DeFi Technologies (DEFT) Q3 2026 Earnings Call Transcript

DATE

Fri, Nov 13, 2026

CALL PARTICIPANTS

• VP of Marketing and Comms - Curtis Schlaufman
• Chief Executive Officer - Johan Wattenström
• Chief Financial Officer - Paul Bozoki
• President - Andrew Forson

TAKEAWAYS

• Revenue -- $18.3 million, reflecting improved digital asset market conditions compared to the second quarter.
• Net Income -- $22.3 million, including $12.3 million in mark-to-market gains on cryptocurrency assets and $7.7 million in venture portfolio revaluations.
• Operating Income -- $7.0 million, compared to $9.0 million in the prior-year period.
• Assets Under Management -- $643.7 million, representing a 62% increase since June 30, 2026, driven by higher asset prices and new capital.
• Valour Net Inflows -- $26.1 million during the third quarter, bringing total inflows for the first nine months to $48.9 million.
• AUM Monetization Rate -- 4.6%, increasing from 3.3% in the second quarter of 2026 as high-yielding volatile assets became a larger portion of the portfolio.
• Balance Sheet Holdings -- $159.1 million, comprising cash, stablecoins, digital assets, and venture investments.
• Cash and Cash Equivalents -- $47.8 million, providing liquidity to support growth and operational flexibility.
• Digital Asset Treasury -- $48.2 million, used for strategic capital allocation and ETP market risk hedging.
• Stillman Digital Revenue -- $2.2 million, representing trading commissions from institutional execution services.
• Stillman Digital YTD Growth -- 21.7% increase year over year, with total revenue reaching $7.6 million for the first nine months.
• Venture Portfolio Value -- $25.5 million, reflecting a recovery in the valuation of the company's stake in AMINA.
• Staking and Lending Income -- $2.6 million, compared to $4.9 million in the third quarter of 2025.
• Management Fees -- $1.2 million, down from $2.9 million in the prior-year period due to a lower average AUM year over year.
• Total Operating Expenses -- $11.3 million, representing a reduction from $13.2 million in the same quarter last year.
• Strategy Preferred Shares -- $20 million, yielding a 12% dividend that contributed to quarterly monetization income.
• Smart Crypto Fund NAV -- $10.2 million, reflecting a 1.8% increase since its inception on Sept. 21, 2026.
• Effective Staking Yield -- 3.6%, rising from 2.4% in the second quarter of 2026 due to higher crypto price levels.
• Total Shareholders' Equity -- $165.8 million, as of the end of the third quarter.
• RWUSD Holdings -- $2 million, held as part of the company's diversified balance sheet assets.
• Venture Fund Target -- $250 million, for a planned digital money and yield infrastructure fund focused on late-stage growth entities.
• Core Operating Revenue -- $6.1 million, excluding realized and net changes in unrealized gains and losses.

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RISKS

• Wattenström stated, "The decline has been deeply disappointing, and we take its impact on investors seriously," referring to the disconnect between the company's market capitalization and shareholder equity.
• Bozoki noted that "U.S. lawyers are expensive, so that is a bit of a burden on the company," citing costs related to a class action lawsuit expected to be resolved in early 2027.
• Wattenström indicated that "we will do a reverse split if we are not over $1 at the latest before the deadline, beginning of March," to maintain Nasdaq compliance.

SUMMARY

DeFi Technologies Inc. (NASDAQ:DEFT) reported a recovery in quarterly financial performance, driven by increased assets under management and a return to positive core operating income. Management stated that the platform's revenue growth is sensitive to digital asset market conditions, where higher prices influence both trading activity and the value of managed assets. The company launched actively managed funds and specialized certificate products designed for global institutional allocators. Strategic priorities include expanding distribution across European and international markets while maintaining liquidity through a portfolio of cash, digital assets, and venture investments.

• Valour launched eight new ETPs on Nov. 5, expanding access to assets across artificial intelligence, institutional blockchain infrastructure, and decentralized trading.
• Management is seeking UCITS fund approval in an alternative EU jurisdiction, with expectations for a decision by the first quarter of 2027.
• Stillman Digital is pursuing licenses across all U.S. states to market brokerage, custody, and asset management services to retail and institutional clients.
• The company announced the imminent launch of the DVIO AMC, an institutional-facing fund that provides access to a dynamic allocation of 50 Valour ETPs.
• Wattenström stated, "The infrastructure supporting substantial growth is already in place," noting that expenses are expected to remain flat as the business scales.
• Beta testing for Valour Custody is expected to begin in the coming weeks, with a targeted launch scheduled for the first half of 2027.

INDUSTRY GLOSSARY

• AUM: Assets Under Management; the total market value of the investments managed by a financial institution.
• ETP: Exchange Traded Product; a type of security that tracks underlying assets, indexes, or financial instruments and trades on an exchange.
• AMC: Actively Managed Certificate; a structured product that allows investors to gain exposure to a managed portfolio of assets.
• UCITS: Undertakings for Collective Investment in Transferable Securities; a regulatory framework that allows for the sale of mutual funds across the European Union.
• Staking: A process where holders of digital assets earn rewards for participating in the validation of transactions on a blockchain network.
• ISIN: International Securities Identification Number; a unique code used to identify a specific securities issue.
• NAV: Net Asset Value; the total value of an entity's assets minus its liabilities, often expressed on a per-share or per-unit basis.
• OTC: Over-the-counter; a decentralized market where participants trade stocks, commodities, or currencies directly between two parties without a central exchange.

Full Conference Call Transcript

Curtis Schlaufman: Welcome. Hi, everyone. Welcome to the DeFi Technologies Third Quarter 2026 Financial Results and Shareholder Call. I'm Curtis Schlaufman, VP of Marketing and Comms. Joining me today on the call, per usual, are Chief Executive Officer Johan Wattenström, Chief Financial Officer Paul Bozoki, and President Andrew Forson. We'll begin the opening with opening remarks from Johan, followed by a review of our third quarter 2026 financial results from Paul, and then an update on growth initiatives and strategic priorities from Andrew. After that, we'll open up the line for Q&A. Investors, you can type questions throughout the presentation in the chat.

I will try to get to those throughout the presentation, and then we'll also answer a few of them live. Meanwhile, we'll have analysts on for live Q&A after the presentation concludes. Before we begin, I'd like to remind everyone that certain statements made today during the call may constitute forward-looking information under applicable securities laws. These statements included, but are not limited to, comments regarding expected financial performance, business development, strategic initiatives, market expansion, product growth, and future opportunities. Forward-looking statements are based on management's current expectations and assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied.

With that, I'll turn it over to Johan.

Johan Wattenström: Thank you, Curtis, and thank you, everyone, for joining us today. The third quarter was encouraging for DeFi Technologies. We saw improving conditions across the digital asset markets, a strong recovery in Valour assets under management, and continued net inflows into our products. The quarter demonstrated how our platform performs when market conditions improve. We reported $18.3 million in revenue, $7 million in operating income, then $22.3 million in net income. Consolidated revenue for the first nine months was approximately $37 million. Trading gains and investment revaluations contributed materially to those results. Our priority remains building more consistent operating earnings from the fees and services that our business provide.

We believe the platform we have developed gives us considerable scope to grow those core earnings. Valour ended September with $643.7 million in AUM, up from $397.2 million at the end of June, an increase of more than 62%. That recovery reflected both improving asset prices and continued investor demand. Valour generated $26.1 million in positive net inflows during Q3, following $22.8 million in the first half of the year, bringing net inflows for the first nine months to $48.9 million. I think this is worth emphasizing. Throughout the downturn, investors continued to allocate new capital to our products, even as lower asset prices weighted on reported AUM.

I see that continued demand as an important sign of strength of our offering. During Q3, we began to see the combined effect of improving market conditions and continued inflows. That combination demonstrates the growth potential of the business. What's important to understand is how our business model responds when the market improve. Higher digital asset prices drive both greater market activity and new investments. Rising asset prices and positive net inflows increase the AUM, creating a larger base for management fees and staking income. Product mix strengthens this dynamic. When the market recovers, smaller, more volatile, and profitable assets will once again become a larger percentage of the AUM and drive the average monetization rate up significantly.

Because the supporting infrastructure already is in place and is highly scalable, expenses can stay more or less flat. This creates a significant margin expansion as the business grows. We have spent considerable time developing the infrastructure, products, and trading capabilities that support this model. Our focus now is on generating more revenue from those capabilities while improving efficiency and reducing suboptimal costs. We are working hard to expand distribution, bringing new types of products to market, and developing additional sources of revenue. Since quarter end, Valour launched eight new ETPs on November 5th, expanding access to assets across artificial intelligence, institutional blockchain infrastructure, decentralized trading, and lending.

On the institutional side, we are moving more of our efforts towards expanding distribution capabilities. That includes developing the distribution relationships, operating arrangements, and client relationships needed to drive AUM in these new types of products. In September, we launched Valour Funds SPC and its Smart Crypto Fund SP, expanding into actively managed strategies for professional and qualified investors, which is the first out of many funds to come in the future. This gives us another way to serve investors beyond our traditional exchange traded products, with a different fee structure and additional revenue opportunities with significantly more upside.

We launched the fund with approximately $10 million of our own capital and are focused on roadshows to bring early stage investors while building the track record and distribution. Additional fund structures and institutional products are also in development. Their launches remain subject to the necessary approvals and operating arrangements, but they give us further opportunities to broaden our investor base and revenue streams. Valour Custody is progressing as well. Our goal is to begin beta testing in the coming weeks, with a targeted launch in the first half of 2027. Initially, the platform will support Valour's own operations, providing infrastructure for additional products and services. We will consider offering it externally at a later stage.

We also continue to pursue the UCITS opportunity. Following the Swedish regulator's decision to deny approval, we have appealed and are very far also in an alternative EU jurisdiction and have good hopes for approval before year-end or, hopefully, at the very latest in Q1. This is also obviously subject to the approval from the FSA in that country. Stillman Digital is another important part of the business. It generated approximately $2.2 million in trading commissions during the quarter and $7.6 million throughout the first nine months, up approximately 22% year-on-year. We are expanding Stillman's institutional reach and client relationships, including larger clients in most jurisdictions they operate.

While trading volumes naturally fluctuate, its execution and liquidity capabilities give another source of revenue alongside Valour's asset management business that is highly uncorrelated. Stillman is also in the process of acquiring licenses in all U.S. states, which would allow the group to start marketing brokerage, custody, and asset management services towards U.S. retail and institutional clients. This would be a very valuable distribution channel for all active strategies also from Valour. Our balance sheet provides the financial flexibility to support aggressive growth. We ended the quarter with approximately $47.8 million in cash and cash equivalents, $5.6 million in USDT and USDC, and $48.2 million in digital asset treasury holdings.

We also held $20 million in Strategy Preferred Shares, $2 million in RWUSD, $25.5 million in venture investments, and a $10 million investment in our Smart Crypto Fund. Together, these assets represent approximately $159.1 million in balance sheet holdings and investments. We continue to take a disciplined approach to capital allocation, balancing investments in new opportunities with strengthening our existing operations and improving profitability. We're also evaluating acquisitions that could add scale, capabilities, and complementary revenue streams, with a high bar for shareholder value creation. I also want to address the significant disconnect we see between our current market valuation and the underlying value of the business. Shareholders have experienced a very difficult picture in the share price, for sure.

The decline has been deeply disappointing, and we take its impact on investors seriously. My confidence in the business comes from the financial resources, operating capabilities, and growth opportunities we have today. At recent trading levels, our market capitalization has been approximately $130 million compared with $165.8 million in total shareholder equity reported at September 30th. When we consider our financial position alongside Valour's asset management platform, Stillman's profitable trading business, and the growth opportunities across our institutional offering, we believe our current valuation materially understates the value and earnings potential of the business. We see a substantial opportunity to demonstrate that value through execution.

Delivering more consistent earnings, attracting additional capital, and converting our existing capabilities into revenue remain our priorities. Looking ahead, we are optimistic that the lows of this bear market may now lie behind us. If that proves to be the case, I believe DeFi Technologies is entering the recovery with a significant broader revenue potential than in previous cycles. The infrastructure supporting substantial growth is already in place. This is why we believe a sustained recovery could translate into substantially greater revenue and earnings potential than in previous bull market cycles. We are continuing to build that earnings capability continuously. Our focus is on attracting capital, expanding distribution, bringing products to market, and maintaining discipline on costs.

I'm confident in the direction of the business. We have the financial resources to keep building and a wider platform for us to grow in. Our responsibility is to convert those strengths into results for shareholders. With that, I'll turn over to Paul to walk through the financial results.

Paul Bozoki: Thank you, Johan, and good morning, everyone. I will begin with the positive momentum in Valour's net inflows, followed by our assets under management, reported financial performance, and balance sheet and liquidity position. Average assets under management for the quarter were approximately $492.8 million, and quarter-end AUM was approximately $643.7 million, compared with $397.2 million at the end of the prior quarter, representing a 62% increase. The increase was driven by positive ETP inflows in Q3 of $26.1 million, $48.9 million on a year-to-date basis, and a strong move in crypto prices, which saw Bitcoin increase 41%, Solana 62.1%, and Ethereum by 71.1% during Q3.

As we had noted in prior quarters, reported AUM reflects both net customer subscriptions and redemptions and changes in underlying digital asset prices. Our Q3 effective staking, lending, and preferred share dividend yield was 3.6% compared with 2.4% in Q2. The improved yield is due to higher yields on the back of rebounding crypto prices, slightly increased AUM staking, 59% versus 55%, and collecting a full quarter of dividends from Strategy preferred shares. Our Q3 effective management fee yield was approximately 1% compared with 1% in the prior period. We remind our investors that Bitcoin Ethereum products generally carry no management fee, which reduces the effective yield from our headline 1.9% rate charged on most of our altcoin products.

Our total AUM monetization rate rebounded to 4.6% from 3.3% in Q2 2026, bringing the company back into positive profitability at a core operating level. As I have said previously, break-even, we estimated 4.25% monetization on approximately $550 million of AUM. Total revenue for the quarter was $18.3 million, up significantly from the $7.8 million in the second quarter of 2026, and bringing our year-to-date 2026 revenues to approximately $37 million. Revenues increased in Q3 from Q2, primarily due to $12.3 million mark-to-market gains on cryptocurrency assets, less ETP liabilities.

We recorded $7.7 million of mark-to-market gains on our venture portfolio, mainly AMINA and Strategy preferred share investments, albeit these gains are recorded within other income expense category below the operating income line and do not form part of the revenue, but do contribute to our bottom line net income. This is a significant increase from the $15 million net loss we recorded in Q2, which was driven mainly by mark-to-market gains, which we feel marked the low point in the 2026 crypto winter. Our balance sheet strength and liquidity remain central to the financial story.

We ended the quarter with approximately $47.8 million in cash and cash equivalents, $5.6 million in USDT, USDC, and $48.2 million of digital asset treasury holdings, $20 million of Strategy preferred shares, $2 million RWUSD, $25.5 million of venture investments, and a $10 million investment in our Smart Crypto for total available balance sheet liquidity of $59.1 million. This liquidity provides flexibility to support the Valour platform, advance institutional commercialization initiatives, and fund strategic priorities as the market conditions evolve. We continue to approach capital allocation and discipline while maintaining financial resources to execute our plans. Turning to Stillman Digital, Q3 revenue was $2.2 million and year-to-date revenue was $7.6 million, representing year-over-year growth of 21.7%.

While Q3 revenues were approximately flat with the prior year, Stillman still expects revenue growth for the full 2026 year. Traded volumes were down in Q3 from previous quarters, but trading spread was maintained. Stillman provides an additional business line that may contribute diversification beyond the performance of Valour's crypto-linked AUM. Finally, on evaluating DeFi's potential going forward, we encourage investors to consider the momentum in our ETP inflows through the 2026 crypto winter, the significant increase in AUM from near-term bottom in June 2026, the increased monetization rate above our Valour core break-even, the launch of our Smart Crypto Fund with more products coming along, and our extremely strong liquidity position in excess of $100 million.

With that, I'll turn the call over to Andrew.

Andrew Forson: Thank you, Paul. Our institutional priority in the third quarter has been moving from product design to launch. This involves more than developing an investment strategy. It requires operational infrastructure, counterparties, distribution arrangements, appropriate regulatory and disclosure processes, and a demonstrable track record for prospective clients to evaluate. We have partnered with Apex for the marketing and distribution of our fund products via their institutional platform. We've also forged partnerships with capital markets groups that enable us to present our fund products directly to capital allocators in the major global financial centers. Promote and distribute our funds and ETPs directly to capital allocators is important, and we worked hard this quarter to establish these global channels.

Institutional investors need multiple looks before making an allocation decision. Starting early means investors get more time to learn about our products. Our first fund, Smart Crypto Fund SP, launched at the end of September 2026 with approximately $10 million of DeFi Technologies' own capital. Whilst the fund has not yet attracted third-party capital, the trading and operational track record that the third-party investors have requested is being established now, which is an important step in making the product ready for distribution. Institutions often need to evaluate actual performance and operating arrangements before allocating capital. Smart Crypto is no exception.

Under Johan's leadership, and after nearly a year of operating our DVIO Index as a broad conviction-driven investor signaling index built around proprietary Valour trading and capital flow data, I'm pleased to announce that earlier this week, approval was granted for the imminent launch of our very first institutional fund of funds, or more specifically, fund of Valour ETPs, the DVIO AMC.

This is an institutional-facing product that has a simple and unique revenue potential white label partnership model as well, that earns Valour additional management fee on its index constituent products, provides a single investment entry point to a broad and dynamic allocation of 50 Valour ETPs, and provides capital allocators and family offices with a simple investment product that enables them to easily and intelligently allocate 1%-2% of their portfolios to one investment product that provides regulated access to the broader digital asset market. This is unique because the underlying of this fund of ETPs are all regulated Valour ETPs. This AMC product already has an ISIN and is awaiting final documentation for its imminent launch.

I'm proud of the team that worked hard to create a proprietary, yet easy-to-explain product from scratch that no competitor can easily recreate, that can be sold internationally, and will serve to drive AUM to our existing Valour ETPs whilst enhancing Valour's average management fee platform-wide. We didn't stop there. We're using our unique position at the intersection of digital assets and capital markets to monetize our current and future venture portfolio by formalizing the structure through a traditional venture fund. The structure draws from four of our existing venture portfolio holdings as seed assets. The fund is expected to be a $250 million digital money and yield infrastructure venture fund, with DeFi Technologies as GP and participating LP.

Whilst it carries a traditional seven plus one plus one structure, the objective of the fund is to invest in late-stage growth and pre-IPO entities that align with the thesis, thereby providing potential for faster returns than traditional seed VC tech funds. As we work to finalize the launch documentation, we've already begun the all-important capital formation outreach process. We have been building relationships with family offices and other prospective institutional investors and presenting our capabilities to potential partners. These conversations help us refine product messaging and distribution models. Preliminary interest should not be conflated with committed capital or revenue, and the nature of many of these institutional and family office transactions are private.

As mentioned, our Apex partnership in concert with our proprietary capital market series events will anchor the capital formation outreach initiatives for our fund products. We will communicate developments when relevant arrangements have been finalized and disclosure is appropriate. Across these initiatives, the common objective is monetization. Our existing platform has been built around listed products, assets under management fees, and staking-related economics. Over time, commercially successful institutional strategies may broaden that model and increase monetization opportunities whilst enabling global access to our products. Our immediate focus is on execution. Smart Crypto is launched, DVIO AMC is imminent, the venture fund is being established.

Our task is to turn these product capabilities into investable offerings with clear distribution and operating arrangements. The continued positive net inflows into our core Valour ETPs provides an encouraging foundation for this work. The metric I most concern myself with is net inflows, from an operating perspective. If we are able to carry positive net inflows in tough markets and minimize negative net outflows in terrible markets, that is good for Valour, and what is good for Valour is good for DeFi Technologies. I'm proud of the work our team has done to reinforce Valour's leading market share position in many of the markets where we are operating, and particularly in Sweden.

The team has shown grit by consistently presenting our products and our story through marketing and at events. This has helped us secure positive inflows in a broader crypto market that has, by and large, experienced significant outflows as compared to a year ago when digital assets had reached record prices. Our customers are allocating new capital to our existing and our new products, even in a difficult market. We seek to carry this same competitive grittiness and discipline into our developing institutional business. I am excited that our platform continues to expand into the more lucrative, less crypto market correlated, globally accessible institutional fund space.

We always remain available at ir@defi.tech to named identifiable shareholders to discuss our products and strategies via calls or email. Conversations are far more productive and useful with actual people and shareholders. The company belongs to all of us as shareholders, and in these tough times, we appreciate engaging in direct discourse with our investors who have stood by our side in good times and challenging markets alike. We are working hard to execute on Johan’s strategy, and I am convinced, as these newly launched products are given the opportunity to gain traction whilst global markets become positive, DeFi Technologies will be well-positioned to capitalize. With that, I turn the call back over to Curtis for Q&A.

Curtis Schlaufman: Thanks, Andrew. I will start from a few questions from the chat. If you're an analyst, please raise your hand, and I will invite you on to ask questions live. I already see a couple have, so thank you for that. From the chat, we will start with, "Hi, team. Thank you for all your hard work." This is a question from Ben. "Do you think that Valour will get into any new countries' markets in the next year?" Johan or Andrew?

Johan Wattenström: Yes, I can start and then leave it to Andrew. Yes, I would be immensely disappointed if that would not be the case. Obviously, we have seen historically that the regulatory hurdles might be really hard outside of Europe, where we are not as familiar, so there is a learning curve. But on a few of these markets, we have seen some progress, not the least in the Middle East. Otherwise, as I think we communicated before as well, we have a lot of focus also on the European markets, more so than a year or two ago. Our core markets, obviously, Scandinavia, Germany, France. There is so much more to do within the EU.

There are 27 separate, very isolated local markets. The investors in this market do not trade a lot across borders within Europe even. That is the lowest hanging fruit as I see it. But obviously, we have the ambition to expand globally in selected markets. After Brazil, I think UAE is obviously where we put a lot of emphasis now again. We have seen encouraging signs. Otherwise, a big thing I think worth noting here is that a lot of our new products here are fund structures or other types of vehicles and products that are aimed at global institutional investors. So, that also marks a shift from the earlier ETPs.

The European-listed ETPs are mostly traded by domestic markets and, to a big extent, by retail. But by taking this big step in product development, we open up the global market for family offices, private banks to cooperate with, for other fund distribution platforms, and the institutions in general, including pension funds. So, I think that is also a huge extra step. Also, I want to mention what is happening in Stillman, where the U.S. market is likely to open up for the group here with the licenses they are going after across all U.S. states. First of all, targeting the three to five largest ones.

Through these licenses and Stillman, there will be a huge opportunity for us to even market retail products under our licenses in the U.S. Andrew, if you have something to add to.

Andrew Forson: No, I think you said it perfectly. Yes, I am quite confident that we will have more international exposure, and I want to reemphasize your words, Johan, that the new products are particularly attractive globally.

Curtis Schlaufman: Thanks, guys. Question from Mark. "Can you speak to the slightly higher monetization rate linked to staking and lending revenues in Q3 2026 versus Q3 2025? Monetization rate defined as lending and staking income average AUM." Paul?

Paul Bozoki: Yeah. Sorry, for everybody, it is up because we bought the Strategy shares. As people know, we purchased the Strategy very late during Q2, so we had a full quarter pickup of Strategy income. For everybody, on year-over-year basis, our rate is strong. On absolute dollar values, it is less because the AUM is less. On a quarter-over-quarter basis, the rate has significantly increased, and we did view Q2 as hopefully the bottom in the crypto market. The long-winded answer is the Strategy contribution is paying 12%.

Johan Wattenström: A small added comment there as well, because obviously, we are working very hard to increase monetization across all the assets in our products. As I think most of you are aware, the contraction of the monetization rate during the bear market in crypto was due to the lower crypto market levels, where normally, all the high-yielding smaller cryptos where we have the highest yields, it might be up to 12%, 15% in some cases, these are much higher volatility. If Bitcoin goes down 50%, they might go down 80%, and a much larger proportion of our AUM consists of Bitcoin, Ethereum, where we have much lower monetization rate.

As also seen here, when the market picks up a bit, the smaller ones like Solana, SUI, and others, where we have high yields, they become a much larger part of the portfolio and then drives the average monetization rate. But we have also, within all these assets, been more efficient, but it doesn't matter that much until the market turns really bullish, because it's still a lot of Bitcoin, Ethereum as a percentage of the AUM. That's being said, we have found good ways to securely start monetizing part of the Bitcoin in a better way than before. I hope that will improve this going forward as well.

But yeah, Strategy's preferred shares has been a big part of Q3.

Curtis Schlaufman: Let's pivot to some analyst questions for a bit. Ed had his hand up first, so Ed, go ahead and the floor is yours.

Edward Engel: Hey, everyone. Thanks for taking my question. A couple quick questions. First of all, on the net inflows for the quarter, it looks like they kind of remained pretty strong. I remember Q2 included one pretty big deal, and that kind of was a driver there, but it looks like it's been sustained into Q3. Just wondering if anything particularly is driving the strength in Q3 net flows.

Curtis Schlaufman: Johan, you want to start, or David?

Johan Wattenström: Okay. Yeah, I could start with that. I don't think it's been one single driver. It's been across most of the assets. We had inflow most weeks across most of the assets. It's been consistent, similar to earlier downturns. Many of our products are also quite unique. There's been some re-weightings within the portfolios, but often we see that if it comes out on one asset, it goes into another. It's not one factor like Solana or SUI has seen all of this inflow. It's been pretty diversified.

Edward Engel: Great. Thanks for the color. On the Smart Crypto Funds, how are those going to be managed? I recall that you had minority interest in a hedge fund that was kind of a quant AI fund. I was wondering if that entity's going to be managing these or if there's another entity that's going to be managing this.

Johan Wattenström: Exactly. Neuronomics is regulated by FINMA Swiss Fund Manager, where DeFi Technologies own 49.5%, I believe. We have just under 50% of that manager. That team has worked, I think, seven-plus years with high-frequency, model-driven trading strategies in crypto, mainly based on machine learning and AI for both signals and for portfolio allocation and cash management. It's a very experienced team within the AI field, and they have a great record since before in other crypto strategies. It's the top 50 coins that constitutes the universe. I'm on the board of Neuronomics as well, and we've known them for many years.

Edward Engel: Great. Thanks for that. Then quickly, on the balance sheet, your private investments and venture picked up in the third quarter. I was wondering if that was due to new investments or just remarking some of the valuations.

Paul Bozoki: I can take that. Yes, Ed, that is mainly to remarking AMINA. So, AMINA is $21.8 million of the $25.5 million. Similar to where it was at the end of Q1, if you look back. It is basically back. Yes. No other significant changes in there. It is just really, it is AMINA.

Curtis Schlaufman: Kevin, the floor is yours.

Kevin Dede: Thank you, gentlemen. Appreciate you having me on the call. Just a quick switch back to the Smart Crypto Fund you launched. Johan, you mentioned that you had seven-plus years of return history. I was wondering if you could share any of that, and maybe what you have seen in this fund since its launch.

Johan Wattenström: Yeah. What I hope I said was that the team at Neuronomics has worked seven-plus years with AI strategies within the crypto field. They have another strategy that you can invest through an actively managed certificate, and it is mostly Swiss investors in that fund. That fund has been active for many years live, and I would say the Smart Crypto is a continuation of that. They still have the other strategy, will continue to be live. There are some differences between them, but this builds on that strategy, and yeah, in my view, is a more attractive new version that we have really high hopes for.

And yeah, obviously, it is essential here for us now to get early mover investors into this fund beside us. But also, as always in this environment, this is not exactly the same strategy they have the live track record in. I think a lot of investors will require us to have, yeah, 6 to 12 months or so live track record. In equities and other more mature markets, obviously, they often want two, three years if it is not an early-stage fund or investor in hedge funds. But in crypto, it is a bit more flexible. I do not think we would have to wait that long.

But yeah, the strategy launched live first time with, I would say, substantial money when we launched the fund. We have had the test portfolios before that.

Kevin Dede: The $10 million initial funding has come exclusively from DeFi?

Johan Wattenström: Yes.

Kevin Dede: Okay. No real read on returns just yet because it is too early? Is that my final answer on that?

Johan Wattenström: Yeah, Paul, maybe you can correct me if I am wrong.

Paul Bozoki: Yeah, it is up 1.8% on the last NAV I saw. It has been a tough crypto market, as probably everybody on this call is painfully aware. Certainly, last week's NAV was up 1.8, so it was $10,177,000. So, it is slightly up in a very brutal market.

Johan Wattenström: I think during the same time period, I think the crypto market in general, Bitcoin has been down 25%, whilst the fund has been up 1.8, so.

Kevin Dede: Yeah. Well, congratulations on that. That is a lot more than I have earned. Over what length of time?

Paul Bozoki: It launched September 21st, Kevin.

Kevin Dede: 9/21. Gotcha. Thank you.

Paul Bozoki: Yeah.

Kevin Dede: Okay.

Paul Bozoki: Okay.

Kevin Dede: Since I have your attention, Paul, thank you. How liquid is the venture and private portfolio? Because you had a group, in the current slide that Curtis is showing, it looks like it's in there and part of your overall liquidity, and yet I'm thinking somehow it's tied to DeFi Alpha. Maybe you could help me understand how those pieces sort of fit together.

Paul Bozoki: Sure, for everybody. Okay, so cash, USDT, we all know what that is. The treasury, that's our own, our net long crypto, that's all liquid stuff. Stretch is extremely liquid, as I think everybody on this call knows. RWUSD is a Binance product, can sell it in a second. The venture portfolio is less liquid. These are private companies. There is always secondary markets that we could use to exit, but it would take slightly longer. The Smart Crypto Fund, that's our seed stake. We've got a support period to launch that up where we have to keep that money there after we're out of the support period, that there's certain net assets of the fund for Neuronomics to manage.

We could cash out our $10 million. So, that's a liquid asset as well.

Kevin Dede: Okay, fair enough.

Paul Bozoki: Yeah.

Kevin Dede: On the eight new funds that you launched in early November, they are all branded under Valour, and they all seem targeted for the Swedish exchange. I think one of the overarching questions in my mind is how you leverage this incredible portfolio of products that you have developed across other exchanges. Understand the concentrated effort is in Europe now, and that is fine. I just wonder if you are able to give us a timeline when you might expect to see more of your funds trading on the exchanges in France and Germany, since you labeled those geographies.

Johan Wattenström: Yeah, for sure. We are launching new, more asset-backed products. I believe they would be at least before year end, hopefully within a month, in Scandinavia, but also in some of these other markets. The eight ones we did here was the exchange traded notes. The reason we push everything out in Scandinavia first is obviously, first of all, it is a good test market to see what the investors are interested in, but also we have a very close relationship to the exchange, so they allow us to list a wide variety of assets.

Often a lot of other exchanges, they do not want to be the first movers, so often we need to launch something in Scandinavia first, and then we can pressure other exchanges to launch it domestically, because they often do not want to be the first exchange to list a product. That is one reason. You will see more cross-listings for sure. Also worth noting is that when the UCITS fund go live, 10% of that at least will be invested in our own ETPs, and that would then the whole universe for that will be what is listed across any exchange.

Also for the DUB Active Managed Certificate here, we are launching, that will exclusively invest in our top 50 products. Also new inflows will weight up those where we get inflows to reflect the market sentiment, and those will use all our whole universe. I think one reason is that we have seen investor demand in Scandinavia for these specific products, but we also want to make sure to remain first movers in all interesting instruments, and when we see something taking off, then we will cross-list it. So, yeah, that is a way for us to have the first products. That's often how you gain most of the AUM before the competition can react freely.

Kevin Dede: Thank you for the color, gentlemen. I'll hop back in the queue.

Paul Bozoki: Thanks, Kevin.

Andrew Forson: Curtis, can I take a second just to talk about Smart Crypto a moment? Folks, this is a very interesting fund product. The reason why is one of the things investors are most concerned with are something called drawdowns, which are significant declines in value of a fund. The Neuronomics team, of which, as Johan said, we own about 49.5% of that company, and it's a licensed Swiss digital asset manager, not digital asset, but across all assets. They use artificial intelligence or machine learning to be able to really reduce drawdowns.

That is why, as Kevin correctly pointed out, the last month, the broader crypto market has fallen significantly, whereas the Smart Crypto is up marginally, and that's one of the benefits of this product. So, you get exposure to the upside of market movements, of which since September 23rd, there hasn't been that much upside movement in the broader market, but most importantly, it protects you from the big drawdowns, the downside. Any institutional investors in this meeting, please reach out so we can have a presentation on that product.

Curtis Schlaufman: Thanks, Andrew. If there's any other analysts who want to join live, please raise your hand. In the meantime, we'll go back to a few more questions from investors. A question from Jeff Rubin. "Why has DeFi Alpha made no trades in 2026, and when might that change?

Johan Wattenström: Yeah, I'm happy to answer that. I think, like we have, I think, communicated earlier, and that's still unfortunately the case, that we are still in talks with all these counterparties in our pipeline. They all want the market to go higher. That's one reason, and that's obviously one big opportunity as soon as the market turns up higher. I think for that market to be really hot again, I believe maybe Bitcoin has to be over $90,000. It's just a guess.

But I know that when we do these types of trades, the counterparties, if it's a foundation, for instance, if the market goes up 2x, and some of these coins has fallen significantly, they will get double the amount of cash onto their side. And also, we will get double the profit. I think we both, as long as the trades happen, I think both sides here are happy to wait for higher asset prices. Obviously, we are still hunting for opportunities intensively. We know how much this can move the needle from history, so it remains a top priority for us to really try to find the opportunities for us to do this, even in this market.

And it might happen. Yeah, I can assign some probability to it, but unfortunately, I would believe that we need to see at least, yeah, prices to come up, maybe Bitcoin over $89,000, $90,000 or so, until we see these counterparties becoming eager to really get cash into their coffers again. Also, another factor too that will make it easier for us to widen the scope among other assets is that a lot of the lockups since early trades are actually, yeah, they're not 100% done, but we have a lot more room now than we had a year ago. So, that's a positive factor.

But yeah, this is top of my mind every day, to be honest, and we really hope we can get back with positive results on this. But I think from seeing how the discussions are going in this market, people, they still have cash, so they're not desperate, so they're waiting for a better crypto market. I think the consensus still is that among these counterparties, that the market will go higher within this next three to six months significantly, so they are not keen. It might be a shift if they think the bear market will be longer. But yeah, for now, that's all I can say, unfortunately.

Curtis Schlaufman: I think just an easy parallel is if you think about the way public companies raise capital, they want to do it with as high of a share price as possible. So that way, it's less dilutive. It's not necessarily dilutive for the foundations. It depends on their tokenomics, but that's an entirely different conversation. But again, they want to be able to do these transactions when their tokens are at higher prices, because it's more accretive for them, like Johan mentioned, much like a public company would like to do capital raises when their stock is valued at a higher market cap.

I guess there's a lot of questions about a potential reverse split and the $1 Nasdaq compliance, split into three different questions. So, I'll frame it this way. One, how do we plan to meet the $1 threshold by March? Do we anticipate a reverse split, or are we still hoping to overcome the $1 threshold organically?

Johan Wattenström: Yeah, I can answer that. We have been awaiting better markets, for sure. We will do a reverse split if we are not over $1 at the latest before the deadline, beginning of March. Hopefully, that would not be necessary out of just that reason. We don't want to exclude the possibility of us doing a reverse split. There might be other reasons for it as well, as it's bad for different reasons to be at the cent level in stock prices. Some brokerage will not even show stocks that are trading too low in the U.S. markets. Some have a $3 level, I think, cutoff level, and some funds don't invest in stocks under $1.

Yeah, I'm not able to say that we will not do a reverse split in any scenario, but if we do, I think we will do it for sure before March 1st with the deadline. We will have to, because obviously we will not accept to be delisted. Yeah, I don't think there's much more maybe to say.

Curtis Schlaufman: Yeah. I think a lot of the fear around reverse splits comes from the fact that they're typically done by companies who are financially distressed or barely generating any revenue. That is not the case for this company. Typically, our revenue generation or balance sheet would at least support a minimum viable market cap in most cases. I think a lot of the weakness right now stems from the fact that we just can't get institutions buying the stock since we are trading under a dollar. I literally talk to several funds every week who would love to buy the stock because we are effectively trading below liquidation levels at this point from a market cap perspective.

They tell me they would buy this, a company like that up all day long, because there's effectively very little, if not no downside. That's another consideration. Look, again, to emphasize, most companies that do reverse splits are financially distressed or generating very little revenue, and that's why you oftentimes see a downward spiral or continued downward spiral after a reverse split for those companies. But if we have to do one, me personally, I'm fairly confident that we have a lot of buyers who would find the opportunity very attractive once we are, if we are trading back over well over a dollar, $2, but at that point, depending on how it's structured.

Management has previously stated that Valour's custody platform was on schedule to launch in the latter part of 2026. Why has this moved to first half 2027?

Johan Wattenström: Yeah. The actual development has gone faster than anticipated, but the only reason is that we actually have some other highly important infrastructure projects where I've, for a time window, have reallocated resources. Those we cannot really talk about those initiatives yet, but some resources that have been working on that platform have temporarily been focusing on some other important internal infrastructure platforms in order to be able to increase our monetization and other things. It's just been a short-term reprioritization, but we are as committed as before to do it because that will also help us build a competitive edge towards competitors, and it's very important for our internal tech stack and the infrastructure as well.

That being said, the development has gone forward much quicker than anticipated, even though we had the team has not been as big. It's on track, and hopefully we can give a more precise launch date before end of year here. It might go quicker than usual, than we stated here, when we allocate back these resources, which we will do quite soon.

Andrew Forson: Yeah.

Curtis Schlaufman: Yeah.

Andrew Forson: I just want to corroborate what Johan is saying. Having worked for digital asset foundations, completing a custody solution that is able to support institutional digital assets in anything under two years is absolutely phenomenal. Our team has been able to pretty much get internal, I'll call it an internal beta or early versions operating in less than a year. The reason why they've been able to do that is some of these guys were behind Switzerland's first institutional custody and digital asset trading and banking platforms. So they know the work. They've done it very, very well, and they're part of our team.

This is also one of the sorts of projects that is requiring capital to invest in to get it done right. Because, like coding on blockchain, you can't make a mistake. You can't have an oops. I think first half of 2027 is still quite effective in terms of a delivery point, and I think that should keep us on schedule and give us great competitive advantage. Imagine us being able to protect our margins, that instead of paying for certain custody and staking services, we're able to support all of those in-house on our own platform. I mean, that is worth a considerable amount.

Curtis Schlaufman: Thanks, Andrew. Next question from Will. I understand that a lot of pressure attributed to the revenue and share prices due to the crypto bear market. Can you share why could the costs continue to rise while revenues fell? Why wasn't more cost discipline applied since a lot of our margins are under pressure? Will, can you speak to year-over-year

Paul Bozoki: Yeah.

Curtis Schlaufman: Cash burn?

Paul Bozoki: We've guided people this year that our cash operating costs, which for everybody when you look at our financials is, one line says, "Operating costs and fees and commissions," will be in the $36 million to 39 million range. That's what we told you at the beginning of the year, and we are tracking to achieve that, and that is a reduction from the prior year. Unfortunately, people are well aware of our class action lawsuit, and U.S. lawyers are expensive, so that is a bit of a burden on the company. But other than that, we are tracking to what we told you we'd do.

Curtis Schlaufman: Yep. I think I saw another inquiry offline about professional fees, and that includes legal expenses related to the class action. I got a question around the class action. We can't necessarily talk about that publicly, but we do hope to have this matter resolved in early 2027. Final few questions. A lot of these are repeats.

Andrew Forson: Curtis, while you are looking

Curtis Schlaufman: Yeah.

Andrew Forson: At final few questions, I just want to mention that the Valour platform is actually unique. Right now, we have 108 ETPs, and in one day in September, they launched eight products. That is just unheard of. So, much so that we are actually able to have an index of our own products without counting all of the ETPs. Yes, there was an R&D process, legal expense, associated technological expense with creating a hedge fund platform. We have a very committed team in Switzerland alongside Johan that are actually recreating what they have done with Valour across a hedge fund platform. Why is that special to DeFi Technologies? Well, for a few reasons.

As you know, Paul has said that our average management fee is, I think, 1.2% across the ETP platform. With the hedge fund platform, you would get baseline fees of approximately 2% because most of them work on a two and 20 model, by and large. All of a sudden, with these different products that you are getting, you also have the ability to generate greater upside. This is why this priority is important. Whenever we talk about an instrument like UCITS, it is not just an acronym. UCITS is probably the gold standard for capital markets fund products globally, their ETFs. Why is UCITS interesting? Johan had a very powerful statement in his statement.

It enables us to invest in equities, one of which could be DeFi Technologies. UCITS can be adopted, since it is a gold standard, by pension funds, which tend to be the largest asset allocators in the world. All of this takes a lot of time, legal effort, infrastructural effort, but the idea is to be able to be as efficient with these advanced sophisticated products as we are now with the ETPs that almost people take for granted, the fact that, oh, we have got 108. They are forgetting the fact that we have the largest portfolio of ETPs in the world. That is a good thing, and that is your company if you are a shareholder in DeFi.

Curtis Schlaufman: Thanks, Andrew. One last question since we're pretty much at time. Has Stillman Digital handled any QCAD volume off the release of their stablecoin in September? Or I guess it would be helpful to explain the relationship there.

Andrew Forson: I can probably take that. The short answer is, first, you need to onboard the stablecoin issuer. The short answer is no, but that's not because that relationship is not going to happen. It's just because it takes time. We're in a good position because obviously we own Stillman Digital, and we're significant shareholders of Stablecorp. You can believe that we talk with them often, and there will be integrations. That is something that has been discussed and worked on, but it hasn't been implemented yet. The nice thing about Stillman is they make a lot of money trading revenue, whether the markets move up and down.

But one of the challenges is the onboarding process for an OTC prime broker like Stillman, it takes time because there's a lot of KYC and know your business stuff. It takes three months and longer if it's a newer project. But you can expect us to really focus on ensuring that we capitalize on the synergies of all of our portfolio companies within DeFi Technologies and make sure they work together for the benefit of shareholders.

Curtis Schlaufman: Great. Thanks, Andrew. With that, we're at time. Thank you all so much for joining. Thank you for your support. If you do have any follow-up questions that I was not able to get to or we weren't able to get to on this call, please do reach out, ir@defi.tech, curtis@defi.tech. I will try to get to your email as soon as possible. See you guys in March. Thanks again.

Andrew Forson: Thank you.

Johan Wattenström: Thank you.

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