UPEXI, INC. Q1 FY2026 earnings call

Strategic Shift

• The company shifted to digital assets due to changed U.S. crypto regulation and the success of MicroStrategy's Bitcoin treasury strategy.

Solana Strategy Rationale

• Solana was chosen as it's a high-performance blockchain with a vibrant ecosystem, strong metrics, and potential to revolutionize financial infrastructure.

Capital Raises

• Completed a $100 million equity private placement in April and a $200 million raise in July, deploying funds into Solana.

Financials

• Total revenue increased to $9.2 million for the quarter, net income was $66.7 million, and EPS was $1.21, with significant contributions from Solana treasury performance.

Market Efforts

• Put effort into building online and traditional finance following, being quoted in over 50 news articles, participating in podcasts, and attending conferences.

The Consumer Brand business continues to perform as expected. In the fiscal first quarter, the company generated over $6 million in digital asset revenue and is currently adding over $75,000 per day. The company currently owns $2.1 million SOL valued in excess of $327 million. The Consumer Brand business contributes as expected, while the digital asset segment, particularly from staking, provides a significant revenue boost.

Forward-Looking

• Q2 will benefit from having all of the 2.1 million SOL staked for the future quarter.

Risks

• The volatility of digital assets is a key risk factor.

Q: The company has added a few high-profile crypto investors to the advisory committee. Can you talk about the impact we're having on the company? And any recommendations the committee is making as we think about differentiation of DAT, for example, outside of SOL accumulation and yield?

A: Thanks, Brian. So two parts. One is, so far, it's been a short amount of time we've been working with them, but we've gotten a lot of good feedback both on how we're presenting ourselves to the market, their opinions on SOL, the overall opinion on how we're positioning the company to communicate to both TEFI, I mean, traditional finance and also the crypto community. No one right now is talking about anything outside of Solana and revenue-generating outside of that, like we still believe as we get some clarity here going forward on regulatory changes that Solana is in line for in all of crypto or all of the top cryptos in line for a pretty big move. So we're going to continue with the strategy we have, like we've said to our investors and stay focused. We will try to maximize yield. And we have had internal discussions, but none of that's public yet. We're going to do the right thing to increase our yield for our investors as quickly as possible, and we always open to input from the people we bring on board and also the outside community we talk to.

Q: Given you didn't have a full quarter of SOL holdings, can you tell us what your effective yield has been? And is there any way to enhance that? Or are you maximizing that already?

A: I can let Andrew answer that question. I will say, as we've been -- because we've been building it step by step, not everything is staked as quickly -- well, it's staked quickly, but as quickly as possible. And just moving things around and getting things set in like the risk-prudent factor, the way we manage it, Also, we're always working with different -- we've been working with different validators. We've been increasing the yield as it goes. So I think this is probably the baseline for us and it's going to go higher from here and especially since it's mostly all staked now that we have on board. So I can turn it over to Andrew, if he has a rate, but I'm not sure we've been able to blend it exactly just because of all the steps along the way, but Andrew? Andrew Norstrud: Yes, you're not going to be able to blend it yet. Next quarter will be a lot better. But just to add to Allan's note, we've got a program that we put in place to look at the various different validators to have them compete against each other on any fees or anything else that's being done. We've got some great partners with us on that side and continue to look at how to increase that yield, plus we've had some other opportunities to try and increase the yield higher than just the standard staking yield. So more and more of that will come out this next quarter as we kind of have everything under control and have some of these programs in place. So -- unfortunately, I can't give you an exact yield, but going forward, you'll be able to calculate a lot better next quarter.

Q: Several of the DATs are trading below 1x, steep discounts, in fact. Thankfully Upexi is not. But I think investors are interested in management, in general, of DAT companies plans with capital markets, should Upexi face a deep discount. What -- how would you address that?

A: We have plenty. I think Brian and I and Andrew have always said when -- if for some reason, we do trade at a discount, it's -- the model is just on top. Like we still believe that inevitably crypto yield, the crypto increases and the yield and us maximizing that and also keeping company expenses as low as possible and continuing to get better at that. We'll warrant a premium. So at those moments in time, I mean, the company does have plenty of options, right? It can turn its staking revenue into a buyback. It could actually buy back shares. There's plenty of ways to offset that. But what I want to stress like this is a longer game, right? Like we don't want to think about it as 1 quarter at a time. We really do believe even if there is some sort of crypto pullback, it's just a pause. And I'll let Brian chime in here a little bit because him and I have talked about this over -- with multiple investors and I'm sure he would like to add in something on this one. Brian Rudick: Yes. Thank you, Allan, and thank you, Brian. Yes, plus 1 on the capital market side of the equation, just being a bit on pause. I think that there's no better example than MicroStrategy. So 2024, it increased Bitcoin per share by 74%. In 2021, it was something like 47%. And then when it got into a bear market, and it did trade at a discount to NAV it still was able to increase Bitcoin per share, but it was something like mid-single digits. So it was just a bit on pause. Like Allan mentioned, there are things that we can do to compress any discount should 1 come to fruition. And importantly, we actually don't have to sell our SOL to do that. You could actually borrow some funds to repurchase your shares to compress any sort of discount. And then the last thing I'd say is like we make an 8% staking yield on almost our full treasury. And then on top of that, a lot of the SOL that we've bought is locked form, which when you put that discount into any sort of yield equivalent. It's nearly doubling that 8% staking yield. So all in, we're making this really nice return on our treasury and so while we are waiting to issue capital in this accretive fashion, we were able to increase our SOL per share at a very nice pace.