Upexi, Inc. Q3 FY2026 earnings call

• Market Context & Solana Fundamentals

  • The quarter faced a challenging crypto bear market, with Solana prices dropping 33% (from $125 to $83 per token) compared to a 22% drop for Bitcoin, driven by broader Bitcoin market declines and Solana's higher beta to Bitcoin.
  • Management believes Solana will eventually decouple from Bitcoin as it is fundamentally a blockchain-based financial infrastructure upgrade, not just a digital store of value, with strong current fundamentals:
    • $2.1 trillion in stablecoin transfer volume on Solana in the quarter, up 60% year-over-year, with major traditional financial firms building stablecoins on the network.
    • Tokenized real-world assets (RWAs) on Solana reached $2.4 billion, up from $317 million year-over-year, and Solana held 99% market share of tokenized equity trading volume.
    • Solana is well-positioned to capture the emerging opportunity of autonomous AI agent payments, as it provides the permissionless, high-performance network required for AI agent transactions.

• Capital Market Initiatives

  • The company proactively executed value-accretive capital activities while shares traded below net asset value (NAV): repurchased 2.5 million common shares for $2 million at $0.80 per share, which increases Solana holdings per share.
  • Issued $36 million in in-kind convertible notes in January 2026, reducing credit risk and increasing Solana per share if converted at the above-NAV conversion price.
  • Completed a $7 million equity plus warrants offering priced above NAV, also growing Solana per share.

• Cost Optimization

  • Reduced headcount to 10 employees, and transitioned all consumer brand operations to third-party outsourcing to right-size costs and tie expenses directly to revenue.
  • Treasury expenses are now normalizing after initial strategy launch costs, and the company targets the lowest expense base among peer Solana treasury companies.

• Yield Generation Strategy

  • The company is developing low-risk, recurring additional yield strategies to supplement the native 7% Solana staking yield, using off-chain traditional Wall Street instruments to avoid on-chain risk.
  • Management believes successful implementation of this strategy will be accretive to valuation multiples, enabling sustained premium valuations and a self-reinforcing capital markets growth flywheel.

UPEXI Inc. operates two primary business segments: the digital asset treasury segment and the consumer brand business segment. For the fiscal third quarter 2026 ended March 31, 2026:

• Digital Asset Treasury: Generated $3.5 million in staking revenue, accounting for 76.1% of total company revenue. As of quarter end, the company held 2.5 million Solana tokens, with 92.3 million of the $109 million quarterly net loss attributed to unrealized losses on digital assets. For the nine-month period ended March 31, 2026, total digital asset revenue was $14.7 million, 67.4% of cumulative total revenue of $21.8 million. Nine-month direct treasury expenses totaled $8.6 million, and unrealized losses on digital assets hit $178.8 million.
• Consumer Brand Business: Generated the remaining $1.1 million of total quarterly revenue, equal to 23.9% of total revenue. The segment was transitioned from in-house operations (manufacturing, warehousing, logistics) to fully outsourced third-party operations during the quarter to align costs directly with segment revenue.

• By July 1, 2026, ongoing operating cash expenses plus interest costs are expected to be less than treasury staking revenue, assuming a continued 6% to 7% staking yield.
• The company expects the quarterly growth in total Solana tokens held from staking rewards to continue.
• Management targets an initial allocation of $25 million to $50 million for the new additional yield strategy, with capacity to allocate more capital after debt refinancing if the strategy meets yield targets.
• Total Solana holdings per share are targeted for continued growth through disciplined capital activities, staking yield, and opportunistic purchases, while maintaining prudent leverage and risk controls.

• The company's financial performance and valuation are heavily dependent on Solana token prices and crypto industry valuation multiples, which are highly volatile and tied to broader Bitcoin price movements in the near term.
• Current short-term treasury debt incurs over $500,000 per month in interest costs that must be reduced to hit the cash flow neutral target by July 1, 2026.
• Unrealized losses on digital asset holdings were large in the quarter, totaling $92.3 million for Q3 2026 and $178.8 million for the first nine months of fiscal 2026, driven by the Solana price decline.
• Any new yield strategy carries execution risk; the company will only pursue opportunities that exceed the baseline yield from existing staked Solana holdings.

Q: How much of the 9% sequential increase in Solana holdings came from yield versus capital raises, how does M&A fit into the company's strategy, and how should the enterprise value to NAV calculation be interpreted? / A: Of the 189,000 token increase, 35,000 came from native staking yield, which brings the current native staking yield to just below 7%. For M&A, the company is still focused on growing core Solana holdings but is open to opportunities that deliver higher yield than baseline staking, which currently ranges from 7% for liquid tokens to ~14% for locked tokens, and any M&A would be funded via debt rather than selling existing Solana. For NAV, the company manages to a fully loaded basis that assumes in-kind convertibles will convert, which puts the valuation close to 1x NAV; the higher EV/NAV multiple referenced assumes no conversion, and the true valuation is likely a blend of the two calculations.

Q: What remaining steps are needed to reach the July 1 cash expense milestone, will there be operating leverage from yield after hitting that target, and how will excess cash be allocated? / A: Remaining steps include the expiration of existing warehouse leases by the end of the current quarter, completion of the full transition to outsourced consumer brand operations, and a planned reduction in short-term debt interest expenses (currently over $500,000 per month) over the next three months. After July 1, staking revenue is projected to exceed operating expenses, and any excess cash will be used to grow Solana per share, either via additional share repurchases when priced below NAV or purchases of additional Solana tokens.

Q: What is the plan for the new high-yield strategy, including initial allocation and future capacity? / A: The company is currently evaluating low-risk off-chain strategies using traditional Wall Street instruments. It plans to make an initial allocation of $25 million to $50 million to the strategy, and after completing debt refinancing that frees up capital capacity, will allocate more funds if the strategy meets the required yield targets.