Galaxy Digital Inc. Q3 FY2026 earnings call

Strategic Vision and Market Positioning:

• CEO Mike Novogratz highlighted a dual focus on crypto finance moving on-chain and AI infrastructure build-out.
• Emphasized conviction that crypto-developed financial architecture will underpin future traditional finance systems.
• Noted encouraging regulatory directions from SEC and CFTC despite lack of final clarity legislation.

Digital Asset Business Operations:

• Global markets trading volumes grew 12% quarter-over-quarter, outperforming the declining broader spot market.
• Average loan book expanded over 25% to approximately $1.8 billion.
• Assets under management increased over 30% to $5.9 billion, driven by ETF and alternative growth.
• Assets under stake grew 64% to $4.6 billion, with major ETF providers delegating ETH and SOL staking to Galaxy.
• Launched Galaxy Sharplink on-chain yield fund and SWEEP money market fund (approaching $300 million AUM).
• Galaxy Digital Ventures progressing toward Fund 2 close, targeting $250-$300 million size.

Data Center (Helios) Development:

• Helios Phase 1 generating ~$80 million quarterly leasing revenue; Phase 2 fully funded and under construction.
• Exited 2027 with annualized leasing run rate guidance of $800-$850 million based on current schedules.
• Paused Helios 2 lease discussions due to shifting market dynamics: constrained forward power availability and strengthened demand for 2028+ capacity.
• Secured key environmental approvals; Texas regulatory uncertainty does not currently impact construction timelines.
• Five Texas projects received conditional Batch Zero classifications totaling ~4.2 gigawatts.
• Advanced AI investment strategy, deploying >$80 million across 11 portfolio companies with unrealized mark-to-market of 3.4x.

Capital Allocation and Balance Sheet:

• Maintained strong liquidity position with ~$3 billion book equity, >80% allocated to operating businesses.
• Completed $200 million share repurchase authorization in October; approved additional $200 million authorization.
• Deployed $79 million in buybacks during Q3.
• Held ~$1.7 billion in net digital assets and investments at quarter-end.

The firm reported combined adjusted gross profit of approximately $150 million, a significant increase from $86 million in the prior quarter. Adjusted EBITDA rose to $60 million from approximately $1 million. In absolute terms, the Data Centers segment generated $79 million in adjusted gross profit and $69 million in adjusted EBITDA, marking its first full quarter of contribution from Helios Phase 1. The Treasury and Corporate segment contributed $419 million in adjusted gross profit, driven by appreciation in digital asset holdings and private investments, compared to a $42 million loss in Q2. The Digital Assets segment generated $71 million in adjusted gross profit, up from $66 million in Q2. Within this, Global Markets produced $53 million in adjusted gross profit, while Asset Management and Infrastructure Solutions contributed $19 million.

• Annualized leasing revenue run rate expectation for Helios is projected to be between $800 million and $850 million by end of 2027.
• Helios Phase 2 data hall deliveries scheduled to begin in Q2 2027.
• Capital expenditures expected to increase as Phase 2 construction progresses, with significant spending anticipated in H1 2027.
• Expect ERCOT clarity on power allocations for expansion projects in April 2027.
• No immediate need to refinance Phase 1 or take capital out; Phase 3 remains fully equity funded.
• Share repurchases remain opportunistic, contingent on stock trading at a meaningful discount to intrinsic value.

• Regulatory Uncertainty: Ongoing political and regulatory developments in Texas, including permitting freezes and ERCOT process outcomes, create uncertainty around future data center development timelines and power allocation.
• Counterparty and Credit Risk: Helios 2 lease negotiations require investment-grade counterparties or credit enhancements; failure to secure appropriate structures could delay revenue realization.
• Supply Chain Constraints: Long-lead time equipment procurement for data centers is becoming increasingly difficult, though Galaxy mitigates this through early deposits and diverse supplier engagement.
• Market Volatility: Crypto market sentiment and volume fluctuations directly impact trading and lending revenues; prolonged suppression of crypto activity may hinder profitability in the digital assets segment.
• Financing Environment: Tightening credit markets and higher interest rates may increase borrowing costs and complicate financing for new developments or refinancing activities.

Q: Analyst asked why Galaxy stepped away from Helios 2 lease discussions in summer and what terms are required to proceed. / A: Management cited shifts in market dynamics, including tighter forward power availability, regulatory headwinds, and evolving financing structures. They paused to reassess counterparty quality, requiring investment-grade tenants or robust credit enhancements, rather than accepting lower-quality deals with complex wraps. With hyperscalers now actively seeking 2028+ capacity, Galaxy broadened conversations to prioritize long-term shareholder value over speed.

Q: Analyst questioned how digital assets can achieve sustainable profitability given current negative EBITDA despite positive gross profit. / A: CFO explained that crypto volumes are suppressed but Galaxy continues to gain market share. The segment is investing in digital infrastructure and recurring revenue streams like lending and staking. A one-time accounting adjustment also impacted results; excluding this, the segment would have been profitable. Management expects consistent profitability as activity picks up and fee-based revenue grows.

Q: Analyst sought clarity on Helios 1’s relationship with CoreWeave and whether direct tenant visibility exists for Phases 2 and 3. / A: President clarified that Galaxy faces CoreWeave’s residual equity exposure across their entire customer portfolio, not individual tenants. CoreWeave contracts generically on GPU hours, allowing load balancing across facilities. While current Helios 1 loads come from a large hyperscaler, specific tenants for Phases 2 and 3 will be determined closer to energization in 2027 based on CoreWeave’s allocation needs.

Q: Analyst asked about capital deployment priorities, specifically regarding the December 2026 maturing notes and potential debt replacement. / A: CFO stated that balance sheet strength and business funding needs are top priorities. Galaxy has sufficient resources to repay the $445 million exchangeable notes without refinancing. Buybacks are opportunistic, and the company maintains a healthy liquidity buffer. Debt replacement is not mandatory, and any new financing would depend on attractive market conditions and overall capital plan optimization.

Q: Analyst inquired about Galaxy’s role in tokenization and competition with traditional financial incumbents. / A: CEO emphasized that Galaxy aims to be the infrastructure partner helping TradFi build on-chain capabilities, starting with custody and staking. This partnership model creates recurring revenue opportunities beyond transactional fees. Management believes the shift to tokenization will accelerate once traditional players complete infrastructure build-outs, positioning Galaxy as a key enabler in the evolving digital asset ecosystem.