Galaxy Digital (NASDAQ:GLXY) Q3 2026 Earnings Call

0:18 Good morning, everyone, and welcome to the Galaxy Digital third quarter 2026 earnings call. Today's call is being recorded. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your telephone keypads. To withdraw your questions, you may press star and two. At this time, I'd like to turn the floor over to Taylor Reinhart, Head of Investor Relations. Please go ahead.

0:47 Good morning and welcome to Galaxy's third quarter 2026 earnings call. Before we begin, Please note that our remarks, including answers to your questions, may contain forward-looking statements. Actual results may differ materially from those described in these statements as a result of various factors, including those identified in the disclaimers in our earnings release or other filings which have been filed with the U.S. Securities and Exchange Commission and on CDER+. 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, the information on this call does not constitute a recommendation, solicitation, or offer by Galaxy or its affiliates to buy or sell any securities.

1:37 With that, I'll now turn the call over to Mike Novogratz, founder and CEO of Galaxy, to discuss our results.

1:43 Good morning, everyone, and welcome, Taylor, to the Galaxy team. You guys will get to know her well and will like her as much as we do. Listen, we had an awesome quarter. I'm really proud of what the team delivered. But what excites me more is what performance says about where Galaxy is headed. We spent years investing ahead of two enormous shifts. Finance moving on-chain and the build-out of AI infrastructure. And we're increasingly seeing those investments translate into results, with the strategy playing out in three important ways this quarter. First, we saw a strong rebound in crypto markets. Bitcoin was up more than 40%, with a meaningful improvement in sentiment and client activity. Our global markets business capitalized on that momentum, growing trading volumes and expanding client engagement. We also saw significant appreciation across our investment portfolio, reflecting the value of capital we've deployed across crypto and the broader technology ecosystem.

2:39 Second, the opportunity in digital assets is getting bigger, and I think we're just scratching the surface of what's ahead. Crypto remains an important and growing asset class, but the opportunity extends well beyond that, with digital assets increasingly becoming the foundation for the future of finance. And increasingly, those two worlds are coming together. You can see it in the growing adoption of stablecoins, the tokenization of traditional financial assets, and the participation of major financial institutions. I have a tremendous amount of conviction that the financial architecture developed by the crypto industry will underpin much of how the financial system operates in the future. Galaxy has spent years investing in these capabilities, and we're still in early stages. I believe that that investment will translate into meaningful results over the next several years.

3:30 Regulatory clarity will be an important part of that. While the Clarity Act has not become law, unfortunately, the SEC and the CFTC are working towards clearer frameworks. There's still a lot to sort out, but the direction is encouraging. And investing ahead of these shifts has always been part of our strategy. We did it early in crypto, investing in companies and technologies that help build the ecosystem. Now we're taking that same approach to AI, increasingly investing in the next generation of companies through our investment strategies and our balance sheet. Third is data centers, where we're building a very sizable business. Helios has come a long way in the past year. We're now generating approximately $80 million of leasing revenue per quarter from phase one. As Phase 2 comes online next year, we expect to exit 2027 at an annualized leasing revenue run rate of between $800 and $850 million, based on our current delivery schedules. That is a substantial business from the capacity we've already leased, and the momentum is building.

4:32 We have significant additional approved power available to lease and a deep development pipeline beyond that. I want to address the timing of leasing announcement at Helios 2. Earlier this year, I spoke about the possibility of reaching agreement during the summer. We were in advanced discussions around a potential transaction, but as the market dynamic shifted material in late summer, we ultimately decided not to move forward on the terms being considered. The market for large-scale power via data centers has become increasingly constrained, while demand for capacity beginning in 2028 and beyond has strengthened. With more than 800 megawatts of secured power and supporting infrastructure, we believe Helios 2 is an even more valuable asset today than it was just a few months ago. And with a delivery plan for 2028, we have the flexibility to evaluate our opportunities and get the right deal.

5:23 We've built Galaxy by adopting the changing markets and being disciplined about where we commit capital. These are large, long-term agreements, and we're not going to compromise on terms just to meet an announcement date. We continue to have productive and active discussions with prospective customers with a focus on maximizing long-term value for shareholders. And as the Helios Campus scales, we're fundamentally changing the earnings profile of Galaxy. We've established a digital asset franchise with significant earnings power, growing opportunities for recurring fee-based revenue, and a data center business that's adding long-term contracted cash flows. Together, these businesses give us multiple drivers of growth and more diversified earnings base that we believe will make Galaxy a stronger, more durable franchise over time. We also have the balance sheet to back that ambition.

6:09 It's a competitive advantage that allows us to commit capital as a principle, invest in growth across our businesses, and take advantage of opportunities as they arise. We're focused on putting that capital to work where we see the most attractive long-term returns. That includes investing in our own shares when we believe they're trading at a meaningful discount. Thanks, Mike.

6:51 Starting with digital assets, one of the strengths of our global markets business is the breadth of solutions we can offer clients. We're seeing growing demand for more sophisticated trading and financing solutions, particularly as traditional financial institutions look to participate in decentralized markets through products and structures they're familiar with. We've spent years building capabilities for crypto native clients, and that experience gives us an advantage as traditional finance increasingly moves on-chain. We understand these markets, can move quickly, and have the flexibility to develop solutions for both groups. Lending is a great example. We've expanded the Galaxy On-Chain Financing Rate, or Gopher, which gives clients access to on-chain financing, alongside our Grove Financing Facility, which allows us to support more lending activity through external capital.

7:38 We're expanding our loan syndication, collar lending, and structured financing capabilities, broadening the range of clients and financing needs we can serve. We're seeing the same innovation across trading. Our derivatives business executes sophisticated options and hedging strategies for clients. And this quarter, we completed our first compute-linked derivatives transaction, extending our capabilities into an emerging market that we believe has the potential to grow into a sizable new standalone asset class. In asset management, we're expanding our investment strategies and product offerings to meet evolving institutional demand. During the quarter, we launched the Galaxy Sharplink on-chain yield fund, an actively managed strategy providing access to yield opportunities in decentralized finance through an institutionally managed SMA for a public company.

8:24 Sticking with on-chain asset management theme, SWEEP, the first-ever decomposable 24-7 on-chain money market fund in partnership with State Street Global Advisors, is now approaching $300 million of AUM, which we believe is an early signal of strong product market fit among first-mover institutions interacting with tokenized real-world assets. With Galaxy Digital Ventures, we are progressing towards a first close of Fund 2, expected towards the end of Q4, with a fund target size of $250 to $300 million. As an investor, you only win the right to raise a second larger fund once you've proven out a strong process and great returns. And the GEV team has done that with Fund 1, currently marked at 2.25 gross MOIC. In digital asset infrastructure, we're seeing growing momentum with some of the world's largest financial institutions and are expanding our capabilities and offerings across tokenization, custody, and staking to meet their evolving needs.

9:19 Staking is an area where we're seeing growing engagement with major institutions. Assets under stake grew 64% in the quarter to $4.6 billion. While this was primarily driven by price appreciation of the underlying assets in the quarter, we've also seen a number of large ETF providers begin delegating their ETH and SOL stake to Galaxy's infrastructure, driving over $400 million of gross new inflows in Q3 and subsequent to quarter end. And we expect additional sizable partner launches before year end. More broadly, our relationship with BNY announced this summer has been an important validation of our capabilities as we continue to deepen our engagement with leading global financial institutions. These are complex engagements with long sales cycles, but the potential is significant. Our objective is to become a long-term strategic partner as institutions build out their digital asset businesses, creating opportunities to expand relationships beyond an initial mandate and generate meaningful recurring revenue over time.

10:16 Turning to our data center business, we're continuing to deliver against our development plans while advancing a substantial pipeline of future opportunities. This was our first full quarter of leasing revenue from Helios, marking an important milestone as our development investments and long-term contracted revenues begin converting into realized contracted cash flows. Phase 2, which will deliver an additional 260 megawatts of critical IT capacity, is fully funded and under construction. Putting us in a strong position as financing for new data center developments become increasingly constrained. Both buildings and the supporting substation are progressing on schedule and within budget, building on our successful delivery of Phase 1. Structural steel installation is well underway on the first building, construction is advancing on the second, and key electrical infrastructure is being installed.

11:04 We expect construction activity to ramp significantly over the coming months, with data hall deliveries scheduled to begin in the second quarter of 2027. On permitting, we've secured the key environmental approvals required for ongoing construction at Helios. While certain additional approvals remain outstanding following Governor Abbott's September directive, we do not currently expect an impact to our construction progress or our anticipated energization timelines. Turning to Helios 2, to build on Mike's earlier comments, we saw several important shifts in market dynamics beginning in late summer that we believe have meaningfully strengthened our competitive position. Forward power availability has become increasingly constrained, with new power approvals more difficult to secure and delays in competing developments limiting the amount of large-scale compute capacity that can realistically be delivered between 2028 and 2030.

11:57 At the same time, we're seeing a meaningful increase in demand from hyperscalers, frontier labs, and neoclouds now looking to secure capacity for 2028 and beyond to support existing backlogs and future growth. Underlying demand for compute remains as strong as we've ever seen it. Financing markets have also become more selective, and we believe access to capital will increasingly favor developers with proven execution capabilities, high-quality counterparties, and financing structures that appropriately allocate risk. Having successfully delivered Helios Phase 1, with Phase 2 fully funded and progressing on schedule, we are building a track record that we believe will differentiate Galaxy in this environment. Meanwhile, the evolving regulatory and political landscape in Texas has created additional uncertainty around future data center development.

12:46 Based on our current understanding of the applicable requirements, we do not believe Helios 2 is subject to the same uncertainties facing certain other projects, further strengthening its relative attractiveness. Taken together, these developments have changed how we evaluate the opportunity at Helios 2. We're taking the time to engage with the right counterparties and evaluate structures that we believe can maximize long-term shareholder value for Galaxy. The focus of our active conversations is squarely on investment-grade hyperscalers or counterparties supported by investment-grade credit enhancements, considering not only headline economics and counterparty quality, but also critical lease terms, probability of execution, and future growth potential outside of the Helios campus. Beyond Helios 2, we've made meaningful progress through ERCOT's Batch Zero process.

13:36 As announced in September, five of our Texas Data Center projects receive conditional Batch Zero classifications, representing approximately 4.2 gigawatts of capacity. That includes more than 1.6 gigawatts of previously approved baseload capacity at Helios 1 and 2, which remains largely unaffected by the ongoing ERCOT process. Our three expansion projects, Caspian, Selene, and Helios III received study load classifications representing an additional 2.6 gigawatts of potential capacity. While we submitted Caspian for base load classification, ERCOT ultimately reclassified it as study load and our subsequent dispute for reconsideration was denied. Although that wasn't the outcome we had sought, Caspian remains part of the batch zero study, and we expect greater clarity on power allocation and anticipated energization timelines for these projects in April 2027, based on the timelines communicated to us by ERCOT.

14:34 These classifications cover a substantial portion of our broader development pipeline of more than 5.7 gigawatts, providing a foundation for potential growth well beyond the initial phases of Helios. Beyond our data center business, we're also investing in the growth of AI across the firm, with a focus on opportunities ranging from frontier model developers to emerging technologies at the intersection of AI and financial infrastructure. Through Galaxy Ventures and our broader investment activities, we're building on our experience gained from investing early in the digital asset ecosystem. To date, we've deployed more than $80 million across 11 portfolio companies via 17 investments, including SpaceX, Etched, Tarta, Orn, TRM Labs, and Architect. While these companies are all early in their growth journey, our current unrealized mark-to-market on that pool of investments is already 3.4x.

15:28 Importantly, our ambition extends beyond just generating returns for our balance sheets. Thank you, Chris and Mike. For the third quarter, Galaxy reported net income

15:55 Thank you for joining us. Firmwide operating expenses, excluding grossed-up transaction costs, digital asset impairments, and pass-through data center operator costs, were $161 million, compared with $147 million in the prior quarter. This increase was primarily driven by higher depreciation and amortization expense related to Helios Phase 1 entering full operation.

16:41 are operating businesses generated combined adjusted gross profit of approximately $150 million, up more than 75% from $86 million in the prior quarter, and adjusted EBITDA of $60 million, compared with approximately $1 million in Q2. On a segment level, starting with digital assets, the business generated $71 million of adjusted gross profit, up from $66 million in the prior quarter, reflecting increased client activity and the breadth of our platform. Within global markets, adjusted gross profit increased to $53 million from $49 million in Q2. Our digital asset trading volumes grew 12%, outperforming the broader spot market, where volumes declined, demonstrating the strength of our trading franchise.

17:28 In lending, our average loan book grew over 25% to approximately $1.8 billion, reflecting continued demand for our financing solutions. Asset management and infrastructure solutions generated $19 million of adjusted gross profit, compared to $17 million in the second quarter. Assets under management increased by over 30% to $5.9 billion, driven by growth of more than 40% in ETFs and 30% in alternatives. As Chris mentioned, assets under stake also increased more than 60% to approximately $4.6 billion, reflecting both market appreciation and new capital inflows. Fee growth was more modest during the quarter, as reported AUM reflects quarter-end balances, including capital raised late in the period, while fee revenue reflects activity throughout the course of the quarter.

18:19 Turning to data centers, we generated approximately $79 million of adjusted gross profit and $69 million of adjusted EBITDA, representing the first full quarter of contribution from Helios Phase 1. Capital expenditures were approximately $757 million during the quarter, compared with $448 million in Q2. We expect spending to increase as Phase 2 construction progresses, with a significant portion of the remaining construction expenditures anticipated in the first half of 2027. As a reminder, there are a few moving pieces related to interest income and expense in our data center's business that will affect our financials over the coming quarters. As financing proceeds are deployed into construction, our short-term investment balances and related interest income will decline. At the same time, a greater portion of our borrowing costs will be capitalized on the balance sheet rather than expensed through the income statement.

19:15 At quarter end, data center segment had approximately $6.8 billion in total assets and approximately $5.3 billion in total liabilities, reflecting continued investment in Helios and the financing secured for phase two. We do expect this segment's total asset base to grow as construction progresses and capital is deployed. The Treasury and corporate segment generated $419 million of adjusted gross profit during the quarter, compared with a $42 million loss in Q2, driven primarily by significant appreciation across our digital asset holdings and private investments during the quarter, including notable contributions from etched and forward industries, among others. As Mike mentioned, these investments reflect our ability to identify compelling opportunities across the digital asset ecosystem and broader technology ecosystem and represent an important source of long-term value for Galaxy.

20:09 We also held approximately $1.7 billion in net digital assets and investments at quarter end, up nearly 50% from Q2, including exposure to Bitcoin and other liquid digital assets. Thank you for joining us. with the structure of that financing being informed by market conditions, comparable transactions, and our assessment of the most attractive terms available.

20:54 We also have $445 million of exchangeable notes maturing in December 2026. We have the necessary resources on balance sheet to meet that maturity today, but are always evaluating different financing options in the context of our overall liquidity position and broader capital priorities. We exited the quarter with approximately $3 billion of book equity, with more than 80% allocated to our operating businesses, providing a strong capital foundation as we continue to scale. On share repurchases, we deployed approximately $79 million during the third quarter, and as Mike mentioned, we purchased the remaining portion of our previously authorized $200 million during the month of October. These repurchases have more than offset dilution from equity-based compensation, contributing to a net reduction in shares outstanding year-to-date.

21:44 The Board's approval of an additional $200 million authorization announced today allows us to continue opportunistically buying back stock when we believe it's trading at a meaningful discount to intrinsic value and it fits within our broader capital plan. With that, Operator, let's open the line for questions. At this time, we'll begin the question-and-answer session. To ask a question, you may press star and then one on your touch-tone phones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure the best sound quality. If at any time your question has been addressed and you would like to withdraw your question, you may press star and two. Again, that is star and then one to join the question queue. Our first question today comes from Patrick Molley from Piper Sandler.

22:33 Please go ahead with your question.

22:37 Hey, good morning, everyone. This is Will Kops on for Patrick. I want to go back to the comments on the Helios lease discussions from over the summer. Can you help us understand what led you to step away and what terms you need to see to deal you're willing to sign? Was it driven mainly by economics and revenue or potentially more by a counterparty and credit support or something else? Thank you. Hey, Will, good morning. Thank you for joining for the question. So as we said in the remarks, we had been pursuing opportunities throughout the year at early stages, given that Helios 2's energization timeline really isn't until the middle of 2028 at the earliest expected right now.

23:24 Those conversations got pretty serious going into the summer, and then a lot of stuff happened. We saw actual projects around us getting delayed. We saw regulatory headwinds, not just in Texas, but across the country, tightening up, and therefore an expectation that available power on the forward was going to be tighter than I think we or the market really understood. At the same time, we saw a number of financing structures start to come into the market, think like investment-grade wraps around non-investment-grade potential counterparties that we thought were interesting and that we were evaluating.

24:09 The issue there is the devils are in the details. And so an investment-grade wrap that doesn't actually achieve investment-grade protection for both our debt and our equity isn't really an investment-grade wrap. And you don't really know those things until you get into the details and you get to the finer points. And finally, to sort of back that up, the financing markets obviously around that time also started backing up. And the focus on structure, and counterparty really came into light for us and for the whole market. And so with all that as the backdrop, we decided to take a pause, take a breath, reignite conversations more broadly. And that sort of happened at exactly the same time that a number of the big hyperscalers started showing their attention to 2028 available power.

24:56 And so that's what led us to decide to broaden out the process. And that's why now we're in active conversations with a number of high-grade potential tenants who are now very focused on figuring out what their power strategy is for 2028. Got it. Thanks a lot. Our next question comes from James Yarrow from Goldman Sachs. Please go ahead with your question.

25:24 Good morning, and thanks for taking the question. I was hoping you might be able to update us on your current capital deployment priorities. in light of the new buyback program, the maturing notes at the end of the year, as well as the continued need to deploy capital into the data center segment. And could you speak to your appetite, I guess, or maybe just expand on your appetite to potentially replace the notes maturing in December with additional debt?

25:52 Yeah, sure, James. I'll take that one. So first, when we think about capital planning, we start with what is the business need across our two businesses, which obviously have different capital need profiles. But that is the first focus for capital requirements. We obviously have a funding and financing plan for the data centers. The digital asset businesses broadly tend to be self-financing in many ways as financial services oriented. And so we think of our business needs as the first priority. Secondly, I would say we think about a capital buffer and cushion on the balance sheet. Maintaining a healthy, strong, robust balance sheet, I think, is a very important principle from our standpoint. As we talked about, we have significant cash, stablecoins, and liquidity on balance sheet in addition to liquid investments on the balance sheet that we have the ability to shift around as necessary.

26:53 As you'll see, we've got about 80%, actually more than 80% of our capital now deployed into our operating businesses. We've talked about this over the last couple of quarters. You should expect that number to increase. as we see the investment in those businesses grow out. And then, third, we extinguished the buyback, the $200 million initial. We thought it was appropriate to have an additional authorization, but we will be very, I would say, opportunistic in how we think about deploying additional capital from a buyback perspective. The second part of your question, remind me, what was the second part of your question?

27:31 If you could just maybe just expand a little bit on the comments around The Exchangeable Notes, and I guess Appetite to replace that. I think you pointed out you have enough resources to not have to do so, but just maybe the moving parts there.

27:44 Yeah, yeah. Got it. Thanks. Yeah, so The Exchangeable. So we have $445 million of exchangeable notes maturing in December. Look, the way we think about that is, you know, first and foremost, we have the capital resources to pay that back in full without refinancing it. As you know, we did a convertible issuance project. That's super clear. Thank you so much. Our next question comes from Peter Christensen from Citi.

28:33 Please go ahead with your question.

28:35 Good morning. Thanks for the question. I wanted to ask about the digital assets part of the business. It generated a decent gross profit this quarter, yet EBITDA still negative. I'm just curious, what are some of the key investments that's suppressing profitability there, and how do you think for digital assets to become more sustainable, even though what do we need to see occur?

29:08 Yeah, so thanks for the question. This is Tony. I'll start and Chris can add as he sees fit. So I would say broadly, the second quarter, as we talked about in our comments, the broader landscape was volumes and activity in the crypto space were down. Obviously, the price of crypto is still something underlying that drives a lot of the activity in our markets. are all trading and derivatives businesses. We continue to outperform in that space. Our volumes were up on a quarter-over-quarter basis. We believe we're continuing to take share in those businesses. Our lending book grew about 25% quarter-over-quarter. and we're adding recurring revenue streams, which we think is the most important part of building a more durable business.

29:54 We do continue to invest. We are making investments in a few different areas that we've talked about, digital infrastructure, areas where we see future growth. And so as activity continues to pick up, I think we'll You should see us move closer towards consistent profitability in that segment. The other thing I'll mention, it's a bit nuanced, but we did have a small accounting adjustment in terms of how we accounted for certain things in the business that if not for that change on a quarter-over-quarter basis, we would have been profitable in that segment just this quarter. It's sort of a one-time shift. Other than that, Chris, I don't know if you have any other comments.

30:35 Yeah, I'll just supplement that a little bit. I think there's a few things going on in digital assets and the broader financial infrastructure markets that drive our thinking and our planning around profitability and what we're investing in. The key is, one, volumes in the narrow niche crypto market. obviously are suppressed and are a bit challenged at the moment. And our business generally is a pipe business where the more volume that flows through it, the more opportunity there is for us to generate revenue for the business, historically at least. Thank you so much for joining us. and many more.

31:55 Thank you. Very helpful. Our next question comes from James Fawcett from Morgan Stanley. Please go ahead with your question.

32:27 Thanks very much. Wanted to ask quickly on Helios One and working with Coreweave there, just any insight you can share with us around what you know about their agreements with their partners for not only phase one, but also if if that's going to, if that same partner is likely to also take on phases two and three.

32:59 Sure. Good morning, James. Thanks for joining for the question. So let me, I'll just, I'll set the stage for our relationship with CoreWeave, how it's set up and how we understand their contract restructure and how their business model works. And I think it's important and it's illustrative of Thank you for joining us. The way we think about that is that means that ultimately we face CoreWeave's entire portfolio of customers. And we face effectively CoreWeave's residual equity and interest in those contracts after their site level GPU secured financings.

33:52 That's pretty much the business model. That's our exposure. We like that exposure because what it means is that we are not subject to at our facility A single counterparty look through exposure in the instance where there's an idiosyncratic problem with that one counterparty. Corwee's portfolio of pretty much all the entire hyperscaler universe and most of the frontier labs is the credit that we look to across their whole portfolio. Corweave's contracts, while we don't have insight into all of them or into the specificity necessarily, Corweave generally contracts with its customers under four, I believe now the average is closer to five years as they reported, on a GPU hour basis generically, not on a facility level agreement. And so what that means is Corweave has the ability to balance their loads to their customers across their data center footprint.

34:52 That's important because it means that the answers to the question of who's the underlying tenant at Helios, by definition, can and we expect will change over time, both because they commit generic GPU loads to their clients and because we know that the tenors of their contracts are shorter than the leases they have to sign, by definition. We have been communicated by Tim from CoreWeave that the loads running today that we see every day on the screen in Helios One are coming from a customer contract that's currently allocated to a large multi-trillion dollar investment grade hyperscaler. We don't have insight yet into ultimately who's going to be in phase two, let alone phase three. That will happen as we get closer to energization and data hall turnover. And they decide at that point in time in 2027 where their load is needed and where they want to allocate load to a particular facility.

35:54 And so that's really the setup. I know that investors want to hear a direct look through to an investor-grade counterparty on the other side. It's just not the business model and not the way the contracts are set up at the CoreWeave side. And it's the platform and the risk that we underwrote when we originally did the transaction. That's not to say that there won't be opportunities if it's credit enhancing to look through to a direct customer and drop it down in SPV, for example, which we've seen happen once or twice in the market so far. But that sort of is downstream from... Corweave financing their GPUs and getting better execution on their GPU financing through an SPV direct deal and would come with our ability to approve or disapprove of any change in the tenant from the Corweave parent company down to a particular SPV.

36:48 And so we'll look at that on a case-by-case basis and evaluate it and assume it's credit enhancing. It's obviously something that we would engage with.

36:56 Got it. That's really helpful. And then back on the Helios 2 and kind of the engagement there, obviously I think we're all sensitive to the changes in some of the market dynamics, et cetera, that Mike alluded to and mentioned at the outset. Are there key market, incremental market changes or clarifications that we should expect to come through before we – would be able to announce a new tenant for Helios 2 or, you know, I'm just trying to get a sense of what the timeline and checklist is we should be paying attention to for that. Thanks.

37:42 Yeah, so the dynamics there, I tried to lay it out as clearly as possible in the prepared remarks. There's a few things that I would look towards. There's nothing today holding us back from executing on what would be a deal with an end tenant. The speculation around late summer and the timing and the conversation we're in, we could have signed a deal had we wanted to. A lot of that was in our control to make a decision to go forward. We proactively chose not to. because of the change in market dynamics. And that still sort of exists today. There is obviously Texas. There's a lot going on in Texas from a regulatory perspective. There are some key dates coming up.

38:33 In December, we expect to have clarity on audit results that we've submitted across the assets, including Helios 2. In April of 2027, we expect to get allocations of batch zero, study load, power, etc. All of those things are on potential tenants' minds. What I would say quite clearly is there are absolutely... are all investment-grade tenants who, despite questions around the ERCOP process, want to contract and lock up power. And when they do the work on our portfolio, in particular on Helios 1 and Helios 2, we think they generally come to the same conclusion we have, which is Helios 2 is a pretty unique asset in terms of when its studies were approved prior to the batch process.

39:23 and the likelihood that Helios 2 is going to be unimpacted generally by any of the uncertainty. But nonetheless, those dates are key. And for some of the tenant base looking at it, they're looking for Our next question comes from Devin Ryan from Citizens Bank. Please go ahead with your question.

40:08 Thanks. Good morning, everyone. I want to come back to Chris's comments on kind of broadening the pipes to be able to trade more, kind of a couple parts here. What else are you watching on regulatory guidance that you guys think is critical from here? And then assuming that progresses, how are you thinking about where Galaxy is best positioned to participate in tokenization, meaning How do you see Galaxy being able to compete with obviously well-funded incumbents that will likely be coming here as well? And then are there specific real-world assets that are more attractive to Galaxy? And then even beyond just trading and trade finance, how do you see Galaxy's potential infrastructure partner here as we kind of progress in this world of tokenizing more real-world assets and trading them?

40:57 Appreciate there's a lot in there, but just lots of thoughts. Thanks.

41:01 Yeah, hey, it's Mike. Listen, so our big bet is that the infrastructure that crypto created is going to end up being the infrastructure that a lot of the traditional world operates on. When that happens, we'll see, right? It is starting to happen. I is building towards that. Partly because they have to, because if it happens, they need to be there. One of our businesses that we're putting a lot of effort into and is growing is actually being the partner to help build that infrastructure for traditional finance companies. That's in some ways a fee or a SaaS business, but the real upside of that is once you get partnership The ancillary services, the trading, the potentially offering other products, that's where the growth of those things come.

42:02 We announced the one deal with Bank of New York. We are very engaged with a few other large participants. I think that's a good strategy. It's not going to dominate our revenue in the next 12 months. But when I look out 24 and 36 months, it's where I think we'll be a key part of that play. The second real angle is on-chain credit. Chris talked about a few of the deals we've already done. We have credit as part of our DNA. Chris came from a credit shop. It's been a big driver of our business since we started. And we are, you know, one of the leaders of on-chain credit today.

42:48 We think that business is going to continue to grow. And so building on-chain prime, building on-chain credit, on-chain asset management lives really on top of that. That, you know, I'd love to say in two years, we're really an on-chain – our digital asset business is really an on-chain digital asset business, and that's what we're driving towards. And that's what – when someone asks Tony about the investment dollars, they're all tech dollars, and they're all tech dollars and regulatory dollars going into that build-out. Great. Thanks, Mike. Our next question comes from Edward Engel from Compass Point.

43:33 Please go ahead with your question.

43:35 Hi, thanks for taking my question. Back in February, I think you kind of acknowledged maybe aspirations that you'd have a deal for Helios 2 within the next 12 months. Should we assume this timeline maybe gets extended by a little bit, just given that you walked away from the deal this summer? And then just quickly on Helios 1 financing, I think you last mentioned that the Phases 1 and 2 should have enough free cash to kind of sell fund Phase 3. Has that also changed just given maybe the exchangeable notes that are due and maybe some of these recent buybacks? Thanks.

44:11 Yeah. Hey, Ed. Good morning. I'll take the first part of the question. On Helios 2 leasing timeline, I think we've covered a lot of it so far. I think, you know, the The expectations around timing of signing a deal, let's start from the fact that Helios 2's energization timeline is expected to be in mid-2028. If you work back from mid-2028, that gives us 1.75 roughly years of room for both finding the right partner, negotiating the right deal, design planning, and then ultimate construction. While that's not infinite time, that is a lot of cushion that we have, which we appropriately think we should take. Thank you for joining us.

45:21 direct conversations with some of the largest companies in the world without an intent to ultimately transact. And we are in direct conversations with some of those companies right now. And so I'm pretty positive and pretty bullish on the opportunity set in front of us for that right now. And know that our end date solving backwards is to deliver those potential clients data halls in 2028.

45:50 on the second part of your question. So as you know, phase one and phase two are fully funded through the completion and end of construction. We will have the opportunity to refinance phase one if we think the economics make sense from a refi standpoint, which may give us the opportunity to take some additional capital out. But importantly, we do not need to do that. As we've said before, phase three is fully equity funded and through the project. We intend to pursue debt financing sometime in the first half of 2027, and the equity financing being fully available already is not changed.

46:33 Great. Thank you for that, Claire. Our next question comes from Brett Knobloch from Cancer Fitzgerald. Please go ahead with your question.

46:42 Hi, guys. Thanks for taking my question. On Just like the permitting environment, I think you guys touched on it briefly in your prepared remarks regarding kind of Helios 2. How critical is it to have all those permits in place before maybe we look to sign a lease there? And how are your customers thinking about maybe a permitting freeze and one if the election goes the other way in Texas that potentially could be extended?

47:12 Yeah. So on the permitting front, we could take this in a couple different tranches. One, for Helios 1 and 2 and 3 under development, we have all the permits in hand needed to begin and continue construction. There are still a handful of permits that the TCEQ primarily would issue and or approve that are not permits that would prevent us either from continuing construction or ultimately delivering and energizing data halls for the client.

47:57 They're unrelated to cooling. They primarily relate around the potential to operate, diesel gen backups, and some other like potable water and things on site. They're not limiters. All the permits we need for those things are in hand already. And for future developments that will require sort of those level of permits, They're months to years out from when we would actually need them to begin construction. And so we're just very confident that while today there's a permitting freeze, while ERCOT and all the stakeholders are attempting to comply with Governor Abbott's announcement, we're not of the belief that those timelines are going to intersect anywhere close to one another, that we have concerns that permitting is going to be an issue for us at Helios.

48:56 Perfect. Thank you guys. I appreciate it. Our next question comes from John Peterson from Jefferies. Please go ahead with your question.

49:05 Great. Thanks. Sorry to keep going on the data center stuff, but you outlined that some of the hyperscalers might be willing to secure power now even before final approval, or sorry, yeah, secure a lease here in power even before final approval is from ERCOT. But curious what you're hearing in the project financing market and if the debt markets are I guess willing to be that forgiving or if we have to get past that April deadline for, you know, any potential leases you signed today to be financed. And maybe also just kind of a follow-up, just I guess as you talk to potential lenders, like how much stricter are they being on different debt covenants and LTVs and LTCs and all those sort of metrics?

49:47 Yeah, so it's a very good question. From a counterparty perspective, we're not seeing, as you pointed out, we're not seeing broadly really any pushback to, hey, let's just not engage until we see clarity in Texas. People know power exists in Texas. People know power is there. affordable and getting cheaper in Texas. People know that that's going to be a tier one market, we believe, and they believe for a lot of time to come for these kinds of assets. And so the conversation we're having really, really, they want to understand the dynamics at play with our are all assets, but they're certainly willing to move past that pretty quickly. On the lender side, first and foremost, the existing facilities we have in place are not impacted at all by any potential perceived uncertainty around the Texas regulations.

50:54 There's no covenant breaches. There's no risk to capital availability in those facilities. Those are fine. On a go-for basis, I do believe the risk on investing capital in advance of knowing for sure whether you have the right to energize is a risk that we in theory would be taking should we choose to do that and therefore what lenders would be choosing to take along with us. And lenders generally are a lot more conservative than we would be as a developer in the equity. The good news for us is, as Tony pointed out, like our potential financing needs outside of our own capital start to get highlighted as we turn the corner into Q1, into Q2 of 2027.

51:42 And so from a timing perspective, we for better or for worse have the luxury of being able to assess the regulatory environment, see how December goes with respect to the RFI audit results, choose to deploy our own capital are at risk based on that landscape, and we really don't have to go to the markets to have conversations or will want to go to the markets to have conversations until there's a lot more clarity in 2027. And so not all of our competitors are in that situation. We happen to have the luxury of being able to do that, and we're happy with that. Okay, great. Thank you. Our next question comes from Joseph Voffey from Canaccord.

52:29 Please go ahead with your question.

52:31 Hey, guys. Good morning. Nice to see progress on all fronts here. I was wondering if we could kind of just drill down on the digital asset side of things. Is there anything particular to point to here on trading share gains in the quarter that you like to call out and then just the appetite to continue to expand the lending book? from here from a risk management point of view. Comments there would be appreciated too. Thank you.

53:04 Yeah. Hey, Joe, good morning. So on the trading side, I think factually the numbers are that our volumes grew 12% quarter over quarter and industry volumes were roughly flat. So I think from a pure share gain perspective, we continue to make incremental gains of market share. all be it in a fairly slow and tepid environment for traditional crypto assets. But the team is performing extremely well given that condition and Galaxy is getting stronger. On the lending side of the business, we did expand our lending footprint over the quarter pretty dramatically. I think we were up 27% quarter recorder average loan book size. We think there's huge opportunity in that space.

53:51 We think that we could probably grow faster If we wanted to, that's not always the right thing to do as a lender is grow whenever you can. And so we don't. We pick our spots and we choose them wisely. As I said in my remarks, the other thing we're really focused on on the lending side is we're pretty cognizant that you can't really just grow a lending business ad infinitum with a finite balance sheet, particularly a finite balance sheet that has a lot of uses across the company. The good thing is we do have the capabilities internally, and we think there's a very large opportunity to expand our structured credit offerings to originate loans, package them, sell them off, think more traditional financial debt capital market businesses.

54:40 in a whole new design space on chain that really has not been tapped yet in any size. And so I think you should expect us to both grow our balance sheet exposure to our loan book, but also be able to grow volumes outside of just our own balance sheet exposure. And the team is hard at work on creating structures, creating risk boxes so that we can do that responsibly for ourselves and potential clients and off-takers. And so more to come on that, but I think that's the future of the sea of our lending business.

55:11 Great. Thanks very much, Chris. Our next question comes from Chris Brendler from Rosenblatt Securities. Please go ahead with your question.

55:22 Hey, thanks.

55:23 Good morning, and thanks for taking my question. I wanted to follow up on the

55:26 The idea of the sort of modernization of financial infrastructure and this whole space moving on chain and Galaxy's position within that opportunity. You had the BNY this last quarter. Any other sort of color you could provide on your progress with partnering with traditional financial institutions and helping with this process and then zooming out a little bit, what does the revenue mix look like in digital assets as

55:54 If you are successful in capitalizing this opportunity, how much will the business move away from transactional and lending and trading activity and more towards either asset management, custody, or staking activities as you progress on that opportunity?

56:12 Thanks.

56:14 Well, certainly the goal is to move it away. in a large fashion. Part of that is how fast this stuff moves on chain. It's one of these things that my intuition is it'll go slow and then it'll go fast, kind of like the way people go bankrupt. It happens, it happens, and all of a sudden you're like, well, how did that happen? We haven't seen it yet. We're seeing lots of positive signs. Stable point use is a big part of it, but we haven't seen a wholesale shift to tokenization. People still trade normal equities, not tokenized. Partly, that's because most of the traditional players haven't built out their infrastructures. and so there is a scramble going on you know that we're part of for these institutions to build out their digital wallets, their custody, their staking abilities or to hire people to do their staking abilities for them and I think once that infrastructure shows up you very well might see that part of the business really start to grow and so we're walking that tightrope between making sure our and many more.

57:57 I'll just add, if you think about the revenue mix, I think that was your second question. To Mike's point, this build-out in infrastructure and adoption will take time, but one way to think about it is are more traditional businesses around trading, derivatives, lending, et cetera, will grow. The opportunity set will grow with the overall growth of the pie. So the mix may shift for us, but we think that the opportunity set for the more recurring fee-based revenue, as well as the more transactional-based, can grow together as the industry grows and adoption continues.

58:32 And the last piece I'll add on that is just from an infrastructure business model perspective, which I think is part of the question. We see the financial players in institutions around the world in two categories, or at least they pick and choose these two categories depending on the service needed. There's a we need to own it, own the underlying technology, own the underlying operating risk, or we are okay white labeling and contracting out. And so what we are doing today is we are selectively partnering with some of the largest institutions who need to own certain components think Baselair custody, think maybe like a custody allocation engine, et cetera, to help build that and we get paid to help build that.

59:19 That increases not only their capabilities, but our portfolio of capabilities to then offer as a platform service to those companies and everyone else for the components of those services that they are okay not owning and would rather contract out to create recurring revenue for us. And so the model is getting paid both upfront to help build, but also over time stacking a recurring revenue business for a platform service for both those customers and the long, long, long tail of middle market and lower market financial institutions who would never need to build and own their own capabilities.

59:57 That's fantastic, Tyler. Thanks so much. Our next question comes from Ben Summers from BTIG. Please go ahead with your question. Hey, good morning, and thank you for taking my question.

1:00:08 So kind of to build off the last one a little bit, I wanted to ask around the individual investor adoption of digital asset product offerings through Galaxy One. Seems like the TradFi institutional interest is significant, but kind of curious how Galaxy One could potentially contribute to the revenue mix over time.

1:00:25 Yeah, we haven't talked about Galaxy One in our prepared remarks or really questions a lot recently. We're actually under the hood, really excited about Not only what's going on there, but also the product roadmap. And so our assets on platform, while still relatively small there, have grown quite substantially. We're well north of $125 million, I believe, the last number I saw there, and growing fast. And on the forward, this year was really a build baseline capabilities and ensure that our retail-facing offering had a digital asset are all crypto related capabilities that were on par with what's available in the market. We still got a little bit work to do on there, but that was the big lift so far this year. What we look forward to next year in 2027 actually is rolling out expanded Brokerage capabilities across a number of different asset classes.

1:01:18 And our real focus there is not only just baseline capabilities to compete with existing big platforms, but actually offer much more higher end bespoke wealth management style access products and capabilities for high earners individuals with networks that they want to preserve and grow. And we have a really cool lineup of product roadmap on that front that we're really excited to start rolling out in Q1, 2027. So more to come on that, but we think the opportunity set is much broader than just offering crypto access and is going to be quite differentiated in 2027. Super helpful. Thank you for taking my question. Our next question comes from Michael Kim from Bloomberg.

1:02:06 Please go ahead with your question.

1:02:09 Hey, good morning. Thanks for taking my question. So I noticed that the average annual revenue assumption for phase two of Helios One just ticked down a bit from last quarter's forecast. So just wondering if you could maybe flesh that out in terms of or maybe with respect to your earlier comments around supply remaining constrained and demand strengthening as well as your competitive positioning. Thanks.

1:02:40 Yeah, Michael, it's Tony. I'll address the first part of the question and then if Chris wants to hit the other. So nothing has changed with regard to phase two and the revenue. It's simply a clarification of the recognition under lease accounting for gap purposes that we just wanted to help analysts clarify for their model building. Nothing fundamentally has changed. Phase two is exactly the same. Got it. That's helpful. Thanks. And our next question comes from Bill Pompensateo from Chardon Capital Markets. Please go ahead with your question.

1:03:21 Yeah, good morning. Thanks for taking my questions. We're hearing that long lead time item equipment procurement is becoming increasingly harder to come by. Just quickly here, how is the team strategizing equipment procurement for its uncontracted sites and lining that up with energization timelines? Any pressure there on Helios to build out timelines? Thanks.

1:03:49 Sure. So on the procurement side, our internal mantra is be early and be deliberate, but don't get too far ahead of yourself on demand. So it's always a delicate balance for us. Again, for us, we have the lowercase l luxury of having a balance sheet and resources available to us to allow us to lean in where we see potential future supply chain bottlenecks. We're now becoming a large, consistent buyer of a lot of the infrastructure. And so the big suppliers, while not on the same level as the hyperscalers, we are a key customer to critical infrastructure suppliers now.

1:04:36 And so we have the access and the ability to place deposits, lock up future capacity for ourselves. For example, for Helios 2 already, we've already committed approximately $230 million in deposits and purchase orders for future electrical infrastructure, mostly focused on long lead time equipment that early on we saw the potential for some supply chain disruption. It's not... I would not characterize supply chain for infrastructure today as something that's completely prohibiting and limiting from growth expansion. It's available. There are also new suppliers globally that are emerging that we have traveled around the world to meet with and evaluate as to whether the equipment meets the highest standards so that we can install into our infrastructure. And we've made substantial progress on that front, too.

1:05:32 Yeah. And our final question today comes from Martin Toner from ATB Cormark Capital Markets. Please go ahead with your question.

1:05:48 Thanks for taking my question. Mike is a very unique CEO because of his market sense. And so I wanted to ask Mike, what he thinks of the credit market? Your customers need a lot of money, right? seems like kind of a standoff to me. And I would love to hear what Mike thinks about it and how he thinks it'll be resolved and on what timeline, if he's willing to speculate.

1:06:21 You know, it's a great question. I mean, you know, you don't have to be living under a rock if you didn't realize there was stress in the credit markets recently. And the equity markets have sold off some, but not as dramatic as the stress one might have seen in the credit markets. That's happened for a few reasons, right? This war in Iran has kept oil prices over $100. That pushed up the 10-year yield, which pushed up the credit yield, and just the recognition of just how big this infrastructure build is going to be. And so I think partly pressure are higher rates as a base case is starting to be absorbed psychologically by the market.

1:07:09 We are not going to go back anytime in the short term to short-term interest rates at 1% or 2% and long-term rates below 4%.

1:07:20 There was a whole generation of traders and investors that started to live with that as their base case.

1:07:26 And I think we're going back to an era where short-term rates are probably between 4% and 6%, 4% and 5%, and the yield curve being more, you know, tending to be more steep. And so, in some ways, this is a one-time adjustment in psychology that is coming off of what was really an era that was abnormal historically. I do think this election is going to come and go, and there's going to be a lot of readjustment for the first week or two, and then, like always, economics take over from politics when it comes to markets.

1:08:15 The war will—if the war ends and oil comes down, if Trump attacks— and we end the war or we pressure them to end the war. I mean, there are people negotiating like crazy right now to try to end the war. And you get oil going back from 100 to 60, it's going to take a tremendous amount of pressure off the fixed income markets and hence the credit markets. And so Chris was saying we have the luxury of being able to wait to the turn of the first quarter, second quarter before we really need to tap credit markets. I'm thrilled with that because I know one thing. Tension never lasts forever. It always resolves itself.

1:09:00 There are bullets that Scott Besant has in his gun. We'll see if he uses them. Kevin Warsh will most likely raise rates, not the week before the election, but soon after. At one point, you slow the economy because you have to if that's what it takes. We have indigestion in the credit market. It is probably close to peak nervousness. There's not an easy path out, but I think time is going to heal this thing, and mostly that's going to be The good news is, you know, Meta is coming out and doing a monster equity raise.

1:09:47 Anthropic said they have $130 billion on their balance sheet. I think that was the number. It's going to raise another $100 billion. And so every time I see giant equity raises... I breathe a sigh of relief for the credit market, right? You could argue, is it good for the equity holders of those companies or not that they're being diluted? That's a separate discussion. But more equity, less credit is one way to think about it. And so this last week, to some degree, was good for the credit markets because we saw this massive amount of equity. And I don't think the belief in what's coming in AI is going away. Just yesterday, four of the most, to a layman, absurd math problems got solved by these machines.

1:10:41 And the breathtaking accomplishments of AI are going to start translating into medical advancements. And even consumer, if you look at the consumer apps, From Instinct to Muse to Grokbot, as consumers start using them, the demand for AI picks up, but also the acceptance of AI. And so it's going to be a politically charged issue, but this is the transformative technology that is literally going to change the world. And in some ways, we need it to win. like Galaxy is betting on it that it's going to win but quite frankly as an American we need it to win when I think of 41 trillion dollars of debt like the only way out is we have above average growth with lower inflation which is one of the promises of AI or at least one of the potentials of AI and so one of the reasons we've made this bet is because we're good patriots uh but we actually believe that this really and listen there's going to be a new regulatory framework that comes out sometime in the next 12 to 18 months.

1:11:53 That meeting at the White House, which looked like it was performative, wasn't just performative. They've come out with a bunch of things that are going to slowly be or quickly be instituted to make people feel better about AI safety. But that conversation is not going away either. We plan on being part of it, like being at the table trying to help guide. I think the best AI policy is one that keeps people optimistic. And so, you know, you might see some things that are perceived as small step backwards to go two steps forward. But this is, again, the country's making a long-term bet on AI. Galaxy is. And I think, you know, we're pretty optimistic it's going to turn out well.

1:12:41 That's great. Thank you very much, Mike. And with that, we'll conclude our question and answer session. I'd like to turn the floor back over to Mike for any closing comments.

1:12:53 Yeah, listen, I want to give a shout out to the Galaxy team. First of all, people have been working their tail off in all aspects of this thing. And also to our investors, nobody likes when their stock goes down or dislikes it as much as I do. We are working hard to build a company that, you know, Stock markets are weighing machines, and we really hope that in six months, 12 months, 18 months, and 36 months when we're weighed, the conclusion of the equity market is that we're worth a lot more than we are today. So that's our goal. Appreciate you, the questions, and appreciate the support. And with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.