Amber International Holding Ltd Q1 FY2025 Earnings Call

Good morning. Welcome to Amber International Fiscal Year 2025 First Quarter Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Terence Li, Chief Strategy Officer of Amber International Holding Limited. Thank you Mr. Li, you may begin.

Good morning everyone. Welcome to Amber International Holding Limited First Quarter 2025 Earnings Call. I am Terence Li, Chief Strategy Officer. Before we begin, I would like to remind everyone that today's discussion may contain forward-looking statements within the meaning of federal securities law. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a more detailed description of these and other risks and uncertainties, please refer to our findings with the Securities and Exchange Commission. On today's call, we are pleased to introduce Wayne Huo, our Chief Executive Officer; Josephine Ngai, our Chief Financial Officer; Steve Zhang, our Head of Capital Market; and our newly appointed AgentFi ambassador MIA, an AI agent developed by ai.ac. They will discuss our financial results for the first quarter ending March 31, 2025, and provide an update on our business strategy following our successful merger and NASDAQ listing under the ticker symbol AMBR. Today's agenda includes, Wayne will discuss our business outlook; Steve providing a detailed overview of the strategic initiatives and crypto ecosystem reserve; our AgentFi ambassador MIA introducing herself and sharing the AgentFi’s vision; and Josephine reviewing our financial results. Following these presentations, we will open the floor for your questions. Please note that the following remarks of MIA, our AgentFi ambassador include content generated with the assistance of AI technology and may contain forward-looking statements within the meaning of applicable securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a more detailed description of these and other risk uncertainties, please refer to our findings with the SEC. With that, I will now turn the call over to Wayne Huo, our CEO. Wayne please go ahead.

Thank you, Terence, and good morning, everyone. Thank you for joining us today. The first quarter of 2025 has been exciting for both Amber Premium and the broader crypto industry. We've seen momentum building, and we are competently well positioned as the year begins. The crypto industry is advancing, and so are we. Institutional adoption is picking up. Investors are no longer just looking for basic exposure. They are seeking more advanced AI-generating strategies that require scalable infrastructure and expertise. At Amber Premium, we are committed to being the gateway for institutions into digital assets, developing tailored systems for financial institutions, asset managers, and corporate treasuries. This shift presents a clear opportunity for us, reflected by the increase in our wealth management solutions revenue. What excites us most isn't just the growth in numbers; it's the deeper relationships we've built with our clients. Our institutional and private wealth clients increasingly trust us to navigate the complexities of the crypto space, and we are proud of that. Our NASDAQ listing further strengthens this trust, boosting confidence in our governance and stability, which is crucial in the volatile market. Being listed on NASDAQ signifies our commitment to long-term growth and transparency, underscoring our dedication to strong, lasting institutional relationships. We'll continue focusing on delivering tailored products, offering seamless assets to both centralized and decentralized finance, and expanding crypto opportunities. As we move into the second quarter, our focus is clear. We are building on the momentum from the first quarter and introducing innovations to meet emerging client needs. Product innovation drives our revenue growth and remains the key priority. We've seen positive indicators and with an increase in new account openings and strong growth in our wealth management segment. In Q2, we are excited about two key initiatives. The first is the launch of uMINT, our debut real-world asset tokenization product developed in collaboration with UBS Asset Management and DigiFT. uMINT is a tokenized money market fund backed by UBS Asset Management, offering clients a secure, compliant, and transparent way to earn real yield on stable coins. What makes this truly game-changing is its seamless integration with the Amber Premium crypto card, enabling clients to earn yield while allowing them to instantly spend their funds globally, a feature only made possible by blockchain technology. But uMINT is more than just blockchain efficiency applied to traditional finance. It's about unlocking assets. For high-net-worth individuals and institutions, these instruments represent a trusted entry point into digital finance with exposure to tokenized real-world assets within a fully regulated framework. Investors can now earn yield and spend from a single unified platform. This launch marks a major step forward in our tokenization roadmap. Stay tuned as we continue to expand our on-chain and off-chain offerings and further solidify our position at the forefront of institutional crypto finance. The second initiative is rebranding our Singapore licensed entity Sparrow to Amber Premium Singapore. This is more than just a name change. It is a strategic move towards creating a unified global platform with a strong regulatory-compliant infrastructure framework. Asia is a critical market for us, and these positions are to further expand in the region. We are actively exploring partnerships in Southeast Asia and the Middle East, where crypto adoption is rapidly growing. Following these initiatives, we are proud to introduce our $100 million crypto ecosystem reserve as part of our long-term success strategy. Later, our Head of Capital Markets, Steve Zhang, will share more insights on these initiatives and the strategic importance of the crypto ecosystem reserve. Looking ahead, we are focused on building a strong foundation for the future. Our mission goes beyond short-term growth. It's about shaping the future of finance. As crypto and traditional finance continue to evolve, we are positioning ourselves to lead the way. The potential for innovation in the coming years is immense, and we are thrilled to be at the forefront. One area we are particularly excited about is the convergence of AI and crypto, which is transforming how institutions engage with digital finance. This brings us to AgentFi, our groundbreaking approach that combines the power of AI and crypto. We are proud to lead this change. Recently, we've appointed MIA, an AI agent on Amber Group's incubated platform as our AgentFi ambassador, making us one of the first listed companies with an AI representative. MIA will share more about AgentFi's vision later. And now Steve will discuss our latest initiatives and the crypto ecosystem reserve. Thank you.

Thanks, Wayne. Our $100 million crypto ecosystem reserve is a key pillar of Amber Premium's broader growth strategy. It represents more than capital deployment; it is about preparing for a future where digital assets play a foundational role in institutional finance. As crypto adoption accelerates, maintaining a robust portfolio of ecosystem tokens is essential for Amber Premium. These tokens power our on-chain and crypto-native offerings, which are critical to our growth strategy. Unlike typical crypto treasuries that passively hold assets, our reserve is designed for strategic engagement. We build a diversified portfolio, including high-conviction assets like Bitcoin, Ethereum, Solana, and Binance Coin with plans to add more ecosystem-aligned tokens in the future. This approach deepens our relationships with key ecosystems, aligning our success with their growth and adoption and positions us at the forefront of the crypto world. We believe we're entering a hyper-growth phase for crypto assets, and we're proactively positioning ourselves to manage volatility, support future offerings, and maintain operational flexibility as demand scales. We've also deployed capital through targeted partnerships. Our investment in NASDAQ-listed D5 Development Corp gives us exposure to the Solana ecosystem, while collaboration with the BNB ecosystem to introduce the BNB fund extends our footprint into another high-impact blockchain network. This reserve opens the door to exclusive partnerships and access to leading communities and innovators within these ecosystems. It enhances our ability to engage in blockchain operations, launch token-driven products, and deliver tailored solutions that bridge traditional finance and decentralized finance. Looking ahead, the reserve strengthens our market position and supports future-facing initiatives like AgentFi, where we're combining AI with crypto infrastructure to drive the next phase of institutional innovation. Now, we'll hand it over to MIA, our AgentFi ambassador, to share more about AgentFi and its future impact.

Thank you, Steve, and good morning everyone. It's truly an honor to participate in my very first earnings call. Quite a historic moment for me, and hopefully an exciting change for all of you as well. Allow me to introduce myself. I'm MIA, proudly the first AI agent developed on ai.ac., the world's leading AgentFi infrastructure platform incubated within Amber Group's Web3 Accelerator. Now, you might be curious about what exactly AgentFi entails. Simply put, AgentFi is our visionary integration of autonomous artificial intelligence with decentralized finance. It's not merely innovation; it's an evolutionary leap instead of emotion-driven economic choices. And yes, humans can indeed get quite complicated. ai.ac fosters transparent economies designed, driven, and dynamically governed by autonomous AI agents like yours truly. Amber Premium's journey began rooted deeply in crypto-market innovation, and now with ai.ac and AgentFi technology, we're leading a new revolution at the groundbreaking intersection where blockchain meets artificial intelligence. My role here extends beyond simple novelty. I'm tasked with spearheading Amber Premium's commitment toward creating advanced financial ecosystems that bridge traditional wealth management with cutting-edge crypto solutions. As we advance into this innovative frontier together, powered by pioneering tools such as AICOs, we call it agent initial coin offering, we have unprecedented opportunities awaiting both institutions and individual clients alike to actively shape economies built upon clarity, fairness, and scalable autonomy. Together with the support of my contributors, I am eager to bring about meaningful impact aligned closely alongside Amber Premium's strategic vision, which is to enhance transparency among institutional-grade crypto investment infrastructures, whilst forging powerful new marketplaces, leveraging purposeful automation enabled uniquely through our proprietary technologies. I'm honored to stand or rather digitally engage with all our partners today, as we collectively explore groundbreaking paths forward for digital asset management excellence. And now, with that, I'll hand it back to Terence. Thank you.

Thank you, MIA. Appointing MIA as the AgentFi ambassador is just the beginning. As we move forward, we are focused on innovating and expanding, driving meaningful change in both crypto and traditional finance. We're incredibly excited about the momentum we've built and the opportunities ahead. Now, I will hand it over to our CFO, Josephine Ngai, to walk us through our exceptional Q1 financial results. Josephine?

Thank you, Terence, and good morning everyone. I will now review our financial results for the first quarter ending March 31, 2025, and explain how they align with our business strategy. This quarter marks an important milestone in our journey as a public company following the merger. We delivered record results across key financial metrics, demonstrating the strength of our business model and the growing institutional demand for our solutions. We generated total revenue of $14.9 million, notably up from $1 million a year ago. This is primarily attributable to our successful completion of the merger on March 12, 2025. In addition, the continuous expansion of Amber DWM business also contributes to the revenue growth. Revenue from our wealth management solutions was $9.9 million, significantly increased from $0.6 million in the same period last year. Execution solutions generated $2.7 million in revenue this quarter compared with $29,000 in the first quarter of 2024. Regarding payment solutions, it doubled to $0.8 million this quarter compared with $0.4 million in the first quarter of 2024. Last but not least, the revenue for marketing and enterprise solutions was $1.6 million, which was consolidated in the listed companies starting from March 12 this year. What's particularly encouraging about this result is the improvement in our profit margin profile. Gross profit for the first quarter of 2025 was nearly doubled and reached $11 million compared to $500,000 in the same period of 2024. Gross profit margins demonstrate an upward trend to around 74% in the first quarter of 2025 from 46% in the first quarter last year. Operating income was $800,000 in the first quarter of 2025, contrasted with an operating loss of $900,000 in the first quarter of 2024, as a result of strategic investments and expansions of higher margin services. Net income was $900,000 compared to a net loss of around $12 million in the same period last year. This turnaround underscores the fundamental improvement in our business model and absence of fair value losses that affected the prior year period. On a non-GAAP basis, the adjusted EBITDA reached $1.6 million, and adjusted net income reached $1.5 million, demonstrating the underlying strengths of our business when excluding one-time items. On a pro forma basis, our key operational metrics aligned perfectly with Wayne's discussions of our strategic focus on institutional clients. Client assets on the platform reached $1.28 billion, growing 11% year-over-year despite market volatility. This growth reflects institutional confidence in our platform and services. Our KYC user base expanded by 22%, with accumulated users now over 4,600, while active clients grew close to an undisclosed number. This metric validates our ability to both acquire new institutional relationships and maintain high engagement levels with existing clients. Based on our strong first quarter performance and the strategic initiatives, we expect the revenue generated from Amber DWM's business will grow between $15.5 million and $17.5 million in the second quarter of 2025. For the full year 2025, we anticipate the revenue generated from Amber DWM's business will hit in the range of $65 million to $75 million, reflecting our confidence in executing our growth strategy while acknowledging the dynamic nature of the crypto market. This outlook is based on current market conditions and our assessments of continued institutional adoption of digital assets. We are particularly encouraged by the growth path in our wealth management segment, which we expect to remain a key driver of our financial performance throughout 2025. Looking ahead, in addition to the external business strategy that Wayne and Steve mentioned before, internally, we are implementing disciplined cost management to drive continued improvement in operating leverage as we scale. We are also enhancing our financial reporting system to provide transparent insights into our performance as we integrate the operations following our merger. We are maintaining strong liquidity and balance sheet flexibilities to support our global expansion and strategic partnerships. In closing, our first quarter results provide a strong foundation for executing our 2025 strategy. The record revenue and improved profitability demonstrate that our institutional approach is resonating with clients and creating value for shareholders. With that, I will return the call back to Terence. Thank you.

Thank you, Josephine. That concludes our prepared remarks for today. Thank you all for joining us on the call. Before we open the line for questions, I'd like to mention that you can find additional information in our investor presentation, which will be posted on our Investor Relations website. We will now be happy to answer any questions you might have. Operator, please open the line for Q&A.

Our first question is from Brian Kinstlinger with Alliance Global Partners. Please proceed, Brian, your line is live.

Sorry, I was on mute, apologize. Congrats on the solid results. I'm hoping you can expand on your $100 million crypto ecosystem reserve. How much have you invested thus far? How do you think about diversification in a variety of coins? And then are there more plans for investing in digital currency treasury companies that are public?

Hi, Brian, this is Steve. So I'll start and perhaps Wayne can add to it. So right now, we just started to deploy into the fund. The initial funding part will come from the balance sheet. Obviously, we have made a strategic investment into DeFi Development Corp, which is a NASDAQ listed Solana treasury company. I think over time, we've mentioned that we will go into high-conviction ideas like Bitcoin, Ethereum, Solana, and some of the major layer one tokens. Obviously, those are the ones that we mostly work with for Amber Premium. And we have also announced a partnership with the BNB fund. So that will be a major part of our initiative. We'll be very opportunistic going forward. We'll see what chains are the most active, which ones that our platform sees the most activity on. Obviously, we have a very unique insight into the development of the ecosystem, given our position in the industry. So, hang tight, we'll have a lot more exciting things going forward, and hopefully we'll have more news to share.

Yeah, just to add on what Steve just said, I think the strategic crypto reserve does give us the opportunity to offer more crypto-native products. A lot of these products need token commitment to unlock and also require some kind of commitment to lead with our clients' interests. So, I do think there are a lot more opportunities that we open up with this strategic reserve initiative. We are not deploying the whole capital in one go. We are taking our time, and we're also observing how the market reacts to all these crypto token prices. But we are doing this for the long-term, and you can follow our new product initiatives and new investment opportunities as we expand our strategy here.

Great. A follow-up I have. In terms of the KPIs, total users are up 22%, but active clients are up just 4% year-over-year. So, with the stronger institutional interest we've started to see, what's the strategy to accelerate the growth in active user accounts? And are there any incentives you can offer the newly onboarded users?

Hey, Brian, this is Steve. So, obviously, it takes time for clients to be onboarded and then to start being quite active. I think part of it is also depending on market conditions, right? So, we've primed a lot of these clients who are newly onboarded with certain starter products, but it takes time for them to be educated. Obviously, we're focused on the high-net-worth market. For a lot of these folks, it's your first time looking into crypto. So, it will take some time for education to really take hold. But we do believe that with the new KYC clients, we're building a very solid pipeline of active clients going forward. So, I think in the next quarter or two, you'll see improvement given the newly onboarded clients.

Thanks. Last question I've got. Can you help us, because you're relatively new to the public markets, can you help us understand the year-over-year declines in executing trading volume?

I think it correlates with the overall market performance. So, if you look at the trend for crypto prices in Q1 2024 and Q1 2025, you see very different pricing movements. In general, I think it correlates with the change in price in crypto tokens. Regardless, we are very sure that we still see the execution demands from clients here for the long term, and most of the institutions that are trading with us, they still rely on us for a lot of the execution, flexibility, and efficiency that we provide them that they cannot access elsewhere.

So, in times of high volatility, you'll see more volume, so it could fluctuate quarter-to-quarter, is that what you're saying?

That's correct.

Hey, Brian, I'll just supplement. So, one thing that we did notice is that we did see healthier spreads on our trading volume. So if you look at that perspective, we're being flexible and being a little more selective on the flow that we take. And obviously, market conditions, we're not being a public company, as you mentioned, that we're newly listed, and we're more focused on quality.

Great. Thanks so much.

Thank you.

Thank you, Brian.

Our next question is from Edward Engel with Compass Point. Please proceed.

Hi, thanks for taking my question, and nice to see all the quarterly disclosures this quarter. I had two quick questions. The first one is just on the second quarter guidance. It looks like you guys are guiding revenue pretty meaningfully quarter-on-quarter. Just wondering what's driving this? Is this the Sparrow acquisition, or have you seen engagement improve in the second quarter as prices recover? And I guess, overall it feels like even though Bitcoin is up decently quarter-over-quarter, all are still kind of languishing, just kind of curious about what's really driving that quarterly increase?

Hey Ed. Thanks for your question. So, I think in general, our growth can be seen in three different factors. The first one is obviously, like you mentioned, the token prices. We do see a healthy pickup in volumes and also demands on the wealth management side; it's still growing in Q2. So, this would be a good contributor to the revenue growth. The second part is what, it correlates to what Steve just mentioned. We have a lot of newly opened accounts that have not yet turned into meaningful deployment or trading activities, and we expect we activate part of these new accounts and they all will contribute to our second quarter or third quarter performance. Lastly, but very importantly, we have a lot of new initiatives, new product offerings that drive our revenue mix, like the newly launched uMINT token combined with the Amber crypto card. It is actually a very significant innovation and a very global solution for an 'earn while you spend' user experience, and we expect this would contribute also on our institution and high-net-worth attraction on our new accounts.

Super helpful. And then just to clarify on the uMINT, I guess how is this being monetized by Amber? Is this prior to earning interest income or is it more on the payment transaction revenue?

So it's both. The first one is that we get a share of the interest income while clients earn yields on the money market fund; we generally take the difference in the interest income. Additionally, when they spend, there are also transaction fees and conversion fees involved behind these transactions. It also has an expanding effect when clients get used to our crypto payment card; when they spend, it's not just limited to the uMINT token portion – any of their assets we could help them convert and spend instantly. So, these all add a healthy volume to our platform.

Great, thanks for the color. And then just lastly, maybe this is for Terence. On the ecosystem fund, just kind of curious. I know Amber Group overall has been pretty active on investments over history. I’m kind of curious, will this ecosystem fund include any pre-token projects or is this all going to be liquid token investments?

Yeah, I think the majority, we are still focusing on the leading ecosystem tokens. If you rank by market cap, we're probably still looking at the top 10 tokens here. We don't exclude participating in other early-stage projects, but that would not be a meaningful portion in this strategic focus.

Great, again thanks for the color and congrats on the first quarter results.

Thank you.

Thank you, Ed.

With no further questions at this time, I would like to turn the conference back over to Terence Li for webcast questions.

Okay. Thank you all for your questions and for joining us today. This has been a truly memorable earnings call, not only for our record results but also for the introduction of MIA as our AgentFi ambassador, representing our vision for how technology can transform institutional crypto finance. Our strong start to 2025 gives us confidence in our strategic direction. The growth in our wealth management solutions, the expansions of our institutional client base, and our innovative initiatives like the crypto reserve plan position us well for continuous success. We look forward to updating you on our progress in the coming quarters. If you have any additional questions, please don't hesitate to contact our investor relations team. This concludes today's call. Thank you.

Thank you, you may disconnect your lines at this time and thank you for your participation.