Exodus Movement, Inc 10-Q for FY2025 Q1
Exodus Movement, Inc. (EXOD)
About this 10-Q
Exodus Movement, Inc filed this 10-Q on May 12, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $36M
- up 23.9% from $29.06M a year earlier
- Net loss
- $12.87M
- compared with net income of $54.79M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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par value $0.000001 per share. |
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NYSE American |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 30, 2025, the registrant had
(1) We are a remote-first company. Accordingly, we do not maintain a headquarters. For purposes of compliance with applicable requirements of the Securities Act of 1933, as amended, and Securities Exchange Act of 1934, as amended, communications may be directed to the listed address.
Table of Contents
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PART I. |
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Item 1. |
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2 |
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Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income |
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Condensed Consolidated Statements of Changes in Stockholders’ Equity |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 |
Item 3. |
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Item 4. |
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PART II. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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i
Cautionary Note on Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”). All forward-looking statements are based upon our current expectations and various assumptions and apply only as of the date of this Quarterly Report on Form 10-Q. Our expectations, beliefs, and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs and projections will be achieved. Forward-looking statements are generally identified by the words “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “forecast,” as well as variations of such words or similar expressions. Forward-looking statements include statements concerning:
There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those expressed or implied by our forward-looking statements, including those set forth in the sections titled “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2025 (the “Form 10-K”). You should evaluate all forward-looking statements made in this Quarterly Report on Form 10-Q in the context of these risks and uncertainties.
We caution you that the risks, uncertainties and other factors referred to above and elsewhere in this Quarterly Report on Form 10-Q may not contain all of the risks, uncertainties and other factors that may affect our future results and operations. Moreover, new risks will emerge from time to time. It is not possible for us to predict all risks. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected and you should not place undue reliance on our forward-looking statements.
All forward-looking statements in this Quarterly Report on Form 10-Q apply only as of the date made, unless an earlier date is specified, and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q. Except as required by law, we disclaim any intent to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
1
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Exodus Movement, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share and par value)
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March 31, |
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December 31, |
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2025 |
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2024 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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U.S. dollar coin |
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Treasury bills |
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Accounts receivable |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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OTHER ASSETS |
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Fixed assets, net |
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Digital assets |
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Software assets, net |
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Other long-term asset |
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Indefinite-lived assets |
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Other investments |
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Total other assets |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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CURRENT LIABILITIES |
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Accounts payable |
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$ |
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$ |
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Other current liabilities |
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Total current liabilities |
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LONG-TERM LIABILITIES |
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Other long-term liabilities |
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Deferred tax liability |
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Total long-term liabilities |
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Total liabilities |
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STOCKHOLDERS' EQUITY |
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Preferred stock |
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$ |
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- |
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- |
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Class A Common Stock |
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$ |
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- |
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- |
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- |
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- |
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- |
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- |
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Class B Common Stock |
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$ |
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- |
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- |
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- |
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- |
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- |
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- |
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ADDITIONAL PAID IN CAPITAL |
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ACCUMULATED OTHER COMPREHENSIVE LOSS |
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RETAINED EARNINGS |
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Total stockholders' equity |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Exodus Movement, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited)
(In thousands, except per share amounts)
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Three Months Ended |
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Three Months Ended |
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REVENUES |
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$ |
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$ |
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EXPENSES (INCOME) |
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Technology, development and user support |
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General and administrative |
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Loss (gain) on digital assets, net |
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Impairment on assets |
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- |
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Staking and other loss (income) |
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Other loss, net |
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Interest income |
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( |
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(Loss) income before income taxes |
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( |
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INCOME TAX BENEFIT (EXPENSE) |
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( |
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NET (LOSS) INCOME |
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$ |
( |
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$ |
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OTHER COMPREHENSIVE (LOSS) INCOME |
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Foreign currency translation adjustment |
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( |
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COMPREHENSIVE (LOSS) INCOME |
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$ |
( |
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$ |
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Net (loss) income per share |
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Basic net (loss) income per share of common stock - Class A |
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$ |
( |
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$ |
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Basic net (loss) income per share of common stock - Class B |
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$ |
( |
) |
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$ |
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Diluted net (loss) income per share of common stock - Class A |
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$ |
( |
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$ |
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Diluted net (loss) income per share of common stock - Class B |
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$ |
( |
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$ |
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Weighted average number of shares and share equivalents outstanding |
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Weighted average number of shares used in basic |
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Weighted average number of shares used in basic |
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Weighted average number of shares used in diluted |
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Weighted average number of shares used in diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Exodus Movement, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(In thousands)
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Accumulated |
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Retained |
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Additional |
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Other |
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Earnings |
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Total |
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Class A |
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Class B |
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Paid In |
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Comprehensive |
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(Accumulated |
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Stockholders' |
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Shares |
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Shares |
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Capital |
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Loss |
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Deficit) |
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Equity |
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BALANCES as of January 1, 2024 |
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$ |
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$ |
( |
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$ |
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$ |
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Cumulative effect adjustment to the opening balance of retained earnings for adoption, net of tax |
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- |
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- |
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- |
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- |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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Issuance of Common Stock upon settlement of restricted stock units, net of shares withheld for taxes |
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- |
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( |
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- |
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Conversion from Class B to Class A |
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( |
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- |
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- |
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- |
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- |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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- |
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Net income |
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- |
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- |
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BALANCES as of March 31, 2024 |
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$ |
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$ |
( |
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$ |
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$ |
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BALANCES as of January 1, 2025 |
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$ |
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$ |
( |
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$ |
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$ |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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Exercised options |
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- |
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( |
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- |
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- |
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( |
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Issuance of Common Stock upon settlement of restricted stock units, net of shares withheld for taxes |
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- |
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( |
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- |
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- |
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Conversion from Class B to Class A |
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( |
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- |
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- |
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- |
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- |
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Foreign currency translation adjustment |
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- |
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- |
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- |
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( |
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- |
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( |
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Net loss |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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BALANCES as of March 31, 2025 |
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$ |
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$ |
( |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Exodus Movement, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
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Three Months Ended |
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Three Months Ended |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net (loss) income |
$ |
( |
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$ |
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Adjustments to reconcile net (loss) income to |
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Net cash (used in) provided by operating activities |
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Depreciation and amortization |
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Deferred tax (benefit) expense |
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( |
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Impairment of other assets |
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- |
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Loss (gain) on digital assets, net |
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( |
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Staking and other loss |
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- |
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Other loss, net |
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Stock based compensation |
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Accrued interest income |
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( |
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( |
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Other operating activities settled in digital assets and USDC (1) |
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( |
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( |
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Change in operating assets and liabilities: |
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Accounts receivable |
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- |
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Prepaid expenses |
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( |
) |
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Other current assets |
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( |
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Other long-term asset |
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Accounts payable |
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Other current liabilities |
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Other long-term liabilities |
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Net cash (used in) provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Investment in SAFE Note |
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( |
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- |
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Purchases of fixed assets |
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( |
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( |
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Purchase of treasury bills |
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- |
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( |
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Redemption of treasury bills |
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Purchases of digital assets |
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( |
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( |
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Disposal of digital assets held |
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Net cash provided by investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Repurchase of shares to pay employee withholding taxes |
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( |
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( |
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Net cash used in financing activities |
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( |
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( |
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Change in cash and cash equivalents, and restricted cash and cash equivalents |
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Cash and cash equivalents, and restricted cash and cash equivalents |
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Beginning of period |
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End of period |
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SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES |
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Non-cash issuance of stock |
$ |
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$ |
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Non-cash payment for fixed assets |
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- |
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Non-cash capitalized software costs settled in digital assets |
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( |
) |
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( |
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(1)
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Exodus Movement, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements
1. Nature of Business
Exodus Movement, Inc. (“Exodus” or “the Company” or “we”) was incorporated in Delaware in July 2016. The Company operates in the FinTech subsector of the greater blockchain and digital asset industry. The Company has developed an un-hosted self-custodial digital asset wallet on the Exodus Platform and contracts with third parties to provide various services to users that utilize the Company’s wallet through the platform.
2. Summary of Significant Accounting Policies
The accompanying condensed consolidated financial statements of the Company are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) on the same basis as the audited consolidated financial statements and in management’s opinion, reflect all the adjustments, consisting only of normal, recurring adjustments, that are necessary for the fair statement of the Company’s condensed consolidated financial statements for the periods presented. The unaudited condensed consolidated results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results to be expected for the full year or any other period.
These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2025 (the “Form 10-K”).
There were no changes to the significant accounting policies that were disclosed in Note 2 Summary of Significant Accounting Policies to the audited consolidated financial statements included in the Form 10-K.
Concentration of Revenue
Operating revenue from Application Programming Interface Providers (“API Providers”) exceeding
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Three Months Ended |
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Three Months Ended |
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Company A |
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$ |
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$ |
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Company B |
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Company C |
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Company D |
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Company E (1) |
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Company F (1) |
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(1)
Digital Assets
As of March 31, 2025, the Company held $
6
Fair Value Measurements
Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable:
Prices may fall within Level 1, 2 or 3 depending upon the methodology and inputs used to estimate fair value for each specific security. In general, securities are priced using third-party pricing services. Securities not priced by pricing services are submitted to independent brokers for valuation and, if those are not available, internally developed pricing models are used to value assets using a methodology and inputs that market participants presumably would use to value the assets. Prices obtained from third-party pricing services or brokers are not adjusted.
Recently Issued Accounting Pronouncements Pending Adoption
Expense Disaggregation Disclosures
In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, "Expense Disaggregation Disclosures" (herein, the "Update"). The Update aims to enhance disclosures regarding a public business entity’s expenses, specifically addressing investor requests for more detailed information on the types of expenses included in commonly presented expense captions such as cost of sales, selling, general and administrative expenses ("SG&A"), and research and development ("R&D"). The amendments in this Update require additional transparency on the breakdown of expenses, including purchases of inventory, employee compensation, depreciation, amortization, and depletion. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to financial statements issued for reporting periods after the effective date, or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of the Update on its financial reporting and will adopt the standard in accordance with the required effective date. In January 2025, the FASB issued ASU 2025-01 which clarifies the disclosure requirements for public business entities adopting the Update. ASU 2025-01 specifies that all public business entities should initially adopt the disclosure requirements presented in ASU 2024-03 in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of adopting the standard on the consolidated financial statements.
Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. This guidance only impacts footnote disclosures and will not impact our consolidated financial statements. The Company is currently evaluating the impact of adopting the standard on the consolidated financial statements.
7
3. Revenue Recognition
The following table presents the Company’s revenues disaggregated by geography, based on the addresses of the Company’s customers (in thousands, except percentages):
|
|
Three Months Ended |
|
|
||||||||||||||
|
|
2025 |
|
|
|
2024 |
|
|
||||||||||
Republic of the Marshall Islands |
|
$ |
|
|
|
|
% |
|
$ |
|
|
|
|
% |
||||
Hong Kong |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
British Virgin Islands(1) |
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
||
Seychelles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Saint Vincent and Grenadines(1) |
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
||
Other(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenues |
|
$ |
|
|
|
|
% |
|
$ |
|
|
|
|
% |
||||
(1)
(2)
The following table summarizes the revenue by users of the platform and the business-to-business partnerships for the three months ended March 31, 2025 and 2024 (in thousands, except percentages):
|
|
Three Months Ended |
|
|
||||||||||||||
|
|
2025 |
|
|
|
2024 |
|
|
||||||||||
Exchange aggregation |
|
$ |
|
|
|
|
% |
|
$ |
|
|
|
|
% |
||||
Fiat onboarding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Staking |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consulting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenues |
|
$ |
|
|
|
|
% |
|
$ |
|
|
|
|
% |
||||
(1)
The following table presents the Company's contract balances as of March 31, 2025 and December 31, 2024 (in thousands):
Balance January 1, 2024 |
|
|
$ |
|
|
Contract liability |
|
|
|
|
|
Performance obligation satisfied |
|
|
|
( |
) |
Balance December 31, 2024 |
|
|
|
|
|
Contract liability |
|
|
|
|
|
Performance obligation satisfied |
|
|
|
( |
) |
Balance March 31, 2025 |
|
|
$ |
|
8
4. Prepaid Expenses
The Company prepays certain expenses due to the nature of the service provided or to capture certain discounts. The table below shows a breakout of these prepaid expenses for the periods presented (in thousands):
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
Marketing |
|
$ |
|
|
$ |
|
||
Prepaid software |
|
|
|
|
|
|
||
Accounting, consulting, and legal services |
|
|
|
|
|
|
||
Prepaid cloud services |
|
|
|
|
|
|
||
Partner fees |
|
|
|
|
|
|
||
Prepaid insurance |
|
|
|
|
|
|
||
Prepaid expenses |
|
$ |
|
|
$ |
|
||
5. Intangible Assets
Indefinite-Lived Asset
Indefinite-lived assets consisted of the following (in thousands):
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
Indefinite-lived assets |
|
$ |
|
|
$ |
|
||
Indefinite-lived assets |
|
$ |
|
|
$ |
|
||
The Company purchased the exodus.com domain name in the first quarter of 2021 for $
Digital Assets
The table below outlines the fair value of our digital assets based on publicly available rates as of the dates presented as well as the cost (in thousands, except units):
|
|
Units |
|
|
Cost Basis |
|
|
Fair Value |
|
|||
As of March 31, 2025 |
|
|
|
|
|
|
|
|
|
|||
Bitcoin |
|
|
|
|
$ |
|
|
$ |
|
|||
Ethereum |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|||
Digital assets |
|
|
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
As of December 31,2024 |
|
|
|
|
|
|
|
|
|
|||
Bitcoin |
|
|
|
|
|
|
|
|
|
|||
Ethereum |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|||
Digital assets |
|
|
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
For the three months ended March 31, 2025, the Company recognized realized gains from exchange of digital assets of $
For the three months ended March 31, 2025, the Company recognized unrealized gains from remeasurement of digital assets of $
9
The following table summarizes other operating activities settled in digital assets and USDC (in thousands):
|
|
|
Three Months Ended |
|
|||||
|
|
|
2025 |
|
|
2024 |
|
||
Revenue |
|
|
$ |
( |
) |
|
$ |
( |
) |
Expenses |
|
|
|
|
|
|
|
||
Conversion of digital assets and USDC to cash |
|
|
|
|
|
|
|
||
Accounts receivable and other current assets |
|
|
|
|
|
|
( |
) |
|
Payroll liabilities |
|
|
|
( |
) |
|
|
|
|
Currency translation related to digital asserts |
|
|
|
( |
) |
|
|
|
|
Other operating activities settled in digital assets and USDC |
|
|
$ |
( |
) |
|
$ |
( |
) |
The following table summarizes the digital asset activities as of March 31, 2025 and December 31, 2024 (in thousands, except units):
|
|
|
BTC |
|
|
ETH |
|
|
Other |
|
|||||||||||||||
|
|
|
Units |
|
|
Value |
|
|
Units |
|
|
Value |
|
|
Units |
|
|
Value |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance, December 31, 2023 |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Adoption of ASU 2023-08 |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Balance, January 1, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Additions (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Disposals (2) |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Gains (3) |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Losses (3) |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Balance, December 31, 2024 |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Additions (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Disposals (2) |
|
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Gains (3) |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
|
||
Losses (3) |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Balance, March 31, 2025 |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
(1)
(2)
(3)
6. Fixed Assets, Net
Fixed assets, net, consisted of the following (in thousands):
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
Computer equipment |
|
$ |
|
|
$ |
|
||
Vehicles |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Fixed assets, gross |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Fixed assets, net |
|
$ |
|
|
$ |
|
||
Depreciation expense was less than $
10
7. Software Assets, Net
Software assets, net, consisted of the following (in thousands):
|
|
March 31, 2025 |
|
|
December 31, 2024 |
|
||
Internal use software |
|
$ |
|
|
$ |
|
||
Less: accumulated amortization |
|
|
( |
) |
|
|
( |
) |
Software assets, net |
|
$ |
|
|
$ |
|
||
The following summarizes the future amortization expense as of March 31, 2025 (in thousands):
|
|
|
|
|
|
|
Nine months ending December 31, 2025 |
|
|
|
$ |
|
|
2026 |
|
|
|
|
|
|
2027 |
|
|
|
|
|
|
2028 |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
Amortization expense was $
8. Stockholders’ Equity
The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to
In December 2024, our Class A Common Stock was listed for quotation on the NYSE American under the symbol “EXOD”.
In April 2024, our Class A Common Stock was listed for quotation on the OTCQX under the symbol “EXOD”. OTC Markets approval was received in April 2024.
In January 2024, our Class A Common Stock was listed for quotation on the OTCQB under the symbol “EXOD”. OTC Markets approval was received in January 2024 and in January the initial qualifying deposit was made and initial trades have occurred.
In December 2023, our Class A Common Stock ceased trading on tZERO Markets, LLC ("tZERO"), an alternative trading system that had the ability to support trades of our Class A Common Stock and transfers of our Common Stock Tokens. Our Class A Common Stock previously traded on tZERO under the symbol “EXOD”.
In October 2023, our Class A Common Stock ceased trading on Securitize Markets, an alternative trading system that had the ability to support trades of our Class A Common Stock and transfers of our Common Stock Tokens. Our Class A Common Stock previously traded on Securitize Markets under the symbol “EXOD”.
There is currently no public market for our Common Stock Tokens and we do not believe one will develop in the foreseeable future. Common Stock Tokens cannot be traded on the OTC market or any national securities exchange.
Stock-Based Compensation
Options and Equity Grants Issued
The 2019 Equity Incentive Plan adopted in September 2019 (the “2019 Plan”) permitted the Company to grant non-statutory stock options, incentive stock options, and other equity awards to Exodus team members, directors, and consultants.
In August 2021, the Company also adopted the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan permits the Company to grant non-statutory stock options, incentive stock options and other equity awards, such as restricted stock awards, to Exodus team
11
members, directors, and consultants.
Upon the approval of the 2021 Plan, the Company can no longer grant non-statutory stock options, incentive stock options, or other equity awards to Exodus team members, directors, or consultants under the 2019 Plan.
Terms of our share-based compensation are governed by the plan in which awards were issued.
The following table summarizes stock option activities for the three months ended March 31, 2025 and 2024:
|
|
|
|
|
Weighted |
|
||
|
|
|
|
|
Average |
|
||
|
|
|
|
|
Exercise Price |
|
||
|
|
Options |
|
|
Price |
|
||
Outstanding as of January 1, 2024 |
|
|
|
|
$ |
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding as of March 31, 2024 |
|
|
|
|
$ |
|
||
Outstanding as of January 1, 2025 |
|
|
|
|
|
|
||
Exercised |
|
|
( |
) |
|
|
( |
) |
Outstanding as of March 31, 2025 |
|
|
|
|
$ |
|
||
Vested and exercisable as of March 31, 2025 |
|
|
|
|
$ |
|
||
The following table summarizes RSU activities for the three months ended March 31, 2025 and 2024:
|
|
|
|
|
Weighted |
|
||
|
|
|
|
|
Average |
|
||
|
|
|
|
|
Exercise Price |
|
||
|
|
Restricted Stock Units |
|
|
Price |
|
||
Outstanding as of January 1, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Settled |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding as of March 31, 2024 |
|
|
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Outstanding as of January 1, 2025 |
|
|
|
|
|
|
||
Granted |
|
|
|
|
|
|
||
Settled |
|
|
( |
) |
|
|
|
|
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Outstanding as of March 31, 2025 |
|
|
|
|
$ |
|
||
We recognized stock-based compensation related to options and restricted stock units of $
12
Stock-based compensation is recorded on the Company’s condensed consolidated statements of operations and comprehensive (loss) income as follows (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Technology, development, and user support |
|
$ |
|
|
$ |
|
||
General and administrative |
|
|
|
|
|
|
||
Stock-based compensation |
|
$ |
|
|
$ |
|
||
As of March 31, 2025, total unrecognized stock-based compensation expense was $
9. Income Taxes
At the end of each interim period, the Company records income taxes by applying an estimated annualized effective tax rate to the current period income or loss before income taxes. The Company’s annualized effective tax rate is based on pre-tax earnings, enacted U.S. statutory tax rates, non-deductible expenses, tax credits, certain tax rate differences between U.S. and foreign jurisdictions, and specific events that are discretely recognized entirely within the interim period in which they occur. Exodus’ foreign subsidiary Proper Trust AG files an income tax return in Switzerland.
For the three months ended March 31, 2025 and 2024, the Company recorded an income tax benefit of $
Our effective tax rate for the three months ended March 31, 2025 was primarily impacted by the change in permanent differences, including the tax benefit from the foreign derived intangible income and non-deductible expenses, and discrete items, including stock-based compensation and tax effect of realized and unrealized digital asset gains and losses during the period. For purposes of recording the discrete tax expense related to digital assets, for the three months ending March 31, 2025 realized gains or losses are recorded to the Company’s current taxes payable and unrealized gains and losses are recorded to the deferred tax liability based on current period activity. The effective tax rate for the three months ended March 31, 2024 was primarily impacted by the change in permanent differences and discrete items, including the tax benefit from the foreign derived intangible income and the effect of digital asset gains and losses, specifically recognized in the period.
10. Commitments and Contingencies
Legal Proceedings
The Company is subject to a number of claims and proceedings that generally arise in the ordinary course of business, the outcome of which cannot be predicted with certainty. The Company does not believe that the liabilities from such ordinary course claims and proceedings will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. If the Company believes the losses are probable and can be reasonably estimated, reserves will be established. For matters where a reserve has not been established, the ultimate outcome or resolution cannot be predicted at this time or the amount of ultimate loss, if any, cannot be reasonably estimated. Litigation is subject to many uncertainties and there can be no assurance as to the outcome of the individual litigated matters. It is possible that certain of the actions, claims, inquiries or proceedings could be decided unfavorably to the Company or any of its subsidiaries involved. Accordingly, it is possible that an adverse outcome from such a proceeding could exceed the amount accrued in an amount that could be material to the Company’s consolidated financial condition, results of operations or cash flows in any particular reporting period.
13
11. Fair Value Measurements
The Company’s financial assets are summarized below as of March 31, 2025 and December 31, 2024, with fair values shown according to the fair value hierarchy (in thousands):
|
|
Carrying |
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
||||
March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
BTC |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
||
Treasury bills |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Money market funds |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
ETH |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Other digital assets |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Other investments |
|
|
|
|
(A) |
|
|
|
- |
|
|
|
- |
|
||
|
|
$ |
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
BTC |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
||
Treasury bills |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ETH |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other digital assets |
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Other investment |
|
|
|
|
(A) |
|
|
|
- |
|
|
|
- |
|
||
|
|
$ |
|
|
|
|
|
|
|
|
|
|
||||
(A)
The Company invests in held to maturity treasury bills. As of March 31, 2025, the discount rate was
Assets and Liabilities Not Measured and Recorded at Fair Value
The Company’s financial instruments, including USDC, are carried at cost, which approximates their fair value. If these financial instruments were recorded at fair value, they would be based on Level 1 inputs.
14
12. Earnings Per Share
The following table sets forth the computation of basic and diluted net income per share of common stock (in thousands, except per share amounts):
|
|
|
Three Months Ended |
|
|||||
|
|
|
2025 |
|
|
2024 |
|
||
Basic net (loss) income per share: |
|
|
|
|
|
|
|
||
Numerator |
|
|
|
|
|
|
|
||
Net (loss) income, basic and diluted |
|
|
$ |
( |
) |
|
$ |
|
|
Denominator |
|
|
|
|
|
|
|
||
Weighted-average number of shares used in per share |
|
|
|
|
|
|
|
||
Weighted-average number of shares used in per share |
|
|
|
|
|
|
|
||
Basic net (loss) income per share - Class A |
|
|
$ |
( |
) |
|
$ |
|
|
Basic net (loss) income per share - Class B |
|
|
$ |
( |
) |
|
$ |
|
|
Diluted net (loss) income per share: |
|
|
|
|
|
|
|
||
Denominator |
|
|
|
|
|
|
|
||
Weighted-average number of shares used in diluted |
|
|
|
|
|
|
|
||
Weighted-average number of shares used in diluted |
|
|
|
|
|
|
|
||
Diluted net (loss) income per share - Class A |
|
|
$ |
( |
) |
|
$ |
|
|
Diluted net (loss) income per share - Class B |
|
|
$ |
( |
) |
|
$ |
|
|
13. Segment Reporting
The Company has
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of Exodus’ financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 1A. Risk Factors” in the Form 10-K and “Cautionary Note on Forward Looking Statements” and in other parts of this Quarterly Report on Form 10-Q.
Overview of Our Business
We are engaged principally in the business of creating and distributing self-custodial wallets for digital assets. Because a majority of our revenue is derived from services provided by application programming interface (“API”) providers (“API Providers”) to persons located outside the United States pursuant to a transaction-based structure, our profitability is dependent on a number of factors including the pricing of digital assets, the volume of transactions and the quality of our third-party relationships.
Our revenues are primarily derived from digital asset-related transactions and consist of fees from third-party API agreements. These API agreements typically consist of transaction-based contracts and tiered subscription contracts where fees are generated based on transaction volume which is primarily driven by users interacting with the API providers.
Our expenses primarily consist of:
Based on the services offered and transactions conducted by API Providers, the following table shows the digital assets that are most material to our business by revenue.
Digital Asset |
API Provider Service(s) |
Blockchain(s) |
BTC |
|
|
Store of value and payment cryptocurrency |
Exchange Aggregation; Fiat Onboarding |
Bitcoin |
Tether |
|
|
Stablecoin |
Exchange Aggregation; Fiat Onboarding |
Ethereum, Algorand, Avalanche, Binance Smart Chain, Arbitrum, Polygon, Optimism, Solana, Tron, Fantom, Polygon, Solana |
Ether |
|
|
Blockchain economy or blockchain platform |
Exchange Aggregation; Fiat Onboarding; Staking |
Ethereum |
U.S. Dollar Coin ("USDC") |
|
|
Stablecoin |
Exchange Aggregation; Fiat Onboarding |
Ethereum, Algorand, Avalanche, Binance Smart Chain, Arbitrum, Fantom, Polygon, Optimism, Solana, Tron |
Other |
|
|
All other digital assets |
Exchange Aggregation; Fiat Onboarding; Staking |
Multiple Blockchains |
Known Trends and Uncertainties
Cloud based infrastructure expense – Cloud infrastructure expenses decreased by $0.1 million for the three months ended March 31, 2025 compared to three months ended March 31, 2024 primarily due to cost optimization efforts, including monthly reviews by the Development Operations team to reduce waste, improve instance efficiency, and minimize inter-zone transfer costs. We anticipate increased cloud infrastructure expenses as the platform continues to grow due to increased database capacity and new users.
Investment in human capital – Costs related to investment in human capital (including recruiting costs, salary, incentive and compensation costs) increased $2.9 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024 primarily due to an increase in salaries, stock based compensation and headcount. As the Exodus platform continues to expand, we anticipate the need to add more team members to accommodate the growth in our business, which is expected to materially increase
16
expenses as a result of the impact on the human capital costs described above. Human capital costs are also expected to increase due to the need to add additional team members to address compliance with the evolving regulatory environment, including as a publicly traded company.
Marketing expenses – Marketing-related costs increased $1.1 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase was primarily due to increased spending on website advertisements targeted at the digital asset focused spaces and on online platforms, such as the App Store, and marketing agency expenses. To date, we have primarily focused our marketing strategy toward user growth. We continue to evaluate our marketing strategy and in the future may decide to refocus the current organic growth-based strategy in growing our user base to a more competitive approach, which would be expected to further increase marketing-related expenses.
Changes in tax laws –We operate in various jurisdictions and are subject to changes in applicable tax laws, treaties or regulations in those jurisdictions. A material change in the tax laws, treaties or regulations, or their interpretation, of any jurisdiction with which we do business, or in which we have significant operations, could adversely affect us. For example, the new Pillar 2 approach, which came into effect in 2023 in certain jurisdictions, will establish a global minimum tax rate of 15%, such that multinational enterprises with an effective tax rate in a jurisdiction below this minimum rate will need to pay additional tax. While many aspects of the application of Pillar 2 remain to be clarified, including how the jurisdictions in which we operate, and those in which we and our subsidiaries are based, choose to implement the Organization for Economic Cooperation and Development’s approach in their tax treaties and domestic tax laws, we do not expect Pillar 2 to apply in 2025.
Growth Initiative and Transaction-Related Expenses
During the three months ended March 31, 2025, the Company incurred approximately $1.8 million in expenses associated with the evaluation, negotiation, and travel due to prospective business acquisitions. The Company expects these expenses to continue throughout 2025 as it continues to evaluate potential acquisition targets. These expenses primarily include legal and advisory costs and are recorded within general and administrative expenses in the accompanying condensed consolidated statements of operations. There were no growth initiative expenses in the three months ended March 31, 2024.
In addition, the Company incurred approximately $4.3 million and $0.4 million in revenue sharing expenses related to its business-to-business partnerships for the three months ended March 31, 2025 and 2024, respectively. While the Company does not control the operations or growth of its partners, their success can directly impact our own performance. As these partners grow or as new partnerships are formed, our associated revenue sharing expenses are expected to increase. These expenses represent costs of revenue and are included within technology, development, and user support expenses in the consolidated statements of operations.
Monthly Active Users
Monthly Active Users ("MAUs") were 1.6 million and 1.7 million as of March 31, 2025 and 2024, respectively, reflecting a period-on-period decrease of 0.1 million, or 6%. We believe this decrease in MAUs was primarily attributable to a negative movement in consumer-related sentiment related to the cryptocurrency markets primarily due to evolving macroeconomic factors including uncertainty surrounding current U.S. presidential policies, particularly related to tariffs and trade, which contributed to a broader risk-off environment, similar to what was observed in the equity markets during the three months ended March 31, 2025. These dynamics have led to increased market volatility and reduced user confidence across digital asset markets. leading to lower prices and decreased engagement. Our strategic focus remains on expanding our active user base, improving app features, and expanding our business-to-business partnerships. We believe that over the long term, interest in digital assets and digital asset markets will continue to increase. However, during any given period, we cannot be certain that our MAU growth efforts will be effective or that interest in digital assets will remain or continue to increase.
MAUs are defined as any user with activity history in any month. A user has “activity history” if, in the last calendar month, the user performed any activity within the application such as opening their application to check digital asset prices, reading news, or accessing the services of our API Providers. MAUs provide a measurement of user engagement, allowing management to compare engagement over time. MAUs consist of both funded wallets and unfunded wallets. Because Exodus users do not have accounts, users do not close an account. Therefore, users may be inactive one month and active the next as they re-engage with the platform. Management views increasing interest in the Exodus Platform over time as a key indicator of increasing revenue, especially for MAUs outside of the United States as the likelihood of revenue generating transactions increases as user interest increases.
Quarterly Funded Users
In addition to MAUs, we utilize Quarterly Funded Users (QFUs) to assess user trends and market sentiment. QFUs are defined as unique users with an Exodus wallet that was funded at any point prior to or during the fiscal quarter and during which the user remained active,
17
i.e. opening the app during the period. A wallet is considered “funded” if it holds a non-zero balance of any supported digital asset, QFUs offer a longer-term view of engagement by capturing users who have already funded their wallets.
QFUs totaled 1.8 million and 1.6 million as of March 31, 2025 and 2024, respectively, reflecting a period-on-period increase of 0.2 million, or approximately 13%. This growth reflects user engagement in addition to active user count. We expect MAUs to fluctuate more significantly in response to app usage patterns and broader market conditions. In contrast, QFUs provide a longer-term view of engagement, representing a more stable cohort—users with funded wallets actively participating in the Exodus platform.
We consider both MAUs and QFUs to be Key Performance Indicators (KPIs) that provide insight into user activity and platform engagement. While MAUs may fluctuate more significantly due to changes in app usage patterns and broader market conditions, QFUs offer a longer-term view of engagement by capturing users with actively funded wallets who are transacting on the platform. Management uses these metrics to monitor platform health, inform product and marketing strategies, and assess user trends over time.
Results of Operations
Results of operations for the three months ended March 31, 2025 and 2024 (in thousands):
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
$ Change |
|
% Change |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
REVENUES |
|
$ |
35,996 |
|
|
$ |
29,060 |
|
|
$ |
6,936 |
|
|
24 |
|
EXPENSES (INCOME) |
|
|
|
|
|
|
|
|
|
|
|
||||
Technology, development and user support |
|
|
14,893 |
|
|
|
10,704 |
|
|
|
4,189 |
|
|
39 |
|
General and administrative |
|
|
14,318 |
|
|
|
8,055 |
|
|
|
6,263 |
|
|
78 |
|
Loss (gain) on digital assets, net |
|
|
28,809 |
|
|
|
(56,799 |
) |
|
|
85,608 |
|
|
(151 |
) |
Impairment on assets |
|
|
137 |
|
|
|
- |
|
|
|
137 |
|
n/m |
|
|
Staking and other loss (income) |
|
|
136 |
|
|
|
(150 |
) |
|
|
286 |
|
|
(191 |
) |
Other loss, net |
|
|
447 |
|
|
|
244 |
|
|
|
203 |
|
|
83 |
|
Interest income |
|
|
(1,003 |
) |
|
|
(947 |
) |
|
|
(56 |
) |
|
6 |
|
(Loss) income before income taxes |
|
|
(21,741 |
) |
|
|
67,953 |
|
|
|
(89,694 |
) |
|
(132 |
) |
INCOME TAX BENEFIT (EXPENSE) |
|
|
8,868 |
|
|
|
(13,166 |
) |
|
|
22,034 |
|
n/m |
|
|
NET (LOSS) INCOME |
|
|
(12,873 |
) |
|
|
54,787 |
|
|
|
(67,660 |
) |
|
(123 |
) |
OTHER COMPREHENSIVE (LOSS) INCOME |
|
|
- |
|
|
|
- |
|
|
|
- |
|
n/m |
|
|
Foreign currency translation adjustment |
|
|
(254 |
) |
|
|
703 |
|
|
|
(957 |
) |
|
(136 |
) |
COMPREHENSIVE (LOSS) INCOME |
|
|
(13,127 |
) |
|
|
55,490 |
|
|
|
(68,617 |
) |
|
(124 |
) |
Revenue increased $6.9 million, or 24%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase was primarily driven by exchange aggregation revenue, which increased $7.1 million, or 26%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, which was primarily attributable to user growth and volume exchange growth related to our business-to-business partner efforts. Non-exchange aggregation (i.e., fiat onboarding, staking, consulting, and other) revenue decreased $0.2 million, or 5%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The non-exchange revenue decrease was driven by a loss in staking revenue and lower NFT revenue with a year-over-year decrease of $0.6 million as a result of lower total staked assets year-over-year and a decline in business-to-business NFT revenue due to reduced demand, while fiat and consulting revenue partially offset the decrease with year-over-year increases of $0.1 million and $0.3 million, respectively.
For the three months ended March 31, 2025, six API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $28.4 million. For the three months ended March 31, 2024, four API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $21.2 million.
The following table summarizes the revenue by users of the platform and the business-to-business partnerships for the three months ended March 31, 2025 and 2024:
18
|
|
Three Months Ended |
|
|
||||||||||||||
|
|
2025 |
|
|
|
2024 |
|
|
||||||||||
Exchange aggregation - users |
|
$ |
27,819 |
|
|
|
77.4 |
|
% |
|
$ |
26,030 |
|
|
|
89.5 |
|
% |
Exchange aggregation - partnerships |
|
|
5,988 |
|
|
|
16.7 |
|
|
|
|
720 |
|
|
|
2.5 |
|
|
Fiat onboarding - users |
|
|
1,129 |
|
|
|
3.1 |
|
|
|
|
1,008 |
|
|
|
3.5 |
|
|
Fiat onboarding - partnerships |
|
|
11 |
|
|
|
- |
|
|
|
|
3 |
|
|
|
- |
|
|
Staking |
|
|
588 |
|
|
|
1.6 |
|
|
|
|
645 |
|
|
|
2.2 |
|
|
Consulting - users |
|
|
37 |
|
|
|
0.1 |
|
|
|
|
- |
|
|
|
- |
|
|
Consulting - partnerships |
|
|
300 |
|
|
|
0.8 |
|
|
|
|
25 |
|
|
|
0.1 |
|
|
Other - users |
|
|
124 |
|
|
|
0.3 |
|
|
|
|
55 |
|
|
|
0.2 |
|
|
Other - partnerships |
|
|
- |
|
|
|
- |
|
|
|
|
574 |
|
|
|
2.0 |
|
|
Operating revenues |
|
$ |
35,996 |
|
|
|
100.0 |
|
% |
|
$ |
29,060 |
|
|
|
100.0 |
|
% |
Technology, development and user support increased $4.2 million, or 39%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase was primarily due to a $4.0 million increase in partner fee expense as a result of a correlated increase in revenue from business-to-business partnerships, a $0.7 million decrease in capitalized labor as a result of impairment of software projects, a $0.3 million increase in subscription expenses primarily driven by higher costs associated with key infrastructure vendors for development tools, application development, performance optimization and security protections, a $0.2 million increase in consulting expenses, partially offset by a $0.7 million decrease in team member compensation and benefit expense as a result of lower incentives awarded and a $0.1 million decrease in cloud infrastructure service costs due to cost optimization efforts,
General and administrative expenses increased $6.3 million, or 78%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. During the three months ended March 31, 2025, the Company incurred approximately $1.8 million in transaction-related expenses associated with the evaluation, negotiation, and travel due to prospective business acquisitions. The Company expects these expenses to continue throughout 2025 as it continues to evaluate potential acquisition targets. These expenses primarily include legal and advisory costs. In addition to these transaction related expenses, other expenses driving the increase include a $2.2 million increase in team member compensation and benefit expenses as a result of increased team member compensation, increased stock based compensation and increased headcount, a $0.3 million increase in legal and consulting expenses, a $1.0 million increase in meeting and travel expenses, a $1.1 million increase in marketing expenses, and a $1.0 million increase in political contributions, partially offset by a $1.4 million decrease in foreign currency expense.
The Company experienced an unfavorable fluctuation in the market price of digital assets held during the three months ended March 31, 2025, primarily driven by market volatility due to macroeconomic headwinds, including the Federal Reserve's revised economic outlook, with a lower growth forecast and a higher inflation outlook, and the looming threat of broader tariffs. During the three months ended March 31, 2025, the Company recognized net realized gains from exchange of digital assets of $5.1 million and net unrealized losses from remeasurement of digital assets of $33.9 million. During the three months ended March 31, 2024, the Company recognized net realized gains from exchange of digital assets of $4.0 million and net unrealized gains from remeasurement of digital assets of $52.8 million.
Income tax benefit was $8.9 million for the three months ended March 31, 2025, compared to an expense of $13.2 million for the three months ended March 31, 2024. The effective tax rate during the three months ended March 31, 2025 was 40.8% compared to 19.3% during the three months ended March 31, 2024. For the three months ended March 31, 2025, the change from the effective rate was primarily due to was primarily impacted by the change in permanent differences, including the tax benefit from the foreign derived intangible income and non-deductible expenses, and discrete items, including stock-based compensation and tax effect of realized and unrealized digital asset gains and losses during the period. For the three months ended March 31, 2024, the change from the effective rate was primarily impacted by the change in permanent differences and discrete items, including the tax benefit from the foreign derived intangible income and the effect of digital asset gains and losses, specifically recognized in the period.
Liquidity and Capital Resources
Overview
Our primary source of funding is from API fee revenues. We fund our operational costs from these revenues. Our primary use of funds is payment of our operating costs, which consist mostly of compensation and benefit expenses and security costs. As of the date of this filing, based on current operating plans, we believe that our existing cash and cash equivalents, treasury bills, USDC and digital assets, together with cash generated from our operations, will be sufficient to fund our operations and anticipated growth for the next twelve months and thereafter for the foreseeable future. We may seek to opportunistically raise additional capital through private or public equity securities offerings in the future.
19
We expect that increased market acceptance of digital assets and blockchain technology, combined with our expected continued growth of the Exodus platform, market acceptance of our services and ability to attract and retain users on our platform, should support our ability to generate sufficient cash to meet our requirements and plans for cash.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
|
|
Three Months Ended |
|
|
|
|
||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|||
Net cash (used in) provided by operating activities |
|
$ |
(6,166 |
) |
|
$ |
450 |
|
|
$ |
(6,616 |
) |
Net cash provided by investing activities |
|
$ |
33,694 |
|
|
$ |
9,552 |
|
|
$ |
24,142 |
|
Net cash used in financing activities |
|
$ |
(5,638 |
) |
|
$ |
(344 |
) |
|
$ |
(5,294 |
) |
Net Cash (Used In) Provided By Operating Activities
Net cash used in operating activities increased from March 31, 2025 to March 31, 2024 by $6.6 million. The primary drivers of the change were a net decrease year-over-year on digital assets of $85.6 million, an increase of $1.1 million in operating activities settled in digital assets and USDC, and an increase of $6.2 million in working capital, partially offset by a decrease in net income of $67.7 million. The primary drivers of the increase in operating activities settled in digital assets and USDC included an increase to revenue of $10.1 million related to increased transaction volume partially offset by $6.2 million of conversion of digital assets and USDC to cash for use in operational expense, $1.2 million of expense and $3.8 million in accounts receivable.
Net Cash Provided By Investing Activities
Net cash provided by investing activities increased from March 31, 2025 to March 31, 2024 by $24.2 million. The increases were related to $29.2 million of net change in treasury bills investments and redemptions and purchases of $0.5 million of digital assets, partially offset by $5.5 million of digital assets sold for cash.
Net Cash Used In Financing Activities
Net cash used in financing activities increased from March 31, 2024 to March 31, 2025 by $5.3 million. This was primarily driven by cash used for the repurchase of shares of our common stock to pay employee withholding taxes as a part of our 2019 and 2021 Plan.
Total Digital Assets and Liquid Assets
The following tables show the Company’s holdings of digital assets and cash and cash equivalents (including treasury bills with a maturity date of less than three months), USDC, and treasury bills with a maturity date of greater than three months.
The digital asset holdings as of March 31, 2025 and December 31, 2024 were (in thousands, except units):
|
|
Units |
|
|
Cost basis |
|
|
Fair Value |
|
|||
As of March 31, 2025 |
|
|
|
|
|
|
|
|
|
|||
Bitcoin |
|
|
2,011 |
|
|
$ |
81,833 |
|
|
$ |
165,978 |
|
Ethereum |
|
|
2,693 |
|
|
|
5,072 |
|
|
|
4,905 |
|
Other |
|
|
4,781,900 |
|
|
|
8,398 |
|
|
|
4,324 |
|
Digital assets |
|
|
|
|
$ |
95,303 |
|
|
$ |
175,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
As of December 31, 2024 |
|
|
|
|
|
|
|
|
|
|||
Bitcoin |
|
|
1,941 |
|
|
$ |
69,707 |
|
|
$ |
181,238 |
|
Ethereum |
|
|
2,655 |
|
|
|
4,967 |
|
|
|
8,847 |
|
Other |
|
|
10,036,242 |
|
|
|
7,882 |
|
|
|
6,274 |
|
Digital assets |
|
|
|
|
$ |
82,556 |
|
|
$ |
196,359 |
|
|
20
The liquid asset holdings as of March 31, 2025 and December 31, 2024 were (in thousands):
|
|
|
|
Carrying Value |
|
|
Quoted |
|
|
Significant |
|
|
Unobservable |
|
||||
As of March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
|
|
$ |
59,773 |
|
|
$ |
59,773 |
|
|
$ |
- |
|
|
$ |
- |
|
USDC |
|
|
|
|
1,308 |
|
|
|
1,308 |
|
|
|
- |
|
|
|
- |
|
Treasury bills |
|
|
|
|
1,695 |
|
|
|
1,695 |
|
|
|
- |
|
|
|
- |
|
Total liquid assets |
|
|
|
$ |
62,776 |
|
|
|
|
|
|
|
|
|
|
|||
As of December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
|
|
$ |
37,883 |
|
|
$ |
37,883 |
|
|
$ |
- |
|
|
$ |
- |
|
USDC |
|
|
|
|
12 |
|
|
|
12 |
|
|
|
- |
|
|
|
- |
|
Treasury bills |
|
|
|
|
30,490 |
|
|
|
30,490 |
|
|
|
- |
|
|
|
- |
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Total liquid assets |
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$ |
68,385 |
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Material Capital Commitments
Exodus currently has no material commitments for capital expenditures.
Critical Accounting Estimates
See the section titled “Critical Accounting Estimates” set forth under “Item 7. Management’s Discussion and Analysis of the Financial Condition and Results of Operations” in the Form 10-K. There have been no material changes from those disclosed in the Form 10-K.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Market price risk of digital assets
A large portion of our revenue generated from API providers is received in Bitcoin. A decline in the market price of digital assets had (and could in the future, have) an adverse effect on the Company's operations, the value of our digital assets, and our future operations and cash flows.
The market price of Bitcoin is impacted by a variety of factors and is determined primarily using data from various exchanges, over-the-counter markets and derivative platforms. The digital asset industry has previously been negatively impacted by market price volatility. Pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of Bitcoin. There can be no assurance that we will be able to exchange our digital assets for U.S. dollars on a timely basis, if at all, or for a fair price. If the value of our digital assets declines, or if we experience difficulties converting our digital assets to U.S. dollars, we may not have sufficient liquidity to satisfy our liabilities, expenses and costs as they become due, which may negatively affect our business operations and financial condition. A hypothetical 10% increase or decrease in the digital assets held would have resulted in a change to the fair value of $17.5 million and $19.6 million as of March 31, 2025 and December 31, 2024, respectively.
Interest rate risk
Our exposure to changes in interest rates primarily relates to interest earned on our cash and cash equivalents and U.S. Treasury Bills with maturities of approximately six months or less. We had no outstanding debt subject to interest rate risk as of March 31, 2025 and consequently, we do not currently expect to be exposed to fluctuations in interest rates for the foreseeable future.
Our investment policy and strategy related to our cash, cash equivalents, and treasury bills is to preserve capital and meet liquidity requirements without increasing risk. Our cash and cash equivalents consist of money market funds denominated in U.S. dollars, cash deposits, and treasury bills acquired with less than three months to maturity. Treasury bills outside of cash and cash equivalents include amounts acquired with three months to twelve months to maturity. Therefore the fair value of our cash, cash equivalents, and treasury bills would not be significantly affected by either an increase or a decrease in interest rates. A hypothetical 100 basis points increase or decrease in average interest rates applied to our daily balances held as of March 31, 2025 and 2024, would have resulted in a $0.6 million increase or decrease for both years, in interest earned on cash, cash equivalents, and treasury bills. The Federal Reserve has increased the Federal Funds Rate over 500 basis points since March 31, 2021 to control current levels of inflation and as of March 31, 2025, the Federal Funds Rate was 4.33%. A decrease in interest rates is possible. A hypothetical 500 basis points increase or decrease in average interest rates applied to our daily balances held as of March 31, 2025 and 2024, which hypothetical basis point increase corresponds closely to the increase of the Federal Funds Rate since early 2021, would have resulted in a $3.1 million and $3.2 million increase or decrease, respectively, in interest earned on cash, cash equivalents, and treasury bills.
Foreign currency risk
Foreign currency transaction risk
Revenues, expenses, and financial results of our foreign subsidiaries are recorded in the functional currency of these subsidiaries. Our foreign currency exposure is primarily related to transactions denominated in Swiss Francs attributable to cash and cash equivalents, and other intercompany transactions where the transaction currency is different from a subsidiary’s functional currency. Changes in foreign exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar may negatively affect our results of operations as expressed in U.S. dollars. We have experienced and will continue to experience fluctuations in our results of operations as a result of gains or losses on the settlement and the remeasurement of monetary assets and liabilities denominated in foreign currencies that are not the functional currency.
We recognized net foreign currency gains of $0.5 million and losses of $1.0 million for the three months ended March 31, 2025 and 2024, respectively, in general and administrative expense, net in the condensed consolidated statements of operations and comprehensive (loss) income. If an adverse 10% foreign currency exchange rate change was applied to total monetary assets, liabilities, and commitments denominated in currencies other than the functional currencies at the balance sheet date, it would not have a material impact on our financial results.
We have not, but may in the future enter into derivatives or other financial instruments in an attempt to hedge our exposure to foreign currency exchange risk. It is difficult to predict the impact hedging activities would have on our results of operations. Additionally, the volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. Our international operations increase our exposure to exchange rate fluctuations and, as a result, such fluctuations could have a material impact on our future results of operations and cash flows.
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Foreign currency translation risk
Fluctuations in functional currencies from our net investment in international subsidiaries expose us to foreign currency translation risk, where changes in foreign currency exchange rates may adversely affect our results of operations upon translation into U.S. dollars. We recognized losses on translation adjustments, net of tax, of $0.3 million for the three months ended March 31, 2025, compared to gains on translation adjustments, net of tax, of $0.7 million for the three months ended March 31, 2024, in the condensed consolidated statements of operations and comprehensive (loss) income. As of March 31, 2025 and 2024, a 10% increase or decrease on foreign currency exchange rates for translation purposes would not have a material impact on our financial results.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of, and under the supervision of, our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, 2025. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025 the Company’s disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting, as described below.
Previously Reported Material Weaknesses
We identified errors in our previously reported financial information as of and for the year ended December 31, 2021. As a result of the errors that were identified, we identified a material weakness in the Company’s control environment whereby the Company did not design and maintain effective internal control over financial reporting with respect to the expertise and quantity of its resources. Specifically, we did not effectively execute a strategy to hire, train, and retain a sufficient quantity of personnel with an appropriate level of training, expertise, and experience in certain areas important to financial reporting. In addition, we also identified a material weakness whereby we did not design and implement effective control activities based on the criteria in the Internal Control -- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO Framework”). Specifically, the control activities did not adequately (i) address relevant risks, (ii) provide evidence of performance, (iii) provide appropriate segregation of duties, or (iv) operate at a level of precision to identify all potentially material errors. These material weaknesses remain unremediated as of March 31, 2025.
Remediation Plan Update of Previously Reported Material Weaknesses
We have initiated the following remediation activities that were substantially completed as of December 31, 2024 designed to improve our internal control over financial reporting to remediate the material weaknesses, including the following:
We cannot ensure that the measures we have taken to date, and are continuing to implement, will be sufficient to remediate the material weaknesses we have identified or avoid potential future material weaknesses. While we believe the steps taken to date and those planned for future implementation will improve the effectiveness of our internal control over financial reporting, we have not completed all remediation efforts. The material weaknesses cannot be considered remediated until applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. As we continue to evaluate
23
and work to remediate the control deficiencies that gave rise to the material weaknesses, we may determine that additional measures or time are required to address the control deficiencies or that we need to modify or otherwise adjust the remediation measures described above. Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting.
We believe that the steps detailed above, are substantially implemented and once successfully tested, will remediate the identified material weaknesses.
Changes in Internal Control over Financial Reporting
Except as described above with respect to our remediation plan, there have been no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
The information required with respect to this item can be found in Note 10, “Commitments and Contingencies—Legal Proceedings” to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
In our report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on March 6, 2025, we identify under Item 1A important factors which could affect our financial performance and could cause our actual results for future periods to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statements made in this Form 10-Q. See the section entitled “Cautionary Note on Forward-Looking Statements” in this Form 10-Q. We may also refer to such disclosure to identify factors that may cause results to differ from those expressed in other forward-looking statements made in oral presentations, including telephone conferences and/or webcasts open to the public.
Except as set forth below, there have been no material changes in our risk factors from those previously disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024.
Changes to business-related risks regarding tax information reporting obligations.
On April 10, 2025, President Trump signed House Joint Resolution 25 (H.J. Res. 25) into law. This legislation provided for congressional disapproval under chapter 8 of title 5, United States Code, of the rule published by the Internal Revenue Service on December 27, 2024 relating to "Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales” (the “Rule”). We previously listed this rule as a business-related risk that would have caused us to invest substantially in new compliance measures because we would have been treated as a broker for tax purposes of reporting for sales of digital assets effected on or after January 1, 2027. Following H.J. Res. 25 being signed into law, we believe this rule no longer poses a business-related risk.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(c) Trading Plans
During the three months ended March 31, 2025, no director or Section 16 officer
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Item 6. Exhibits
Exhibit Number |
|
Description |
|
3.1* |
|
Amended and Restated Certificate of Incorporation of Exodus Movement, Inc. |
Incorporated by reference to Exhibit 3.1 to the Company’s Form 10 filed on February 28, 2024. |
10.2* |
|
Amended form of API Agreement (U.S. Crypto-to-Crypto Exchanges) |
Incorporated by reference to Exhibit 3.1 to the Company’s Form 10 filed on February 28, 2024. |
21.1* |
|
Filed herewith. |
|
31.1 |
|
Filed herewith. |
|
31.2 |
|
Filed herewith. |
|
32.1 |
|
Furnished herewith. |
|
32.2 |
|
Furnished herewith. |
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
* Exhibits 3.1, 10.2 and 21.1 were filed with the Annual Report on Form 10-K but are being refiled herewith to correct an administrative error.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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EXODUS MOVEMENT, INC. |
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Date: May 12, 2025 |
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By: |
/s/ James Gernetzke |
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|
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James Gernetzke |
|
|
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Chief Financial Officer |
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Exhibit 21.1
SUBSIDIARIES OF EXODUS MOVEMENT, INC. |
JURISDICTION OF |
As of March 31, 2025 |
INCORPORATION |
XO Italia XRL Proper Trust AG |
Italy Switzerland |
3ZERO, LLC |
Delaware |
OSMIUM, LLC Osmium Europe B.V. Osmium Canada LTD |
Delaware Netherlands Canada |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Jon Paul Richardson, certify that:
Date: May 12, 2025 |
|
By: |
/s/ Jon Paul Richardson |
|
|
|
Jon Paul Richardson |
|
|
|
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James Gernetzke, certify that:
Date: May 12, 2025 |
|
By: |
/s/ James Gernetzke |
|
|
|
James Gernetzke |
|
|
|
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Exodus Movement, Inc. (the “Company”) for the period ending March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: May 12, 2025 |
|
By: |
/s/ Jon Paul Richardson |
|
|
|
Jon Paul Richardson |
|
|
|
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Exodus Movement, Inc (the “Company”) for the period ending March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
Date: May 12, 2025 |
|
By: |
/s/ James Gernetzke |
|
|
|
James Gernetzke |
|
|
|
Chief Financial Officer |