Antalpha Platform Holding (NASDAQ:ANTA) Q2 2026 Earnings Call

0:00 Good day, and thank you for standing by. Welcome to Antalpha's Second Quarter twenty twenty six Earnings Conference Call. Today's call is being recorded. All participants are now in a listen only mode. After management's prepared remarks, there will be a question and answer session. I'd now like to turn the call over to Chris Mamone, Managing Director of the Blue Shirt Group and representative on Antalpha's Investor Relations team. Mr. Mamone, please go ahead.

0:28 Thank you, operator, and welcome, everyone, to today's call. Joining me today is Paul Gang, Antalpha's chief financial officer. Please note the following. First, all year over year comparisons in today's call are for q two twenty twenty six versus q two twenty twenty five unless otherwise stated. Second, consolidated financial statements, including Aurelian, began from q four twenty twenty five. As such, q two twenty twenty five compared to the figures reflect Antalpha's stand alone results. Third, our remarks today will include forward looking statements based on current expectations. These statements involve risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to Antalpha's filings with the SEC.

1:15 We do not undertake any obligation to update forward looking statements except as required by law. This call also contains references to unaudited non GAAP financial measures. Reconciliations to the most comparable GAAP measures can be found in our press release and SEC filings. Now I'll turn the call over to Paul Young, who will provide the Q2 operating and strategic overview as well as the financial highlights and outlook. Paul, please go ahead. Thank you, Chris, and good day, everyone. Thank you for joining us today. The second quarter reflected a more measured financing environment across the digital asset ecosystem versus earlier periods, as many of our customers focus on liquidity management, operational efficiency, and prudent capital allocation.

2:09 Against this backdrop, we remain selective in deploying capital, optimize our funding structure, and maintain our high underwriting standards. Since inception, our objective have been to build a financing platform that delivers sustainable long term value for our clients and shareholders rather than maximizing loan growth in any particular quarter. We believe the strongest evidence of that approach is our record of zero principal loss since inception, achieved across a broad spectrum of market environments while building long term client relationship.

2:59 During the quarter, we strengthened the underlying economics of our financing platform while advancing our broader strategy of building a leader that provides financing, technology, and risk management solution solutions to the Web three industry. Further to this point, we made progress across NINA, our Web3AI business, and Aurelian expanded our capabilities in digital gold despite the short term accounting volatilities reflected in this quarter's financials. With that context, let me first provide an update on the operating performance of our key business during the quarter before turning into our financials.

3:53 Let me begin with ANTALPA Prime, which is our flagship financing platform and primary revenue and earnings contributor. During this quarter, we focused on preserving portfolio quality by maintaining prudent underwriting standards and executing with long term perspective. While financing activity moderated, we were highly selective in deployed capital, prioritizing long term risk adjusted return over short term loan growth. Most importantly, we maintain our record of zero principal loss since its inception. We believe this track record reflects the effectiveness of our underwriting standards, active collateral management, and comprehensive risk management capabilities across multiple market environments.

4:53 As institutional participation in digital asset financing continues to evolve. We believe these capabilities combined with the trust we have earned from our clients and funding partners will remain important competitive differentiators for ANTALpha Prime. As well, we deepen relationship with long standing clients while selectively originating new loans, reflecting the trust we have built through consistent execution across the market cycles. Although the total value of loans facilitated decline during the quarter, we view that as a reflection of both customer financing behavior and our selective capital deployment rather than a change of our long term opportunity.

5:56 Net fee margin improved year over year while funding costs remain broadly stable. Turning now to Nina, ANTAL plus proprietary agent take initiative. As we discussed last quarter, we firmly believe AI is becoming an increasing important layer of directory infrastructure through this ability to help users more efficiently discover information, analyze opportunities, and interact with decentralized applications. During the quarter, we made encouraging progress in further developing our Web three AI business.

6:50 We advanced several key product enhancements and expanded product availability through publicly available iOS and Android applications, making the platform more accessible to a much broader universe of adopters. CENA has now reached several thousand registered users across its website and mobile applications, with the majority of registered users completing at least one core product interaction, while Nina remains in the earlier stage of commercialization. It is very encouraging to see these initial engagement indicators.

7:37 Our near term focuses remain on product development, user engagement, and evaluating Nina's commercial potential. We look forward to keeping you updated on our progress. With that overview of our operating performance, now let me turn to our financial results for the quarter. Total revenue for the quarter was 12,200,000 ahead of the midpoint of our guidance. The revenue of this quarter down 28% year over year compared with $70,000,000 in the second quarter of last year. As a reminder, our prior year comparison included contributions from the Cango facility, which was almost fully repaid during the first quarter of twenty twenty six.

8:37 Excluding that facility, revenue declined just 15% year over year, primarily reflecting lower average loan balance across the remaining portfolio as financing activity moderated during the quarter. Looking at the composition of the revenue, technology financing fees were $7,700,000 down 40% year over year, reflecting lower financing activity and average loan balances. Offsetting this decline, technology platform fees increased 10% year over year to $4,500,000 primarily reflecting improved pricing in our margin loan business.

9:30 We believe the combination of financing and platform revenue provides a solid foundation for the long term development of our business. Turning to our loan portfolio. Total value of loans facilitated was $1,350,000,000 as of June 30, compared with $1,610,000,000 at the end of the first quarter. As discussed earlier, this reflected both more measured financing activity across the market and our disciplined approach to capital deployment. Cash rate financing reached approximately 30.9 exahash, representing approximately 3.1% of the global Bitcoin network hash rate at the quarter end.

10:24 From a lending economics perspective, we continue improving the efficiency of our business. Funding costs remain broadly stable at 69% of technology financing fee compared with 67 in the second quarter of last year, while net fee margin improved by approximately 10 basis points year over year, primarily driven by improved pricing within our margin loan portfolio. Turning to operating expenses. In q two, operating expenses that excluded fair value loss on crypto asset were 15,000,000, down 4014% year over year, reflecting time cost discipline amidst ongoing investments in our strategic initiatives.

11:21 These expenses include funding costs of $5,300,000 and non cash equity based compensation of approximately 1,300,000 GAAP operating loss was $25,100,000 compared with operating loss of $500,000 in the prior year period. Excluding noncash items, non GAAP operating loss was $23,800,000 Turning to the bottom line. Net loss attributed to ANTA was 12,500,000 compared with net income of 700,000 in the second quarter of twenty twenty five. As a reminder, Q2 twenty twenty five reflects ANTALVA's stand alone results as consolidation of Aurilion began in q four twenty twenty five.

12:18 Adjusted EBITDA loss was 27,400,000, including approximately 26,200,000 in unrealized loss related to XAUT and XAUE Holdings. Excluding the XAUT and XAUE related fair value movements, adjusted EBITDA loss was just 1,200,000 To put this consolidated result in context, ANTALpha remained profitable on a stand alone basis. Let me now discuss the performance of PRIME and Aurilin separately. ANTALPA Prime generated stand alone revenue of 12,200,000 during the quarter and operated profitably on a stand alone GAAP basis.

13:11 The business improved its operating economics through funding optimization while maintaining prudent underwriting standards throughout the quarter. Prime standalone adjusted EBITDA loss of $3,300,000 includes a $3,900,000 fair value loss related to Prime XAOE Holdings. Adjusted for the fair value loss, Prime generated $600,000 of adjusted EBITDA compared to a 4,000,000 in the prior year period, representing a 524% adjusted EBITDA margin, respectively. I will now turn to Aurilion's performance and our perspective on its role with ANTALPA's capital strategy and long term value creation.

14:05 As I mentioned earlier, Aurilion's reported results this quarter was primarily affected by unrealized fair value adjustment on its XAVT holdings. While these fair value movements significantly affected our reported consolidated earnings this quarter, They do not change our long term strategic rationale for the business. During the quarter, Aurilion contributed approximately $24,400,000 of operating loss, primarily reflecting approximately 22,300,000 of fair value loss as ex activity price declined from approximately 4,667

14:51 per unit at the beginning of the quarter to approximately 3,996 at the quarter end. Since June 30, ex AOT prices have been recovered to above 4,300 as of August 18, reinforcing our long term confidence in the value of tokenized gold and its potential as an on chain digital asset.

15:21 Turning to Aurilion's balance sheet. As of 06/13/2026, Aurilion's net asset value was approximately 91,900,000 reflecting 134,700,000 of digital asset and cash, including 33,318 unit of XOET and XOE AUE value at approximately 3,996 per unit, net of 42,800,000 of that. During the quarter, Aurelian completed the subscription of XLE with 8,000 units of XLET, which were staked into the protocol.

16:16 Based on our 42% economic interest, Aurelien represents approximately 29,000,000 of attributable net asset value. We continue to believe tokenized tokenized gold will play an increasingly important role in the evolving digital asset ecosystem.

16:39 As institutional adoption continues to broaden, we believe investor will increasingly see assets that combine the stability of traditional safe haven assets with the liquidity, transparency, and programmability of on chain infrastructure. In that context, tokenized gold can serve simultaneously as long as a long term store of value, high quality collateral, and a yield generating asset through protocols such as XLAE.

17:19 To sum up, we have full confidence in our long term strategy and are pleased that ANTALPA PRIME remains a resilient foundation for our current business while we actively explore growth enhancing opportunities.

17:38 With that, let me conclude with a few thoughts on our outlook and priorities going forward. We expect third quarter twenty twenty six revenue between $10,000,000 to $12,000,000 While the overall financing environment remains muted, our priorities have not been changed. We will allocate capital selectively, maintain our within right understanding standards, and strengthen the long term economics of our financing platform. We believe risk management remains the foundation of sustainable shareholder value creation, and we will execute with long term perspective rather than optimizing any single quarter financials.

18:29 More broadly, our objectives is to build an on ANTALpha Platform's strong foundation while selectively deploying opportunities where our capabilities in financing, technology, and digital assets can create long term shareholder value. Thank you again for your support and interest in ANTALpha. Operator, we are now open for questions. Thank We will now proceed to take our first question. You. And our first question comes from the line of Ed Engel from Compass Point. Please ask your question, Ed. Your line is open.

19:21 Hi, thanks for taking my question. Do you mind providing a little bit more detail on the yield that you're earning on the ex AUE holdings? And then I guess any yield that you generate, is that reported as income in the P and L? Or is that just marked as gains in financial assets or crypto assets?

19:40 Thanks. Thanks for the question. So as for your questions, the the earnings is not recorded as revenue. As you can see from the financial statements from ANTA is $12.212200000 for this quarter. They are purely from the lending business. And so it was recorded in in in the nonoperating platform. So and as for the yield, it's well, it's it's yield generating this quarter, although it's not significant, but but we we we see this is the first step for us to utilize rather than just sitting there holding Xevo key, and it's meaningful for us at least to have some revenue coming in.

20:46 Great. Thanks for the color. And then I guess just more broadly, as you think about recovery in Bitcoin and then your lending book, is there a level that you think Bitcoin needs to reach for maybe your customers to get back to breakeven and start reinvesting in their fleets? Or is there not really a specific Bitcoin number that you think needs to be hit or exceeded in order to grow your loan book again? Thanks. Thanks. I think at at this moment, it's a it's a very good question, but, I I don't think I have the answer. We we have to, monitor the market on regular basis. But, definitely, at this point, so we we are quite conservative, and our customers are also conservative to, to to have some more fund financing activities.

21:46 But we believe, if the the trading volume is going up, the price is going up, it's definitely is will be more active from from our point of view. Great. And so do you have an idea of what the average cost to mind is for your customer base?

22:06 I know you guys talked about that in the past. It's very it it it's it's case by cases. I I think there's a lot of factors Yeah. You you know, and the the mining machine, different types of mining machine, and and also, about the electricity price. And it's it's a very, difficult question to, I mean, to say it broadly, but, we do see some of our customers still generate rating profits on at this point of price. But yeah. But it depends. This all depends on, the location of the mining side, the electricity, what kind of models, mining machines they are using.

22:55 Great. Thank you for the color. Thank you. We will now take our next question from the line of Devin Ryan from Citizens Bank. Sorry, Devin, please go ahead. Your line is open. Hey, this is Noah Katz on for Devin. Thanks for taking my questions. First, I want to focus on your expansion into AI infrastructure with your AI agent, Nina. Per your comments, Nina has now moved beyond the initial launch and is generating early user engagement with several thousand registered users and more than half completing at least one core product interaction.

23:42 Can you outline for us your commercialization strategy for Nina? And also, as you look at the early activity, what are users engaging with most and what have you learned so far from the product? And how are these learnings shaping the product roadmap from here? Thanks. Thanks, Noah. Thank you very much, for the for the question. So, I think for Nina, it's still in the, very early stage. We are still validating the product. And the current focus, I think, is first to build a product, that our user find users, find find usable, improving the engagement and retention, and then expand functionally.

24:31 So currently, yeah, I I think for those, users, they well, the the in general, the, the interaction is quite baudy. They they see just, they ask about the trend of the, the trend of the Bitcoin price and and also and what's, what what kind of, applications are quite hot right now. So so we have kind of daily trends. Actually, I'm looking at my screen right now.

25:17 For example, they also ask a lot of, like, economic related questions. So there there's a question here in my screen. Is Bitcoin volatility collapse? Why are the traders saying nothing? Prince money? And yeah. So so there are different, well, they they are they are quite different. So, I would recommend that if you have time, you can just download, from the iOS or Android to to take take a look at at, what's going on there. It's quite interesting, I can say. So, currently, I think our goal is to may, make the app easier or for the web free users and so that they can, use to bring more information, and they can also, find some interesting trends on transaction related, stuff.

26:23 And so that so I think at this stage, it's still quite early. So and we will continue to improve the, product user experience. So is that I'm sorry. Is that can I did I answer most of your questions? That was that was very clear. That's that's helpful. I can definitely recognize that it's early in this industry, so definitely understand. If I can switch gears a little bit, talk more about the crypto lending market. We've seen periods of Bitcoin volatility that have impacted borrower demand and then the way lenders manage collateral and risk. Against that backdrop, can you walk us through the specific risk mitigation strategies you have in place?

27:18 And then looking forward, what does your outlook for the loan book look like? And what's giving you confidence in the direction of demand you're seeing? Thank you. Thanks. Thanks, Noah. It's a very good question. I think we take a conservative approach, to manage the credit risk as we also mentioned, during the call. And our framework combines careful underwriting over collateralization, active collateral management, and continual engage engagement with the clients. And, also, from mining related loans, collateral can also be built over time as the Bitcoin mine is also deposited with within the control wallet.

28:05 This provide an additional layer of protection. And and, I mean, there's no credit model is perfect. It cannot eliminate all the risks, but our experience through multiple market environments reflects the right the rigor built into our management process. And I think on the loan book, we expected expect to remain selective. I think the current constraint is not, the assets of capital, but finding opportunities that meet our risk adjusted return threshold.

28:53 And the SAP has remained relatively conservative, and we are not assuming a sharp increase in the near term. And we will continue to see demand actually, we continue to see demand from the existing and prospective customers, but the conversion into our new loan will be depend on the market stability, collateral quality, and also definitely the pricing. We have capital available to deploy when those conditions are met, but we are not to be to review a PBL simply for the sake of balance sheet or revenue growth for the next quarter.

29:49 So this, to us, is a long term business, and risk management is the first priority for us. We I think we need to stay in the market, especially in the bear market. And it's it's a long term long term business for us. I think over time, when a more stable distress environment in an improved borrower confidence, it's just it it should support a higher origination activity, but the pace of recovery will depend on on the opportunities we actually see. Yeah. I think that's probably what we can see at this moment at this market environment.

30:43 That's helpful. Thank you for answering my questions. Thanks, Noah. Thank you. That concludes the questions and answers period. Thank you again for joining our call today. You may now disconnect.