Galaxy Digital Inc. Q1 FY2026 Earnings Call

Good morning, and welcome to the Galaxy Digital First Quarter 2026 Earnings Call. Today's call is being recorded. The operator provided instructions to participants on how to ask questions. I would like to turn the conference over to Jonathan Goldowsky, Head of Investor Relations. Please go ahead, sir.

Good morning, and welcome to Galaxy's First Quarter 2026 Earnings Call. Before we begin, please note that our remarks, including answers to your questions, may include forward-looking statements. Actual results could differ materially from those described in these statements as a result of various factors, including those identified in the disclaimers in our earnings release or other filings, which have been filed with the U.S. Securities and Exchange Commission and on SEDAR+. Forward-looking statements speak only as of today and will not be updated. Additionally, we may discuss references to non-GAAP metrics, the reconciliations of which can also be found in our earnings release. Finally, none of the information on this call constitutes a recommendation, solicitation or offer by Galaxy or its affiliates to buy or sell any securities. With that, I'll turn it over to Mike Novogratz, Founder and CEO of Galaxy.

Yes. Good morning, everyone. Listen, first quarter crypto prices were down on average of 25%. You can see our headline number certainly isn't what we'd like to be delivering quarter after quarter. All that said, I feel pretty good about the business right now. So coming into this earnings call, I thought, well, let's break it down: Data Centers and then Digital Assets and give you just how I'm seeing it from the CEO perspective. Every Monday morning, I look at my to-do list in the Data Center business, and it has four buckets. Are we delivering on time and on cost? That's not an easy feat. But so far, our team is doing an awesome job. We delivered our first data halls. We're on schedule. More than half of the data centers around the country can't say that. So we feel pretty good about the team down in Texas and the hard work they're doing. That's in check. The second is we've got to finance Phase II and then Phase III. The financing markets are open. I was hoping we would have the definitive deal details today; trust me, that will come in very short order. We will have Phase II financed. Our partner, CoreWeave, their credit spreads have come in, the financing markets are pretty robust right now. We're looking at a few different options. Part three is we have this 830 megawatts that we were recently granted tenant status for, right, that would take a lot of stress off of me and derisk this company even further. We're in conversations with a lot of big people — you can guess who they are. That process, Chris will get to the dynamics of it later. My sense is that's probably going to be a second half of the year process; as we get closer to 2027, the stress around 2028 power will pick up. Right now, most of the hyperscalers are focused on this year and next year and just getting the power they need. And finally, new projects that we've been looking at circling around — same answer. Hopefully, in the not-too-distant future, we're announcing a pretty cool one. So stay tuned. I don't have anything specific to tell you today. But in each of those buckets, I'm not sweating. I feel good about where we are, I feel good about the progress we're making, and I feel good about the future after that even. So I can give a big check on the Data Center box. Then I flip to Digital Assets. As I said earlier in the year, I think this is a transition year for the crypto business at large, not just at Galaxy, but globally. What I mean by that is we are going from a very speculative business — you could say the crypto casino — to a technology that is going to be used in industry all over the world. You're seeing that pickup in an accelerating fashion. Every large organization is working on their version of that infrastructure. They need a wallet, they need custody. We have an infrastructure business that's doing great stuff right now and is engaged in all kinds of conversations. Again, I'm not going to announce anything today, but stay tuned. We've got some announcements coming soon. Deals are roughly done; they just aren't at the announcement stage yet. That business is going to keep on growing. For the world, it's important. When you want to understand what's really happening as we're tokenizing equities, tokenizing privates, tokenizing mortgages, tokenizing currencies, this is where the United States projects its financial services power around the world. If you want to think about the real use case of crypto, it has always been the rest of the world more so than the United States. Here, we've got great financial services accessible to most Americans. But there are 5 to 5.5 billion people for whom that's not true. You're going to see the big brands being sold to places like Paraguay and Bhutan and Cambodia and all over the world, where people gain access to financial services. Part of what needs to happen is the Infrastructure Bill in D.C., the CLARITY Act. That's got a really important six weeks. I still believe it gets passed. There's a few obstacles. Thom Tillis, who's a friend of mine and a tough son of a gun, has been digging in. Him and the President are not on the best of terms. He's pushing pretty hard on the ethics piece of this thing. I do think they'll get through that. It's important for both the Republicans, who campaigned on it to get this built; and for the Democrats, who don't want to have to campaign on it, to get it done. It's important for America. Once that gets done, you're going to see a further acceleration in that build-out, and it's also going to help crypto prices. Bitcoin, which is the bellwether, in the first quarter had a pretty severe sell-off all the way to 60,000. It feels like that will be a tradable bottom for this part of the move. We bounced up to 80. Now I think we're trading in the mid-70s. I don't see a big clean explosion in the near term, but it might happen. I think you'll have some work to get through 80 to 85. Once you get through that, the next stop is 100, and if you break that, then it's all price discovery. It's not my prediction that we break 100 this year. You'd need a few things to happen, mostly an easing by central banks. Given the war in the Middle East and tensions with Iran, we've got some inflation prints that will come through the pipeline, and I don't think the Fed does anything but sit and watch for now. I know Kevin Warsh is a real believer in the productivity miracle that is coming from AI. One thing I was pointing out to the team here is all of this wild acceleration we're seeing in AI is mostly being done on the infrastructure that already existed. Campuses like Helios where we're delivering data centers: we deliver the data center support. They then take another two to three months to build out the infrastructure for final customer use. So it's really not until this time next year when the next phase of power comes into powering AI. The AI revolution is just starting, and its impact on inflation and productivity and how the world changes will be significant. I think the Fed will be cutting rates by the end of the year. I think that will be very supportive of broad crypto prices. One thing I'd point out is that industry volumes in trading markets were roughly down 20%. Here at Galaxy, volumes were flat. For the first time we really started to see a decoupling of our business from price, and that's very promising. If I could see that four quarters in a row, I'd have a big grin on my face. The balance sheet lost money as crypto prices were down, but we significantly outperformed what we would have done if we had not cut some positions and also shifted a lot of our Level 2 exposure to Hyperliquid, which is one of the tokens that I talked about. We've been a supporter mostly because it has an economic model unlike many of the other tokens, which were more association tokens. I think Hyperliquid is a good way to look at what the future of crypto is going to look like. Again, the headline numbers weren't what I want, but I feel really good about the two businesses and how we're positioned in the macro backdrop for both of them. And what that will pass on.

Great. Thanks, Mike, and thank you, everyone, for joining the call today. I'll start by walking through the consolidated financials and the balance sheet and then dive into the digital asset operating businesses in more detail before turning it over to Chris for an update on Data Centers. As Mike mentioned, Q1 was a challenging quarter for digital asset prices with total crypto market cap declining roughly 20%. While that impacted our reported results, our operating businesses continue to perform and we have reached an inflection point at Helios as we started to come online. For the first quarter, we reported a GAAP net loss of $216 million, or a loss of $0.49 per share, and firm-wide adjusted EBITDA of negative $188 million. These results were driven primarily by unrealized mark-to-market losses on our balance sheet digital asset holdings, with the Treasury & Corporate segment reporting an adjusted gross loss of $140 million in the quarter. Firm-wide operating expenses, excluding one-time transaction costs and the impairment of digital assets, were approximately $147 million in Q1, down 7% quarter-over-quarter, driven by lower professional fees and a decrease in compensation expense. On the operating business side, our Digital Asset segment generated $49 million of adjusted gross profit, roughly in line with Q4 results despite broad market weakness in Q1, as Mike mentioned. I'll provide more detail on this performance in a few moments. In Data Centers, our financial results remain de minimis in Q1 as we work through the final stages of construction and commissioning for Phase I at Helios. As mentioned previously, revenue will begin ramping in Q2 as we deliver data halls under our CoreWeave lease agreement. As a reminder, these are 15-year contracted cash flows at approximately 90% average lease-level EBITDA margins entirely uncorrelated to digital asset prices. As that revenue comes online, it will begin to meaningfully diversify our revenue and earnings profile in the coming quarters. Turning to the balance sheet, we ended Q1 with approximately $10 billion in total assets, down from $11 billion at year-end, driven by the decline in digital asset prices. Total equity capital was $2.8 billion with roughly 60% allocated to our operating businesses. This mix will fluctuate quarter-to-quarter, but as previously noted, we expect the capital allocated to our operating businesses to continue increasing in the coming quarters, driven primarily by the ongoing build-out at Helios. Within Treasury & Corporate, we have approximately $1.4 billion of net digital assets and investments, down 19% quarter-over-quarter, primarily reflecting market depreciation. During Q1, we repurchased 3.2 million shares of our Class A common stock for $65 million under our previously announced $200 million share repurchase authorization. This amount more than offset dilution from equity-based compensation awarded in 2025 and brought our quarter-end share count to approximately 390 million basic shares outstanding. We view share buybacks as an attractive use of capital when we see a meaningful disconnect between the stock price and intrinsic value, and we'll continue to use them in a disciplined manner. Cash and stablecoin balances were approximately $2.6 billion at quarter end, roughly flat from year-end. We will continue to manage our balance sheet with discipline, balancing investments while maintaining sufficient capital and liquidity, including for the potential repayment of $445 million of exchangeable notes maturing in December of this year. Now turning to our operating results, starting with digital assets. Q1 reflected a more challenging market backdrop as we discussed with digital asset prices down quarter-over-quarter and a corresponding softening in trading volumes and on-chain activity. Against that backdrop, our Digital Asset segment delivered $49 million of adjusted gross profit, roughly flat quarter-over-quarter. In a sequentially weaker environment, this stability reflects how the composition of the business has begun to shift. Recurring fee revenue and transaction income continue to scale across the platform, and this pace will hold up better in quarters where volumes and prices do not. We also tightened operating expenses during the quarter, narrowing the adjusted EBITDA loss by roughly one-third from Q4. In a volatile industry, how we manage the business in challenging environments matters just as much as how we perform in strong ones. The Global Markets business delivered adjusted gross profit of $31 million, up 3% quarter-over-quarter, with digital asset trading volumes holding steady, as Mike mentioned, even as industry-wide activity declined more than 25%. We're adding new trading clients at a steady pace and the mix is shifting, with a growing share coming from traditional asset managers and hedge funds, reflecting the ongoing convergence of digital assets and traditional finance. On the lending side, our average loan book declined approximately 20% quarter-over-quarter, driven by digital asset price depreciation, modest client deleveraging and roll-off of two larger loans. Since then, we've added new clients and originated new loans while further diversifying our counterparty base, which will continue to support a more durable loan book going forward. A quick update on GalaxyOne, where we're quietly continuing to build momentum. We recently launched Solana staking at 0% commission and will be opening the platform to business accounts in the coming months, expanding the user base and addressable market. GalaxyOne is still early, but we see a meaningful opportunity to continue layering capabilities that integrate trading, yield and asset management into a single unified experience. Turning to Asset Management, we delivered adjusted gross profit of $18 million and ended the quarter with approximately $8 billion in assets on platform. In Asset Management, we generated $69 million of net inflows during the quarter, underscoring the durability of our platform against the soft market backdrop. Flows were broad-based across both our ETF platform and alternative suite, reflecting continued institutional demand for access to the digital asset ecosystem and confidence in our ability to manage through volatility. Subsequent to quarter end, we secured a new $75 million investment mandate, one of the largest single client inflows in our history. Our separately managed accounts and managed account business continues to grow as an increasingly important part of our overall platform, and we see a clear path to further expansion through 2026 as client appetite for bespoke mandates remains strong. On May 1, we launched a new fintech hedge fund focused on the convergence of traditional financial services, blockchain infrastructure and emerging technologies. This thematic area is one we've been operating within at Galaxy for nearly a decade and one we believe gives us a differentiated edge as investors. We've seen this space firsthand, we understand how these businesses are built and we're able to underwrite opportunities with a level of conviction that comes from being both operators and longtime participants in the ecosystem. This approach is consistent with how we're building the asset management platform, focusing on differentiated strategies that align with where we see long-term capital formation and innovation across the digital asset ecosystem. On to Digital Infrastructure Solutions: as Mike mentioned, we spent the past eight years building institutional-grade infrastructure to support our own operating businesses. And what we're seeing now is a shift where the largest financial institutions are preparing to move on to blockchain-based rails and are coming to Galaxy as a partner in that transition. Institutions need foundational infrastructure to operate in a tokenized financial system. That includes wallet and custody technology that enable secure 24/7 movement of digital assets as well as the ability to deliver financial products in a way that integrates with their existing systems. This isn't limited to banks or traditional asset managers; it's every institution that touches a digital asset that is now trying to determine what infrastructure they need in a tokenized world. Whether it's trade settlement and clearing, collateral management, corporate treasury or fund administration, all of that has to be re-architected for a digital-native environment. When we think about the total addressable market, it is not niche; it's the entirety of the capital markets across the front, middle and back office, all of which ultimately needs to be rewired. Against that backdrop, institutions are looking for partners with the technical capabilities, infrastructure and expertise to support that transition — capabilities we at Galaxy have been building for nearly a decade. We are now taking those learnings and productizing our digital infrastructure platform into a B2B model through white-labeled solutions, bespoke integrations and custom infrastructure to meet institutions where they are in their adoption cycle. This spans powering staking infrastructure for leading asset managers to developing wallet custody and private key architecture for financial institutions and service providers. Once we're embedded at the infrastructure layer, we're able to provide a set of services where we have real competitive strength that includes acting as a liquidity provider to enable their clients' access to crypto markets, delivering fund and investment products and providing lending and financing solutions. As we expand this business and deepen those integrations, we expect a continued shift in the composition of our revenue. Over time, our results should become less correlated to the underlying price of digital assets and increasingly driven by the pace of institutional adoption and utilization of the infrastructure itself. These are not short-cycle engagements. Winning and growing these mandates requires time, integration and a high degree of trust. We've been investing in these relationships for a long time, and we're seeing that begin to translate into tangible opportunities, which we're excited to build on in the quarters and years ahead. Stepping back, the regulatory environment is continuing to develop, institutional adoption is accelerating, and the pipeline of opportunity across our digital asset businesses is extremely robust. Q1 was a difficult quarter from a market standpoint, but the most consequential developments in digital assets don't happen in price; they happen in infrastructure, regulation and institutional adoption. Before I turn it over to Chris, I want to touch on our Q2 preliminary performance. So far in Q2, we have seen an improvement in digital asset prices and overall activity. This has translated into a strong start to the quarter for Galaxy, with second quarter-to-date adjusted EBITDA estimated at approximately $90 million through last Friday. With that, let me turn it over to Chris.

Thanks, Tony. The lights are on at the Helios campus. We've delivered the first data hall to CoreWeave, and I would call that the most significant milestone this business has hit since the day we signed the lease. Not long ago, this was a Bitcoin mining facility. Today, it is a live operational AI data center with power distribution, cooling and network connectivity. That's a credit to the team on the ground in Texas and here in New York. This is the single most important derisking event this business has experienced. We now have a track record of delivering on time and on budget, not a projection. That distinction matters when you're sitting across the table from a prospective customer or capital partner. We've proven we can take a site from concept to operational data center at hyperscale, and that credibility is opening doors. We remain on track to deliver substantially all of the 133 megawatts of critical IT capacity for Phase I by the end of Q2. Our client, CoreWeave, has indicated that it expects a multitrillion-dollar investment-grade public company to be the end user for their GPUs at our Phase I Helios facility once the clusters are operational. Turning to Phase II: we've made meaningful progress on the greenfield construction for the 260 megawatts of incremental critical IT capacity. Site work, concrete and steel are advancing on the new data center buildings, and Phase II data hall deliveries are on track to commence in the first half of 2027. On Phase II financing, we're seeing strong demand for financing the build. Our focus is on maintaining a capital structure that gives us the flexibility to scale without overleveraging the platform, and we expect to have more to share on Phase II financing in the near term. Turning to leasing the available 830 megawatts, the demand environment for large-scale HPC capacity remains very strong. Every major participant in this market has capital available and is racing to lock up future capacity, and we're seeing that firsthand in the quality of the conversations we're having. We are in active discussions with a select group of potential customers. A lease of this scale — multiple years and billions of dollars of contracted revenue — requires extensive diligence, bespoke structuring and careful negotiation. We've been through this process before, and we know what it takes to get it right. The compounding value of picking the right partner and the right structure is enormous, and that is worth being deliberate about. From our seat, 830 megawatts of approved front-of-the-meter power in ERCOT is a one-on-one asset. The responses from potential customers evaluating the opportunity reinforce this view. Importantly, we are not waiting on commercial structure to be finalized to proceed on development. Consistent with our approach throughout the initial Helios build, we've begun procuring critical infrastructure for the 830-megawatt development. Specifically, we have placed deposits and issued purchase orders on main power transformers and circuit breakers for the first phase of that development and have secured capacity for the balance of long-lead electrical infrastructure. Lead times for this equipment stretch to multiple years, and securing supply early has been core to our development basis and schedule forecasts. A brief update on the evolving ERCOT regulatory framework: in mid-March, ERCOT published a draft rule, PGRR145, which establishes a baseload category for projects with a 2028 energization date. Projects in that category are not subject to restudying in batch 0. Eligibility requires two things: valid completed interconnect studies and a signed interconnection agreement with the utility. Our interconnection studies were completed on January 15, and our service agreement is already executed. We satisfy both requirements to be eligible for baseload within batch 0 based on the current draft. I will note that PGRR145 is still in draft form and could change. We're tracking it closely and are in active dialogue with ERCOT and our advisers. But as we read it today, nothing in the current draft indicates a deferral, and we are certainly not treating this capacity as speculative. There's still a lot to develop at the Helios campus, but scaling beyond Helios we continue to evaluate a deep pipeline of opportunities across the U.S. We're being highly selective. Not every megawatt is worth pursuing, and we're only going to transact on sites where we have conviction in power availability, land suitability, development timeline and customer demand. Several of those sites have progressed to LOIs, and we expect we will be discussing our multicampus portfolio within this year. The Helios campus is the foundation, but the vision is a multicampus, multi-tenant platform built the same way, one disciplined step at a time. We spent the better part of two years building this business, and now that foundation is operational. Phase I is delivering. Phase II is under construction. We have 830 megawatts of approved incremental capacity with active customer conversations underway. We have an additional 1.8 gigawatts progressing through the ERCOT study process and a growing pipeline beyond that. We've proven that we can execute. What lies ahead of the Helios campus and beyond is an opportunity of extraordinary scale, and we're just getting started. I'll turn it over to the operator for questions now.

The operator opened the floor for questions. The first question comes from Peter Christiansen with Citi.

Great to be a part of the call. I'm curious on the financing side as it relates to data centers here. Fully stabilized leased hyperscale deals are seeing tightening spreads, but rating agencies have been calling out syndicate financing for large deals as potentially getting strained. Are you seeing the same? And how are you thinking about that in your go-forward financing strategy?

Yes. I would agree with the comment that financing for stabilized assets in the space has started to tighten. Prior to maybe six months ago, the market was pretty heavy towards bank syndicates financing — more traditional project finance-style financings. The high-yield bond market has stepped in in a big way over the last few months and has taken a lot of market share from the larger bank syndicates, which is good because it's a much more distributed base of investors with more flexible pools of capital, rather than a traditional bank that's looking to either hold and syndicate prescriptive project financing. We've pretty much seen spreads tighten across the board, and that's come from a peak of concern around build-outs, CapEx budgets and credit quality. Spreads have come in pretty significantly. The rating agencies have started to rate a number of issuances at or above the underlying credit levels, which takes into account the fact that firms like us are actually building long-lived, durable infrastructure. Even though we have a tenant with a particular credit profile, those assets live beyond any single tenant deal and are repurposeable. We're pretty constructive right now about the opportunities for financing cost improvement relative to where the market was a few months ago.

The next question comes from Patrick Moley with Piper Sandler.

Yes. On the additional 830 megawatts at Helios, Mike, you mentioned that there were maybe some deals getting done but nothing ready for an announcement yet. Just to level set, is it safe to say that this is not an extension of the current agreement with CoreWeave, but in fact separate tenants? And is there anything you can add on timing or counterparts?

I think you missed — either I misspoke or you misheard me. What I was saying is on the 830, we're engaged in lots of conversations. On new projects outside of Helios, as Chris said in his remarks, those are at the LOI stage. Hopefully in the not-too-distant future we'll have things to announce where we've got actual locked-up projects. That's separate from Helios, which has always been our goal — to have a multicampus business. By the time we're on next quarter, hopefully we'll be talking about that with much more detail.

Yes. And just to add to what Mike said, Patrick: to get at your question from another angle, in addition to a multicampus strategy, we are very focused on a multi-tenant strategy as well. We're always talking with CoreWeave because they're our biggest partner in the business today, but the customer conversations extend far beyond just CoreWeave. I would expect our decision-making around the 830 will take into consideration the importance of having diversified tenant exposure across all our assets.

The next question comes from James Yaro with Goldman Sachs.

I'm speaking on behalf of James Yaro. My question is: What is the risk appetite among your crypto trading clients? When do you expect it to stabilize or inflect as crypto prices have appreciated now?

That's a good question. Like I said in my remarks, volumes across crypto trading were down roughly 25% last quarter on average. We felt good that we were flat. I think you need a few catalysts. Broadly, old holders sold some crypto and what came in was retail — retail through ETFs and retail through buying micro strategies and equity, which then translates into Bitcoin buying and other crypto. When Bitcoin stabilizes and trades up, the rest of crypto tends to do better. You've got places like Morgan Stanley that have moved into the space and have salesforces pitching allocations to Bitcoin as part of portfolios. What we're seeing is a transition: those long-term holders taking profit are being replaced by a broader retail buying base. We've seen a couple of sovereign funds come in and buy or add to positions as well. There's more excitement in AI equities and in commodities given geopolitical developments, and crypto infrastructure is now being used to trade other types of assets. Perpetuals, which were a crypto innovation, are being brought to equity markets. The broader theme is that infrastructure and what goes along with it will be very supportive to the whole space, but that doesn't necessarily mean short-term demand for every token like Solana, Polkadot or others will be strong. Cutting rates and the CLARITY Act passing would give the market a kick. What we've always seen in crypto is that price is a big driver of sentiment and demand. Once price momentum builds, people will find reasons to get excited.

The next question comes from James Faucette with Morgan Stanley.

I wanted to build in quickly through the approval process in ERCOT and the batch process that I understand will be starting this summer. Can you touch on two things? First, any clarification to make sure that the recently approved 830 megawatts isn't subject to any part of that batch process or review? And second, can you give us an assessment of where you think you are or what you may need to do to gain incremental approvals as part of that process for additional capacity and what the timeframe might look like?

Sure. We have two pieces at Galaxy today. Our originally 100 megawatts that's already leased — there's nothing in the current regulatory landscape that puts that capacity at risk. We have a fully executed service agreement, complete interconnect studies, Phase I is live, and we're delivering power to it. For the 830 megawatts that was approved earlier this year, we're equally confident. As I mentioned, the draft PGRR145 rule sets a baseload category for projects that are not subject to restudy, meaning batch 0. We had our studies approved in January and an interconnect agreement with the utility, so as drafted today, and as far as we can see any potential iterations of that draft, it's covered. That leaves the additional up to 1.8 gigawatts that are in question from a timing perspective. ERCOT is still working through specifics on what the new batch process will be and therefore which parts of our 1.8 gigawatts would fit into batch 0 or beyond. The best visibility I can give you today is that ERCOT is expected to narrow in on this framework in the coming months, and we expect more clarity toward mid-year.

The next question comes from Bill Papanastasiou with Chardan Capital Markets.

Congrats on the recent progress at Helios. I just wanted to dig a bit deeper on potential lease economics for the uncontracted capacity relative to the CoreWeave deal. Should we expect similar headline metrics, or do you think it would be more aligned with other deals we've seen from some of your peers?

That's a very good question and it's hard to answer directly because there are a number of factors. When we originally signed the CoreWeave deal, they were still a private company and the credit quality picture was different than it is today. Credit quality is an important element of deal economics. While a headline dollars-per-kW-per-month rent rate is an important metric, the net after-financing-cost spread capture of any deal is arguably more important to us. There's a balancing act between headline monthly rent revenue and financing costs, which will be tied to the tenant. Several deals have gotten done in the interim and while headline rent numbers in the market may look different, on an after-financing-cost basis we expect the economics to build for the next capacity to be equally attractive on both a dollar and an IRR basis. That's the framework we use to evaluate and strike deals.

The next question comes from Devin Ryan with Citizens Bank.

Question on trading activity: if the CLARITY Act passes, what do you think will happen to trading volumes? Mike, I heard your comments around price and trading going together. But thinking about demand for layer-1 and layer-2 tokens beyond the top 10 or 20, that demand seems to have dried up. Do you feel that's cyclical due to risk appetite, or secular because there's not much activity on those blockchains and we may consolidate activity to a smaller number of large blockchains? That could be good for institutions, but maybe not as good for speculative retail. How do you see things playing out if CLARITY passes?

I tend toward the latter scenario you outlined. I think CLARITY will bring more institutions in, and those institutions will come in with direct trading desks to compete in Bitcoin and Ethereum and other majors. Wall Street coming in is also a selling machine in some respects; it starts with Bitcoin and Ethereum and those assets generally prop up the industry. We're seeing crypto infrastructure being used to trade many things at the same time as there are many other avenues for people to speculate — sports betting, online gambling, prediction markets, and so on. People have a lot more to choose from than just small utility tokens. Those smaller tokens need to find ways to be more relevant. We've seen examples like Hyperliquid, which combine great technology, a tight team and an economic model that lets token holders participate in the economics of the ecosystem, not just show association. Many tokens historically were mostly association tokens, often because of the regulatory environment, and I think some of those tokens will either have to restructure or will see declining participation from retail and the broader community. That doesn't mean they all die — communities can sustain projects — but over five years I'd hope and expect most tokens will be more than just community tokens.

The next question comes from Edward Engel with Compass Point.

I appreciate the comments on ERCOT's new load approval process. I know it's still being finalized by them, but from a timing perspective, when do you think you'll have more clarity on where some of your pipeline stands within batch 0, batch 1 or beyond?

Right now, the best visibility we have is around June. Indications are that ERCOT will start to narrow in on their process for the batch interconnect study framework by then. We're doing all the background work and ready to engage with that process once it comes through. So a couple more months from now toward mid-year is the timeframe for better clarity.

The next question comes from Benjamin Sommers with BTIG.

You mentioned expanding the total addressable market for GalaxyOne. It's still early days, but what's been the most used features of the platform so far? What has drawn investors to the platform?

There has been a decent amount going on. We were actually surprised that crypto trading has been the largest use case so far, which is a little counterintuitive given existing trading platforms. Our capabilities on that front are still expanding — we're adding coin coverage and staking; we launched Solana staking last quarter and will add other stakeable assets soon. Cash products are performing okay but lag slightly. The next step we're focused on, and excited about, is tying it all together by offering financing solutions for individual consumer users that allow consumers to leverage their entire portfolio to increase buying power in a thoughtful and safe way. We're working toward creating an entire wallet that a consumer can use to own cash, equities, crypto and more, and to increase buying power without taking outsized risk. That's where GalaxyOne stands today.

The next question comes from Martin Toner with ATB Cormark.

The revenue number was a nice one, given how difficult crypto markets were in Q1. Is the business becoming less cyclical? Is Galaxy better able to do well in weaker crypto markets?

If we can repeat this result three quarters in a row, I'll be more confident calling the business less cyclical. This was a promising quarter in that our trading desk stayed flat quarter-over-quarter when overall industry revenue went down 25%. Our balance sheet was well-positioned; we had more exposure to Hyperliquid and less to other layer-2s and a smaller percentage of some larger positions. If you look at the Digital Assets business alone, our goal is to make it less cyclical. In the second half of the year you'll see some announcements related to the infrastructure business, which will be less cyclical and help further. Combine Digital Assets with the Data Center business, and overall Galaxy will be materially less cyclical to crypto over time, particularly as Data Center earnings come online. But I'm not going to declare victory — we need two to three more quarters of consistent performance before making that call.

The next question comes from Joseph Vafi with Canaccord.

Could you touch more on your real-world asset tokenization strategy? You mentioned wallet and custody infrastructure and Mike talked about infrastructure broadly. This seems like a bigger trend in the ecosystem. Could you provide more color on how this evolves and how you plan to execute on the strategy?

We agree that the direction and scale of the opportunity is significant. Historically, Galaxy has built technology products and services for institutional clients, with more recent steps into consumer-facing products. The tokenization opportunity — really the digital infrastructure to support bearer-instrument tokenized assets — is generating strong demand from businesses. What we once thought might be bank competitors are now potential partners who want to buy or implement Galaxy technology as a vendor, so the financial system can build out the digital infrastructure and stitch it together so end users can seamlessly store and transfer value. Our acquisition of GK8 in late 2022 and early 2023 was a step, and several smaller acquisitions for talent and technology in staking and liquid staking have positioned us well. The market opportunity is crystallizing quickly now. The market for institutions to partner with a trusted, well-capitalized vendor is large; many competitors are undercapitalized, lack the brand or long-term staying power, or are choosing to be vertically integrated competitors to those institutions. We believe Galaxy is well-positioned to be the partner large legacy financial firms need. We've retooled the team and go-to-market to take advantage of that opportunity now.

The next question comes from Chris Brendler with Rosenblatt.

I thought the Digital Assets business was pretty resilient given market conditions, but the lending business looked a little weaker than I expected. Does that reflect decreased risk appetite? Is it asset-price sensitive? Could you provide color on the decline in lending and how you're managing it?

We have a consistent and strong trend line in the lending business historically. Our number-one KPI is preserving capital — we don't lose shareholder or client money. This was one of the first times in a while we saw a pullback, and that's pretty natural given that a large percentage of our book is denominated in crypto; when prices move, the U.S. dollar notional balance of the lending book moves as well. We also had a handful of large, very low-risk loans roll off, which is a natural part of the business. When prices are down and clients are deleveraging, it's prudent to allow some pullback and derisk the book, then rebuild. Subsequent to quarter end we've been rebuilding the book, adding new clients and diversifying our counterparty base. There's nothing alarming in that dynamic — it's a natural progression. Our priority is building a larger, resilient borrowing pool of clients while being aggressive in limiting downside risk. That's one of our specialties. Additionally, there are opportunities to expand beyond bilateral lending into nascent on-chain markets, which is a wide-open opportunity set for us.

The final question comes from John Petersen with Jefferies.

On financing Phase II and maybe refinancing Phase I, one of your peers earlier this year was able to restructure their debt with a parent guarantee from the investment-grade hyperscaler that was using the compute. Is that sort of a solution you're considering to help with debt pricing? And a quick follow-up: do you have any updated thoughts on splitting the Data Center business from the rest of the company?

All options are on the table. The market is evolving quickly and the largest companies are shifting their strategies. We don't take recent market developments lightly. Our approach will be focused on net present value to shareholders and risk-adjusted outcomes. We know the value of Helios and we have an attractive economic deal with a great partner today. If there is an opportunity to do something like a credit support or restructure that improves economics and derisks financing, we would consider it with a clear eye toward shareholder value. For Phase I, I will reiterate that CoreWeave has stated the end tenant will be a multitrillion-dollar investment-grade public company, which provides derisking and comfort to financing partners. On splitting the Data Center business, no update. Our posture is unchanged: management is focused on building both businesses. We recognize the different capital needs and earnings profiles, and while they aren't natural synergistic businesses today, we are not ruling anything out in the future. We'll continue to build both businesses and evaluate opportunities when the time is right.

Just to add an exclamation point: we have a convert that rolls off at the end of the year. Helios Phase I is cash flowing and Phase II is getting started. This is probably more of a decision point toward the end of the year than it is today.

This concludes our question-and-answer session. I would like to turn the conference back over to Mike Novogratz, Founder and CEO of Galaxy Digital, for any closing remarks.

Yes. Everyone, we appreciate your time today. It is a beautiful day in New York — I usually give a weather update at the start. I want to reiterate that we're optimistic on both businesses. We've got 700-plus people here working very hard every day. We understand we're in an environment where AI is changing every company in ways they hadn't dreamed of two years ago, and we are engaged with that trend as well. The world is in an AI revolution, and we plan on riding that wave and paddling our canoe as fast as possible in what will be choppy waters because this is a pretty disruptive technology. Hang on to your seats — that's the broader macro view. Thanks for your time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.