Operator
Greetings. Welcome to Exodus Q2 2026 earnings webcast and conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to Benjamin Marcos from Exodus. Please go ahead.
Hi, everyone. Welcome to Exodus' second quarter, 2026 earnings call. I'm your host, Ben Marcos, and with us today are Exodus' co-founder and CEO, J.P. Richardson, Motivate CEO, Michael Roth, and CFO, James Granetsky. During today's call, we might make forward-looking statements. The company cautions investors that any forward-looking statement involves risk and uncertainties and is not a guarantee of future performance. Actual results may vary materially from those expressed or implied due to a variety of factors described in our earnings release, Form 10K, and other SEC filings. We undertake no obligation to update forward-looking statements. As always, we encourage investors to submit questions through X or Reddit following today's Today's call is our first opportunity to report on the Combined Exodus of Motivate organization. JP will begin with a strategic transformation underway at Exodus. Michael will explain the payments platform and combine market opportunity. And James will review the quarter's financial performance and the steps we're taking to build a more durable financial model. With that, let's go to you, JP.
Thanks, Ben. And thank you, everyone, for joining us. If there's one takeaway from today's call, it's this. Exodus is becoming a payments company. And this quarter, the transformation moved from plan to execution. Over the last few months, Exodus began to execute on the strategy we've presented to you in past calls, turning our company from one of the industry's leading self-custodial wallets to a diversified financial services platform built to help individuals and businesses manage and move money. Everything we'll discuss today builds on that theme. During the second quarter, we completed the most strategic acquisition in our company's history throughout the purchase of Montevate and banks. We spent the second quarter focused on integrating the businesses and creating a new combined organization that is optimized around the payments business. This is a strategic transformation. Again, we are becoming a payments company. We are fundamentally expanding our infrastructure and our enterprise capabilities to be a payments provider and a full-service fintech solution. Bonavate opens the door to a new enterprise payments market with associated revenue streams that are largely independent of the crypto markets. So Exodus gains capabilities to tap into and potentially monetize many billions of dollars of self-custodial wallets currently held by our users. Finally, the combination of our core wallet and Monovate's payment infrastructure enables us to build novel solutions for new markets, most notably, agentic payments. Our product roadmap is built around one goal, make Exodus more useful in our customers' financial lives and earn a stronger economic relationship with them over time. As a part of this transformation, we've made some fundamental changes to align with our long-term payment strategy and position Exodus for future profitability. A few weeks ago, I had to make the difficult decision to reduce the size of our team by approximately 25%, and we expect $10 to $13 million in annualized operating expense savings with a full monthly run rate in place in the fourth quarter of this year. I want to say I'm deeply grateful to everyone affected. They helped build this company and create a product that millions of people use to self-custody their digital assets. But as I looked ahead, I realized that our team was organized around who we were and not where we are headed. As you're going to hear from Michael in a bit, we are working closely with Monovate to bring our businesses together and create a new company purpose-built for the opportunities ahead. This quarter, we faced costs associated with business transformation, revenue was $26 million, the net loss of $19 million. Two key headlines about our financials. First, on revenue. Our revenue has remained relatively consistent over the past six months. This is despite the continued weakness in the crypto market and the incredible amount of time spent acquiring and integrating Monovate into Exodus. I am confident that our platform of direct users and enterprise partners is stable, is the foundation for growth ahead. Second, our net loss largely reflects the one-time operational expenses connected with combining the organizations. Looking forward, I believe our revised operating platform can support our growth plans without an associated increase in cost structure. shortly james will take you through this in more detail now i want to take a few minutes to orient you on the road ahead for exodus historically we have been known as a self-custodial wallet company we are modeled on wallet metrics viewed as a place to hold and manage digital assets and that made sense because it's the company we originally built our customers trusted Exodus to manage their assets, but our platform was limited. This is changing. Exodus Pay is a first example, moving beyond holding assets into everyday money movement. And the Monovate acquisition gives us the infrastructure to take that much further. These efforts are directed at our core base of 1.4 million active users with the goal of deepening our financial relationship with them. And while we are actively exploring ways to build our customer base, such as partnerships with UFC and DirecTV, our greatest near-term opportunity is with our existing users who already trust our platform. For Monovate, whose existing business is built around supporting both traditional commercial enterprises and on-chain finance clients, we see a significant opportunity for growth. Before that can be achieved, we are focused on strengthening Monovate's payments infrastructure and restoring capabilities that have been constrained for the past year. Specifically, Monovate's inability to issue new cards for new clients in Europe. This issue was known at the time of our purchase. It was a principal reason we were able to make this acquisition at such a favorable price relative to substantially higher valuations seen in other transactions such as RAINN, REIT, and BRIDGE. We always believed we could solve the issue, and the improvements we're making today operationalized the same capabilities we saw as significant untapped value when we acquired the business. I will let Michael from Monovate provide some additional details, but I'm pleased to say we've made meaningful progress over the past couple months, and we are on track to establish a new issuing arrangement during the fourth quarter. At the same time, we're also transitioning to a new domestic banking partner in the United States, which will accelerate our domestic capabilities to support interest in excess pay and enterprise payment clients. Excess pay growth is gated on the same issuance fixes, which is why we are holding off from reporting adoption metrics until the product is fully available. Together, these initiatives represent an important milestone in unlocking Monovate's full potential and position the business to contribute much more meaningfully as we move forward. One final point before I hand over to Michael. I've used the term Monovate throughout my remarks. When we say Monovate, we mean the combined teams, businesses, and relationships from both the Monovate and Banks acquisitions. The Banks brand is being retired. Its team and technology are folding into Monovate, and Monovate is our payments business going forward. Michael, over to you.
Thanks, JP. I'm pleased to be joining my first earnings call as part of Exodus. Over the past several months, I've spent considerable time with JP, James, and the broader leadership team. What stands out is the alignment around a clear, long-term vision, building infrastructure that bridges traditional financial services to on-chain finance, powering instant, borderless, and programmable movement of value for the world. Stablecoins are accelerating the modernization of financial services. With near real-time settlement, continuous availability, and borderless interoperability, they are improving how value moves across remittance, global payments, and tokenized assets. Combined with the coming revolution of commerce due to the proliferation of agentic payments use cases, both consumers and enterprises increasingly expect financial products to operate seamlessly across fiat and on-chain environments. That shift is driving demand for regulated infrastructure that enables these experiences to be delivered securely, efficiently, and at scale. That is precisely where Monovate is positioned. For those less familiar, Monovate provides regulated payments infrastructure that enables enterprises to launch and operate modern payment programs. Our platform includes card issuing, processing, settlement, bin sponsorship, stablecoin settlement, compliance oversight, and multi-jurisdictional operational support, allowing clients to move money safely and efficiently. As JP noted, we experienced a registry setback in Europe in late 2025 following a Bank of Lithuania inspection of Monovate UAB. Whilst Monovate UAB was not part of the Exodus transaction, it is important context. The outcome required is to tighten controls, pause new program onboarding in Europe, and offboard a limited number of programs while enhancements were implemented. Importantly, Monovate UAB has continued to service the majority of its existing customers throughout this period as we continue our work on the remediation. Europe remains a key strategic market and in July 2026, Exodus assumed W3C's rights and obligations under its existing agreement to acquire TixiPay, subject to regulatory approval by the Bank of Latvia. As a result, Exodus is positioned to acquire TixiPay, which holds the licenses required to help resume scaled business development across Europe and we view this as an important step in restoring and expanding our regional presence. As of the end of Q2, Manavate supports approximately 40 active enterprise customers. Since inception we have issued more than six million cards and processed over eight and a half billion dollars in transactions. Year-to-date, we've processed over $1.8 billion in gross transaction volume across more than 50 countries, supported by approximately 1.4 million active cards. Our customer base spans fintech, payroll, insurance, logistics, and on-chain businesses. Excluding the impact of one large concentrated client, transaction volumes grew by over 50% in the first half of 2026 compared to the prior year. I will return to that client in a moment. The strategic rationale for Exodus's acquisition of Monovate is straightforward. We provide the infrastructure layer for moving money. Our customers include CareerCard, MarTrust, ShipMoney, ViperLayer, OKX, Kraken and Gnosis to name a few, who span both traditional payment use cases and the digital asset ecosystems. Equally important is what Exodus enables for Monovate. Our enterprise clients now gain access to Exodus's capability in self-custody and digital asset infrastructure, creating meaningful opportunities for cross-sell and the development of integrated end-to-end solutions that bridge fiat and crypto. Integration is progressing well. Our priorities remain clear, maintaining uninterrupted service for customers, advancing technology integration, and executing on commercial synergies. Finally, on the large enterprise client referenced earlier, we supported a fintech in scaling what became a successful buy now, pay later platform in the UK. As they matured, they transitioned card processing in-house. They remain a client today, albeit at reduced volume. However, with potential to expand the relationship into new product categories over time. While this impacts concentration, it also demonstrates our ability to incubate and scale high-growth programs. Importantly, our business today is well diversified and not dependent on any single customer. With that, I'll hand over to James to walk through the financials.
Thanks, Michael. The second quarter represented the first quarter operating as a combined organization following the acquisition of Monovate and Banks. As JP and Michael discussed, this transaction fundamentally expands our strategic opportunity. From a financial perspective, however, acquisitions of this scale require a transition period as organizations integrate systems, align operations, and begin realizing efficiencies. Accordingly, we believe investors should evaluate this quarter through two lenses. First, the resilience of the legacy Exodus business, and second, how we're positioning the combined company to generate stronger and more diverse financial performance over the coming years. Revenue reported for the quarter totaled $26.2 million and a net loss of $18.6 million. Revenue was split approximately $21.2 million from Exodus and $5 million from Montevideo. On a non-GAAP basis, our total revenue for the quarter would be slightly higher, around $29 million. However, our reported results reflect Exodus's ownership of Monovate only for May and June. The non-GAAP total would be in line with the pro forma Q1 2026 combined revenue we published in July. For Exodus, both monthly active users and quarterly swap volume held generally constant from Q1 to Q2. at $1.4 million and $1.13 billion, respectively. Our swap volume is down year over year, but not inconsistent with continued price pressure we are seeing across the broader cryptocurrency market. Our other programs are relatively new and continue to scale. Once fully launched, we look to report adoption and usage metrics along the lines of our swap volume. As Michael mentioned, Monovate has processed $1.8 billion in gross transaction volume year-to-date, with Q2 accounting for approximately $900 million. On a normalized basis, this represents a 60% quarter-over-quarter increase across Monovate's core client base. Moving down to P&O, we had a net loss of $18.6 million and an EBITDA loss of $21.5 million. dollars. Both numbers reflect activities connected with combining two companies and accounting for acquisition-related expenses, technology integration, and restructuring costs. As such, we view these as transitional rather than structural, so we've also produced an adjusted EBITDA to highlight the strength of the core operating business. For the quarter, our adjusted EBITDA is a loss of 6.7 million dollars, with the primary adjustments coming from transaction expenses, and unrealized gains on digital holdings. Looking at the balance of the year, our operating budget will begin to reflect the organizational changes we announced last month. And with that, I'll turn it back to JP.
Thanks, James. Q2 marked the beginning of our transformation, not as completion. From here, we have three priorities. First, complete the integration of Exodus and Monovate while maintaining the service and trust our customers expect. Second, complete the operational and process improvements at Monovate to reactivate their global capabilities. And third, convert our more diversified revenue base and leaner cost structure into sustainable profitability and positive cash generation. We are not moving away from what made Exodus successful. we are building on it. The trust, technology, and direct customer relationships established through the Exodus wallet are now the foundation for a much broader financial platform. One that can power financial experiences for customers, businesses, and AI agents. We understand that investors will judge us on execution. Our responsibility is to demonstrate progress consistently in our products, our operating performance, and ultimately in our financial results. With these changes, we also believe we have the potential to fundamentally change how investors think about Exodus. Historically, we've been largely viewed as a company whose financial performance was closely tied to the crypto markets. While crypto will always remain central to who we are, that's no longer the complete picture. By expanding to payments and broader financial infrastructure, we're building a business with a significantly larger addressable market and more diverse revenue streams, and opportunities to generate growth that are less dependent on digital asset prices. We're leveraging the technology, regulatory expertise, customer relationships, and distribution we've spent more than a decade building, allowing us to expand into adjacent markets from a position of strength. For investors, the practical change is how you model us. Exodus is now two segments. One is cyclical swap and transaction revenue that moves with crypto markets. One is durable payments volume for Monovate, which grows with usage rather than asset prices. Exodus is becoming a payments company. We're incredibly excited about the direction we're headed. And although we do not believe the opportunity is fully reflected in how the market values the company, we remain focused on executing our strategy. Thank you all for your continued support. Okay, operator, now let's open the line for questions.
Operator
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And our first question comes from the line of Gareth Gassetta with Cander Fitzgerald. Please proceed.
Hey, guys. Thanks for taking the question. I just wanted to touch on the cost structure first. Could you maybe provide any color as to how much of the step-up in G&A this quarter was more of these one-time transaction-based expenses versus what may continue out on a run rate basis? And also on top of that, could you maybe weigh how you're thinking about the updated cost structure once some of the headcount reductions start flowing in as compared to kind of this newer cost structure? Thank you.
Yeah, thanks, Garrett. So I would say there's about $17 million in pure transaction-related incentive costs. There's about $5.8 million, you know, related to some professional services. And those are going to be the bulk of the one-time items there. If you're thinking about or as we think about the cost structure going forward, you know, I'll just point out that, you know, the integration is not fully complete yet. So, you know, we had, you know, the reduction in force that, you know, JP mentioned and that we conducted last month. And we are, you know, still actively, you know, working towards, you know, finding those synergies and efficiencies, you know, as part of a go forward organization, combined organization. And so, you know, definitely more to come on that. I think I would just highlight that we're not finished yet, you know, with that integration.
Great. That's really helpful. And I'd love to have Michael on the call, and that was some great color on kind of the profile there. But I'm wondering if you could touch on maybe what are some of those ancillary services outside of processing where you guys see kind of the greatest opportunity among the current client base?
