SharpLink Gaming Ltd. (SBET) Earnings

Management highlights

### Ethereum Ecosystem Development & Long-Term Positioning - Ethereum has matured into a global programmable financial infrastructure, with Ether functioning as a productive financial primitive that powers network security, economic coordination, and a wide range of on-chain financial activity including stablecoins, tokenized assets, and decentralized finance (DeFi). - Two consecutive on-time hard forks (Pectra and Fusaka) shipped since May 2025 have increased Layer 1 (L1) execution capacity and expanded data availability for Layer 2 (L2) networks. The next major upgrade, Clamsterdam, is targeted for H1 2026 to improve block processing and enable higher future L1 throughput. - Ethereum is proactively prepared for quantum computing threats, with built-in cryptographic agility allowing the network to adopt new security standards over time. The ecosystem has researched quantum-resistant cryptography for years, and Ethereum will scale even as it hardens against quantum risk, unlike competing blockchains. - Ethereum holds dominant market positions in decentralized finance, stablecoins, and tokenized assets, with the deepest liquidity, largest developer ecosystem, and strongest network effects. Institutional adoption is accelerating, and long-term Ether value is expected to decouple to the upside from Bitcoin, driven by growing on-chain activity.

Guidance

- Sharpling's core long-term guidance remains unchanged: the firm's north star is to compound ETH per share over time, prioritizing risk management alongside productivity, while generating incremental returns above the baseline Ethereum staking rate. - Management expects exponential growth in tokenized real-world assets on Ethereum over the next 12-24 months, driven by recent product launches and commitments from major institutional infrastructure providers including the New York Stock Exchange, NASDAQ, and DTCC. - Management maintains that the vast majority of Sharpling's ETH holdings will remain in simple and liquid staking over the long term, with only a minority allocation allocated to more sophisticated alternative yield-generating strategies. - No changes to full-year 2026 financial or operational targets were announced in the call.

Segment performance

Sharpling operates a single business segment focused on Ethereum (ETH) treasury management. As of March 31, 2026, the firm held 589,305 native ETH with a fair value of $1.2 billion, plus 189,327 liquid staked ETH (LS ETH) and 66,102 wrapped Ether (WE ETH) with a combined net cost of $487 million. As of May 4, 2026, total combined ETH holdings stood at 872,984 units. Q1 2026 revenue was $12.1 million, up from $0.7 million in Q1 2025, driven by the success of the firm's ETH staking strategy, including a $200 million deployment to Linea Layer 2. Net realized gain for Q1 2026 was $12 million from redemptions and conversions of ETH derivatives, while an unrealized loss of $506.7 million was recorded due to soft ETH market conditions during the quarter. SG&A expenses were $9.9 million in Q1 2026, up from $1.1 million in the prior year quarter, reflecting costs related to the execution of the ETH treasury strategy launched in mid-2025. Net loss for Q1 2026 was $685.6 million, compared to a $1 million loss in Q1 2025, driven primarily by the unrealized loss on ETH holdings and a $191.7 million impairment charge for LS ETH and WE ETH, which follow different accounting treatment under current US GAAP. Cash on hand as of March 31, 2026 was $16.9 million.

Risks & headwinds

- Short-term crypto price volatility and correlation to macro geopolitical and liquidity trends have created a temporary disconnect between Ethereum's growing institutional adoption and Ether's token price, driven by the after-effects of a multi-quarter deleveraging cycle that began in fall 2025. - On-chain DeFi exploits remain a material risk, with most recent exploits stemming from human error and centralized points of failure (rather than smart contract vulnerabilities) that can be exacerbated by the combination of AI and social engineering. - Regulatory clarity for digital assets in the US is progressing slowly, though recent legislative proposals are viewed as a positive step for the industry. - Uncontrolled autonomous activity by AI agents in agentic finance creates operational risks, including the potential for agents to execute transactions outside of approved parameters.

Analyst Q&A

• Q: What benefits come from launching the on-chain yield fund with Galaxy instead of Sharpling deploying ETH directly, and could the fund size be increased later?

  A: The Galaxy partnership gives Sharpling access to a larger pipeline of high-quality early-stage on-chain opportunities, paired with Galaxy's existing institutional-level diligence and risk management capabilities. Sharpling's long-term capital base is uniquely suited to solve the cold start problem that on-chain protocols face after launch, which traditional VC and liquid funds cannot address. The partnership with Galaxy, which has unique market position and deal flow visibility, aligns with Sharpling's goal of selective, discerning capital allocation. Yes, this could be the first of additional funds with Galaxy or other partners, depending on results.

• Q: Why has Ether's price lagged growing institutional adoption, and when will this disconnect close?

  A: Over the last year, ETH has become much more correlated to short-term macro, geopolitical, and liquidity trends than in prior periods, and the market is still working through the after-effects of last fall's deleveraging cycle. This has created a temporary divergence between price and long-term fundamentals, which management views as a dislocation rather than a structural weakness. Ethereum has built an unrivaled dominant position across all major growth verticals, and short-term price movements are less important than long-term adoption trajectory, which continues to strengthen. The disconnect will close as short-term market structure works itself through and ETH begins trading more heavily on its long-term fundamentals.

• Q: Recent DeFi exploits have put pressure on the sector; how has this changed Sharpling's view on risk for L1 vs L2 and different ETH deployment structures?

  A: None of Sharpling's assets were affected by recent high-profile DeFi exploits, due to the firm's strict institutional-grade partner and protocol vetting, internal controls, and custody arrangements. Most recent exploits were caused by off-chain human error and exploits of centralized points of failure, not underlying smart contract or blockchain technology risk. Sharpling maintains an extremely conservative vetting process, turning down most opportunities that do not meet its risk standards, and this approach will not change. Future deployments will continue to prioritize rigorous risk scrutiny over yield, and the Galaxy fund benefits from Galaxy's large, experienced on-chain security team.

• Q: How do you expect agentic finance to evolve over the next 12 months, and why is Ethereum best positioned to capture this opportunity?

  A: Agentic finance is still in early stages, but growth is accelerating rapidly due to the confluence of widespread on-chain smart wallet infrastructure, the development of standardized payment rails like the X402 protocol and ERC8004, and the integration of AI agent infrastructure with on-chain systems. Growth will be driven initially by autonomous micropayments, and will expand to include automated trading strategies, automated yield harvesting, and lending/borrowing of tokenized assets. Ethereum's existing scale, security, liquidity, and developer ecosystem make it uniquely positioned to support this growth, though activity will occur on both L1 and L2 networks. The ecosystem is already proactively building guardrails to limit risk from unregulated autonomous agent activity.