Forward Industries, Inc. Q2 FY2026 earnings call

Solana Ecosystem Momentum

• Solana has accelerated its transition to real-world financial infrastructure, emerging as the leading default settlement layer for on-chain dollar-denominated stablecoin and payments. Year-over-year Solana payment volume grew over 8x, nearly 3x the median growth rate of comparable blockchain and fintech platforms.
• Major industry and institutional partnerships have consolidated around Solana: the Solana Foundation launched Payments.org with global payments partners including Mastercard, Worldpay, and Western Union; Western Union will go live with its USD payment token on Solana in H1 2026.
• Tokenized real-world assets (RWAs) are growing rapidly on Solana: Ondo Finance launched over 200 tokenized U.S. stocks and ETFs on-chain, and the SEC approved NASDAQ's proposal to trade tokenized securities alongside traditional assets. Forward was an early pioneer of on-chain SEC-registered public company shares, with 6.9 million of its own shares tokenized on Solana.
• Jump Crypto's Firedancer independent Solana validator client, now in phased mainnet deployment, delivered testnet throughput exceeding 1 million transactions per second, improving the network's decentralization and resilience for large-scale institutional participation.

Forward Industries Strategic & Operational Progress

• The company executed three key strategic actions in Q2 2026 to strengthen its balance sheet and drive SOL per share growth: a 7.4% reduction in outstanding common shares via a strategic repurchase, $40 million in low-cost institutional debt from Galaxy Digital, and a material SG&A cost reduction initiative.
• As of March 31 2026, fully diluted SOL per share grew to 0.0669, representing 29.1% annualized growth on a fully diluted basis since launch of the treasury strategy, and over 44% annualized growth on an in-the-money share basis. Modified net asset value (MNAV) per share was $0.827 as of quarter-end.
• Forward's Solana validator is the 8th largest in the network by stake weight, with over 6.9 million SOL staked to the node; its liquid staking token fwdSOL is the foundation of the company's capital market strategy, serving as collateral for the $40 million Galaxy credit facility, with 91% utilization of the tokenized FWDI collateral pool.
• Forward co-led a $5 million Series A financing for OneRe (styled OnRe), a Solana-native on-chain reinsurance protocol, and deployed $16 million into ONyc, OneRe's yield-bearing token. This investment adds USD-denominated, non-correlated revenue to diversify Forward's revenue base beyond SOL staking.

Regulatory Updates

• Recent U.S. regulatory developments have delivered meaningful clarity for the industry: the SEC and CFTC established a formal coordination framework via MOU, and issued a joint interpretive release classifying Solana as a digital commodity (not a security) and confirming that protocol staking activities are not securities transactions. The company remains encouraged by bipartisan progress on the Digital Asset Market Clarity Act, which would provide statutory jurisdictional clarity.

Forward Industries operates a single business segment focused on Solana digital asset treasury and Solana ecosystem participation. For Q2 FY2026, total revenue increased over 4x year-over-year to $13.0 million, up from $3.1 million in Q2 FY2025. Staking revenue from the company's Solana treasury strategy drove nearly all of the revenue increase. Gross margin expanded materially to 70.0% in Q2 FY2026, up from -5.7% in the prior year period. Selling, general and administrative (SG&A) expenses were $6.6 million in Q2 FY2026, down from $7.2 million in Q1 FY2026. As of March 31, 2026, the company held 7,044,079 SOL, with 25.1% of holdings represented by fwdSOL (Forward's proprietary liquid staking token). Cumulative staking rewards from inception exceeded 200,000 SOL, with current native staking yields between 6.5% and 7.2%. GAAP accounting required a $201.7 million loss on digital asset holdings and an $85.1 million impairment charge related to fwdSOL, resulting in a net loss of $283.1 million for the quarter, driven entirely by declines in the market price of SOL.

• The company maintains its commitment to driving ongoing SOL per share compounding, with near-term priority on share repurchases while Forward's stock trades at a discount to modified net asset value (MNAV), and will shift focus to SOL accumulation as MNAV normalizes.
• The cost reduction initiative targets a quarterly SG&A run rate (excluding stock-based compensation) of approximately $4.8 million, down from $7.2 million in Q1 FY2026; the cost cuts are structural and permanent, with no expected material reinvestment needs that would reverse the reductions, and operating leverage is expected to improve as revenue grows.
• The company will continue actively optimizing its capital structure using the low-cost Galaxy facility and potential new financing relationships to lower the weighted average cost of capital, unlocking additional capacity for strategic investments.
• Management will prioritize evaluating strategic minority investments, M&A, and on-chain operating initiatives that deliver returns above the native SOL staking yield, with a focus on tokenized real-world assets on Solana that add non-correlated USD-denominated revenue.
• Management expects adoption of agentic AI-powered payments and trading on Solana to accelerate meaningfully in the back half of calendar 2026, positioning Solana to capture growth in this emerging segment due to its high throughput, low costs, and broad integration with on- and off-ramps.

• Short-term fluctuations in the market price of SOL create GAAP accounting volatility that impacts reported net income, though these fair value changes do not impact cash flow, staking yield generation, or the company's ability to compound SOL per share.
• On-chain activity and strategic investments carry inherent smart contract risk, though management mitigates this by prioritizing tokenized RWAs, which allow issuers to remedy exploits via a burn and remint process to reduce downside risk.
• The company retains variable SG&A costs tied to AUM-based asset management fees paid to Galaxy Digital, which will increase in line with growth in the company's asset base.
• Regulatory clarity for digital assets remains incomplete; while recent developments are positive, the final outcome of ongoing legislative and regulatory processes is uncertain, and could impact the company's strategy and operations.
• The recent Drift Protocol security incident on Solana was a social engineering attack targeting privileged off-network access, not a flaw in the Solana core protocol, but broader industry security incidents highlight the need for rigorous operational security for on-chain participants.

Q: How does Forward plan to accumulate additional SOL going forward, beyond reinvesting staking rewards? / A: Management views share repurchases as the lowest risk-adjusted path to SOL per share accretion when MNAV is meaningfully below 1x. The company is also exploring novel accumulation methods like discounted locked SOL derivatives. Once the market exits the current bear environment and MNAV normalizes, SOL accumulation will become the primary focus. If non-correlated USD revenue from initiatives like OneRe grows enough to cover all cash operating costs, that will create a resilient base for ongoing SOL per share compounding independent of SOL price.

Q: How does Solana's positioning look for growth in agentic AI-powered payments and trading, relative to competing blockchains? / A: Solana is uniquely positioned for agentic activity because it offers the high throughput, low cost, and fast transaction settlement that autonomous agent payments require. It also integrates with every major global on/off-ramp, custodian, wallet, and market maker, which is critical for institutional adoption. Major open agentic payment standards (x402 from Coinbase, MPP from Visa) are already live on Solana, and adoption is expected to ramp in the second half of 2026 for both consumer payments and usage-based micro-billing for developer services. On the trading side, new automated Prop AMM innovations powered by AI are already driving higher on-chain liquidity than centralized exchanges for major pairs.

Q: Is there a long-term target allocation for native SOL staking, fwdSOL, and other ecosystem initiatives? / A: Currently 25% of total SOL holdings are in fwdSOL, and management expects this share to increase over time because fwdSOL is the most efficient form of collateral for the company's financing strategy. There is no fixed target allocation. The core framework uses 7% native SOL staking as the baseline hurdle rate, and all new initiatives (like the ONyc investment) are required to deliver returns above this baseline. Borrowing against fwdSOL at low interest rates allows the company to deploy additional capital into higher-yielding opportunities without selling SOL, creating accretive incremental returns while maintaining currency and asset-liability matching.

Q: What explains the 44% annualized in-the-money SOL per share growth, and are there other M&A opportunities in the pipeline? / A: The vast majority of the recent 44% annualized growth comes from share repurchases, both the large March transaction and ongoing programmatic repurchases over the past several months. For future M&A and minority investments, management is focused on tokenized RWA opportunities across reinsurance, royalties, and asset-backed finance that meet two criteria: the investment delivers returns above the native SOL staking yield, and Forward can use its balance sheet to act as both an equity partner and liquidity provider to create a mutually beneficial catalyst for growth, as it did with OneRe.