized protocols and has already generated nearly $300 million of loan originations, reflecting strong early demand from clients.

We also brought to market the Galaxy Curator, an institutional vault curation offering built on Morpho and integrated with Fireblocks, providing more than 2,400 institutional clients with access to curated on-chain yield strategies. These launches reflect our continued focus on expanding our platform in areas where we see long-term demand while creating additional opportunities to serve clients across multiple products and businesses. Turning to Asset Management and Infrastructure Solutions, we delivered an adjusted gross profit of $17 million and ended the quarter with approximately $7 billion in combined assets under management and assets under stake.

This balance was down 12% from Q1, primarily reflecting lower digital asset prices and modest net outflows. During the quarter, we continued to expand our investment platform with strategies focused on areas where we see long-term capital formation and believe we have a competitive edge. During the quarter, we launched the Galaxy Fintech Fund with over $100 million of assets at launch. This long/short equity hedge fund is focused on the digital asset transformation of financial services, a theme that has been central to Galaxy's business strategy since the founding of the company.

We also launched sweep, a tokenized private equity fund in partnership with State Street Investment Management, and one of the few tokenized money market funds that offers 24/7 liquidity while also serving as eligible margin collateral on Galaxy's platform. Looking ahead to 2H26, we expect to raise the next vintage of the Galaxy Ventures franchise. Building on the early success and strong investment performance of our inaugural fund, we expect the 26 vintage to be larger and to continue to focus on blockchains, stablecoin, digital payments, and tokenization.

Since 2018, when we began investing balance sheet capital, our venture strategy has consistently delivered top-decile DPI relative to industry benchmarks across every vintage. That track record positions us well as we continue to scale our venture business onto digital infrastructure. Last quarter we discussed how every layer of the capital markets value chain is investing in infrastructure to support a financial system built on digital rails.

This investment is being driven by the significant operational and economic benefits that digital infrastructure can deliver, including lower operating costs, improved capital efficiency and collateral mobility, faster settlement, broader distribution, and the ability to bring new products to market more quickly. Over the past few quarters, we've seen a meaningful shift in how institutions are approaching this challenge. Increasingly, firms are moving beyond outsourcing core infrastructure to third-party providers and instead are looking to own and control the underlying technology themselves. And our platform has evolved alongside our clients' changing needs.

Rather than offering a single off-the-shelf solution, we've evolved our stack into modular building blocks that enable institutions to build digital asset servicing capabilities around their own operating models, spanning custody, key management, staking, trading, settlement, and wallet infrastructure. That strategy reached an important milestone in Q2 when we signed a multi-year agreement with Bank of New York, the world's largest custodian, to further advance digital asset infrastructure for institutional markets.

This agreement entails Galaxy serving as a design partner to BNY across the full range of digital infrastructure, including support for staking on BNY's digital asset custody platform. We already have a team of forward-deployed engineers on site and look forward to deepening that relationship over time. This engagement reflects the trust that leading financial institutions are placing in our technology and engineering capabilities, while also demonstrating our ability to monetize our best-in-class product and engineering talent through strategic engagements.

These engagements are inherently complex, requiring extensive solution design, commercial alignment, and deep technical integration over extended periods of time. We've spent several years investing in these relationships, and while these engagements have long development cycles, we're encouraged to see them beginning to translate into commercial opportunities. We believe these types of strategic partnerships position Galaxy at the center of the next generation of digital infrastructure. As capital markets continue to evolve, we're also continuing to expand our distribution through additional integrations.

Following BlackRock's selection of Galaxy as a validator for its Ethereum staking fund last quarter, Morgan Stanley Wealth Management has now selected Galaxy to help power staking for two new digital asset ETPs. Extending our role as a staking provider to the wealth industry, we also announced a new partnership that enables Morgan Stanley Wealth clients to lend digital assets to Galaxy and receive in-kind spot crypto ETPs through a new referral program. Since Q4 of last year, we've reoriented our business around the convergence of traditional and digital financial services, a structural trend we believe Galaxy is uniquely positioned to serve.

We brought our infrastructure business onto one single platform, aligned leadership, and added senior talent across product and technology to support it. Q2 showed that strategy translating into commercial results. New distribution partnerships are expanding our footprint and opening new channels for customers, which will help drive organic growth and recurring revenue over time. Turning to Data Centers, Q2 was the segment's first quarter of real operating financial results as we delivered all data halls to CoreWeave under the Phase 1 lease agreement prior to quarter-end.

As a result, beginning this quarter we'll be reporting a more detailed set of metrics in our financial statements and supplements. On the consolidated income statement, you'll see leasing revenue, which reflects the total contracted rent over the life of each lease, including annual escalators recognized under GAAP on a straight-line basis. Within our data center segment reporting, you'll also see operator revenue, which is the pass-through charges we recover from our customer for power, utility, and other related operating services, along with the equally offsetting associated operator expenses.

As with other segments, we will report adjusted gross profit and adjusted EBITDA for data centers. Non-GAAP measures, we believe, offer a clearer view of the segment's underlying performance for data centers. Specifically, adjusted gross profit will exclude the pass-through operator costs, thereby isolating economic profit that we actually generate from our operations. With that framework in place, data centers generated $20 million of adjusted gross profit and $11 million of adjusted EBITDA in Q2, both reflecting the phased delivery of data halls throughout the quarter.

Total data center operating expenses, excluding pass-through operator costs, were $21 million in the quarter, reflecting depreciation and interest expense that began recognition as the data halls were delivered. With Phase 1 now fully online beginning in the third quarter, we expect Phase 1 to generate its first full quarter of leasing revenue of approximately $80 million and a project-level adjusted EBITDA margin of over 90%. Data center CapEx was $448 million in Q2, up from $354 million in Q1. In the coming quarters, you should expect CapEx to continue increasing alongside the pace of construction at Helios.

This quarter, we also recognized a clean electricity investment tax credit of approximately $65 million. Given our Up-C corporate structure, only roughly half of this federal credit flowed through our P&L this quarter as a $32 million tax benefit on the data centers segment income statement. 5 billion in total liabilities, and we expect both to keep growing as we continue to scale the business.