Results
Exodus Movement Inc.
11/09/2026 | Press release | Distributed by Public on 11/09/2026 16:18
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
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Management's Discussion and Analysis of Financial Condition and Results of Operations.
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The following discussion and analysis of Exodus' financial condition and results of operations should be read in conjunction with the unaudited, condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Item 1A. Risk Factors" in the Form 10-K and "Cautionary Note Regarding Forward Looking Statements" and in other parts of this Quarterly Report on Form 10-Q.
Overview of Our Business
Exodus is a financial technology company that operates two complementary platforms. Through the Exodus brand, the Company provides digital asset services, including self-custodial digital asset software and related digital asset services to API providers and direct consumers. Through the Monavate brand, the Company provides payment processing services, including card issuance, payment processing, and payment infrastructure solutions to traditional commerce and on-chain finance customers. The Company completed the acquisitions of Monavate Holdings Limited, Monavate Ltd, Baanx.com Ltd, and Baanx US Corp. ("Acquired Entities") in May 2026, expanding its operations beyond digital asset services into payment processing services. During the third quarter of 2026, the Baanx.com Ltd. business began operating under the Monavate Onchain Ltd. name.
During the third quarter of 2026, the Company renamed its Web3 Services reportable segment to Digital Asset Services to better reflect the nature of its operations. The change did not affect the composition of the Company's reportable segments.
The acquisitions of the Acquired Entities represent a significant milestone in the Company's evolution, expanding its enterprise offerings, diversifying its revenue base, and adding payment processing services and customer programs that complement its existing digital asset services.
In July 2026, the Company approved the 2026 Restructuring Plan, including a reduction in force affecting approximately 25% of its global workforce, to align its cost structure and organizational priorities with its strategy to build a full-stack card issuance and payments platform. The Company expects total employee severance and benefit costs of approximately $4.6 to $5.7 million and substantial completion of the plan by the end of the fourth quarter of 2026. The plan is expected to generate approximately $9 million to $11 million in annualized cash operating expense savings, primarily within the digital asset services expenses and payment processing expenses on the condensed consolidated statements of operations and comprehensive (loss) income, beginning in the third quarter of 2026, with the full benefit expected in 2027. Actual costs and savings may differ from these estimates. Refer to "Note 17 - Restructuring".
Key Business Metrics
In addition to the measures presented in our condensed consolidated financial statements, management uses the key business metrics described below to evaluate operating performance, identify trends affecting the business, and support strategic decision-making.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| Monthly active users (millions) | 1.4 | 1.5 | (7)% | 1.4 | 1.5 | (7)% | |||||||||||||||||||||||||||||
| Quarterly funded users (millions) | 1.4 | 1.8 | (22)% | 1.4 | 1.8 | (22)% | |||||||||||||||||||||||||||||
| Quarterly exchange volume (billions) | $ | 1.1 | $ | 1.8 | (39)% | $ | 3.4 | $ | 5.3 | (36)% | |||||||||||||||||||||||||
| Gross transaction payment volume (billions) | $ | 1.1 | $ | - | * | $ | 1.7 | $ | - | * | |||||||||||||||||||||||||
| Total active cards (millions) | 1.6 | - | * | 2.2 | - | * | |||||||||||||||||||||||||||||
| Net (loss) income (thousands) | $ | (9,740) | $ | 17,041 | (157)% | $ | (60,491) | $ | 41,835 | (245)% | |||||||||||||||||||||||||
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Adjusted EBITDA (1) (thousands)
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$ | (3,919) | $ | 5,850 | (167)% | $ | (11,459) | $ | 15,752 | (173)% | |||||||||||||||||||||||||
(1) See "Non-GAAP Financial Measures" below for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure and an explanation of why management believes Adjusted EBITDA is useful to investors.
Monthly Active Users ("MAUs")
MAUs are defined as any unique user with Exodus activity history in any month. A user has "activity history" if, in the last calendar month, the user performed any activity within the application such as opening their application to check digital asset prices, reading news, or accessing the products and services of our API Providers. MAUs provide a measurement of user engagement, allowing management to compare engagement over time. MAUs consist of both funded wallets and unfunded wallets. Because Exodus users do not have accounts, users do not close an account. Therefore, users may be inactive one month and active the next as they re-engage with the platform. Management views increasing interest in the Exodus platform over time as a key indicator of increasing revenue and product adoption.
Quarterly Funded Users ("QFUs")
In addition to MAUs, we utilize QFUs to assess user trends and market sentiment. QFUs are defined as unique users with an Exodus wallet that was funded at any point prior to or during the fiscal quarter and during which the user remained active, i.e., opening the application during the period. A wallet is considered "funded" if it holds a non-zero balance of any supported digital asset. QFUs offer a longer-term view of engagement by capturing users who have already funded their wallets.
Exchange Volume
Exchange volume is defined as the total U.S. dollar equivalent value of spot trades transacted through the Exodus platform, together with the value of spot trades routed to our exchange aggregation technology from third-party platforms during the reporting period. Exchange volume represents the quantity of digital assets transacted multiplied by the applicable trade price when the transaction is executed.
Exchange volume includes transactions from direct consumers and enterprise partners. Transactions from enterprise partners generally generate lower revenue per transaction than transactions from direct consumers. Accordingly, changes in direct consumer Exchange volume may have a more pronounced effect on transaction revenue than comparable changes in enterprise partner Exchange volume. Management uses Exchange volume to evaluate transaction activity and platform utilization. Exchange volume is influenced by digital asset prices, market volatility, customer engagement, and broader macroeconomic conditions.
Gross Transaction Volume ("GTV")
GTV is defined as the aggregate U.S. dollar equivalent value of purchase transactions made using payment cards issued on behalf of enterprise customers during the reporting period, before deducting refunds, returns, chargebacks, or other transaction adjustments. GTV excludes cash advances, balance transfers, finance charges, and fees unless otherwise specified. Transactions denominated in currencies other than the U.S. dollar are converted into U.S. dollars using the applicable currency exchange rate. Management uses GTV to evaluate payment activity and the utilization and scale of the Company's payment capabilities.
Total Active Cards
Total active cards represents the total number of unique payment cards issued on behalf of enterprise customers that made transactions during the reporting period. Management uses total active cards to evaluate the scale of the Company's card programs and the adoption of its payment capabilities. This metric does not imply the number of unique persons as a person may have more than one card.
Results of Operations
The following table presents our condensed consolidated results of operations for the three and nine months ended September 30, 2026 and 2025:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
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(in thousands, except percentages)
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2026 | 2025 | $ Change | % Change | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||
| REVENUES | $ | 32,539 | $ | 30,343 | $ | 2,196 | 7 | % | $ | 81,514 | $ | 92,166 | $ | (10,652) | (12) | % | |||||||||||||||||||||||||||||||
| EXPENSES (INCOME) | |||||||||||||||||||||||||||||||||||||||||||||||
| Digital asset services expenses | 12,496 | 12,350 | 146 | 1 | % | 37,655 | 35,581 | 2,074 | 6 | % | |||||||||||||||||||||||||||||||||||||
| Partnership expenses | 3,139 | 4,637 | (1,498) | (32) | % | 10,202 | 11,029 | (827) | (7) | % | |||||||||||||||||||||||||||||||||||||
| Payment processing expenses | 9,459 | - | 9,459 | * | 13,809 | - | 13,809 | * | |||||||||||||||||||||||||||||||||||||||
| General and administrative | 28,940 | 14,884 | 14,056 | 94 | % | 89,110 | 48,019 | 41,091 | 86 | % | |||||||||||||||||||||||||||||||||||||
| (Gain) loss on digital assets, net | (11,377) | (21,003) | 9,626 | (46) | % | 32,017 | (44,694) | 76,711 | (172) | % | |||||||||||||||||||||||||||||||||||||
| Loss (gain) on disposed investments | - | - | - | * | 2 | (2,000) | 2,002 | * | |||||||||||||||||||||||||||||||||||||||
| Impairment on other assets | - | - | - | * | 413 | 137 | 276 | 201 | % | ||||||||||||||||||||||||||||||||||||||
| Staking and other income | (1,400) | (264) | (1,136) | * | (4,100) | (241) | (3,859) | * | |||||||||||||||||||||||||||||||||||||||
| Gain on debt extinguishment | - | - | - | * | (20,377) | - | (20,377) | * | |||||||||||||||||||||||||||||||||||||||
| Other loss, net | 94 | 32 | 62 | 194 | % | 171 | 494 | (323) | (65) | % | |||||||||||||||||||||||||||||||||||||
| Interest income | (509) | (599) | 90 | (15) | % | (6,803) | (2,188) | (4,615) | 211 | % | |||||||||||||||||||||||||||||||||||||
| Interest expense | 662 | - | 662 | * | 923 | - | 923 | * | |||||||||||||||||||||||||||||||||||||||
| (Loss) income before income taxes | (8,965) | 20,306 | (29,271) | (144) | % | (71,508) | 46,029 | (117,537) | (255) | % | |||||||||||||||||||||||||||||||||||||
| INCOME TAX (EXPENSE) BENEFIT | (775) | (3,265) | 2,490 | * | 11,017 | (4,194) | 15,211 | * | |||||||||||||||||||||||||||||||||||||||
| NET (LOSS) INCOME | $ | (9,740) | $ | 17,041 | $ | (26,781) | (157) | % | $ | (60,491) | $ | 41,835 | $ | (102,326) | (245) | % | |||||||||||||||||||||||||||||||
*Percentage variances not considered meaningful.
Revenue
Revenue increased $2.2 million for the three months ended September 30, 2026 compared to the same period in 2025. The increase was primarily driven by a $10.9 million increase in revenue contributed by the Acquired Entities within payment processing services, partially offset by an $8.7 million decrease in revenue from digital asset services, primarily attributable to an $8.1 million decrease in exchange aggregation revenue due to lower volume.
Revenue decreased $10.7 million for the nine months ended September 30, 2026 compared to the same period in 2025. The decrease was primarily driven by a $26.5 million decrease in revenue from digital asset services, primarily attributable to a $26.6 million decrease in exchange aggregation revenue due to lower volume, partially offset by a $15.9 million increase in revenue contributed by the Acquired Entities within payment processing services.
The following table summarizes revenue generated from the Company's digital asset service direct users and partnerships revenues:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
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(in thousands, except percentages)
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2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||
| Amount | % of Revenues | Amount | % of Revenues | Amount | % of Revenues | Amount | % of Revenues | ||||||||||||||||||||||||||||||||||||||||
| Exchange aggregation - users | $ | 15,507 | 71.6 | % | $ | 21,894 | 72.1 | % | $ | 47,023 | 71.7 | % | $ | 70,580 | 76.7 | % | |||||||||||||||||||||||||||||||
| Exchange aggregation - partnerships | 3,282 | 15.2 | 5,000 | 16.5 | 10,509 | 16.0 | 13,538 | 14.7 | |||||||||||||||||||||||||||||||||||||||
| Fiat onboarding - users | 2,308 | 10.7 | 1,321 | 4.4 | 6,302 | 9.6 | 3,436 | 3.7 | |||||||||||||||||||||||||||||||||||||||
| Fiat onboarding - partnerships | - | - | - | - | - | - | 13 | - | |||||||||||||||||||||||||||||||||||||||
| Staking - users | 515 | 2.4 | 1,817 | 6.0 | 1,625 | 2.5 | 3,515 | 3.8 | |||||||||||||||||||||||||||||||||||||||
| Other - users | 23 | 0.1 | 292 | 1.0 | 78 | 0.1 | 487 | 0.5 | |||||||||||||||||||||||||||||||||||||||
| Other - partnerships | - | - | 19 | - | 85 | 0.1 | 597 | 0.6 | |||||||||||||||||||||||||||||||||||||||
| $ | 21,635 | 100.0 | % | $ | 30,343 | 100.0 | % | $ | 65,622 | 100.0 | % | $ | 92,166 | 100.0 | % | ||||||||||||||||||||||||||||||||
Revenue generated from the Company's digital asset service direct users and business-to-business partnerships decreased $8.7 million for the three months ended September 30, 2026 compared to the same period in 2025. The decrease was primarily driven by a $6.4 million decrease in exchange aggregation revenue from direct users due to lower volume, a $1.7 million decrease in exchange aggregation revenue from business-to-business partnerships due to lower volume, a $1.3 million decrease in staking revenue due to lower total staked assets, and a $0.3 million decrease in other revenue, partially offset by a $1.0 million increase in fiat onboarding revenue from direct users due to higher volume.
Revenue generated from the Company's digital asset service direct users and business-to-business partnerships decreased $26.5 million for the nine months ended September 30, 2026 compared to the same period in 2025. The decrease was primarily driven by a $23.6 million decrease in exchange aggregation revenue from direct users due to lower volume, a $3.0 million decrease in exchange aggregation revenue from business-to-business partnerships due to lower volume, a $1.9 million decrease in staking revenue due to lower total staked assets, and a $0.9 million decrease in other revenue, partially offset by a $2.9 million increase in fiat onboarding revenue from direct users due to higher volume.
The following table summarizes the Company's external revenue by category within our payment processing services:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
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(in thousands, except percentages)
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2026 | 2026 | |||||||||||||||||||||
| Amount | % of Revenue | Amount | % Revenue | ||||||||||||||||||||
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Traditional commerce (1)
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$ | 6,928 | 63.5 | % | $ | 10,220 | 64.3 | % | |||||||||||||||
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On-chain finance (1)
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3,976 | 36.5 | 5,672 | 35.7 | |||||||||||||||||||
| External revenue | $ | 10,904 | 100.0 | % | $ | 15,892 | 100.0 | % | |||||||||||||||
(1) This reflects the revenues of the Acquired Entities beginning on May 1, 2026. Accordingly, comparative prior-period information is not presented.
Digital asset services expenses
Digital asset services expenses increased $0.1 million for the three months ended September 30, 2026 compared to the same period in 2025. The increase was primarily driven by a $1.4 million increase in restructuring expenses, a $0.9 million increase in technology subscription expense, a $0.5 million increase in fiat onboarding costs, a $0.3 million decrease in capitalized labor, and a $0.3 million increase in testing expense, partially offset by a $2.4 million decrease in salary and benefit expenses, a $0.6 million decrease in cloud infrastructure expense, and a $0.3 million decrease in depreciation and amortization expense.
Digital asset services expenses increased $2.1 million for the nine months ended September 30, 2026 compared to the same period in 2025. The increase was primarily driven by a $1.8 million increase in fiat onboarding costs, a $1.4 million increase in restructuring expenses, a $0.7 million increase in technology subscription expense, a $0.4 million decrease in capitalized labor, and a $0.2 million increase in salary and benefit expenses, partially offset by a $1.2 million decrease in depreciation and amortization expense, a $0.7 million decrease in cloud infrastructure expense, a $0.4 million decrease in consulting expense, and a $0.1 million decrease in testing expense.
Partnership expenses
Partnership expenses decreased $1.5 million for the three months ended September 30, 2026 compared to the same period in 2025. The decrease was primarily driven by lower transaction volume.
Partnership expenses decreased $0.8 million for the nine months ended September 30, 2026 compared to the same period in 2025. The decrease was primarily driven by lower transaction volume.
General and administrative expenses
General and administrative expenses increased $14.1 million for the three months ended September 30, 2026 compared to the same period in 2025. The increase was primarily driven by a $3.1 million increase in subscription, bank and network, depreciation and amortization and other general and administrative expenses, a $3.0 million increase in professional services expense, a $2.7 million increase in transaction-related incentives, a $2.2 million increase in restructuring expenses, a $1.9 million increase in compensation and benefit expenses (including $2.4 million of stock-based compensation expense related to founder equity awards resulting from the voluntary cancellations of outstanding unvested equity awards), and a $1.3 million increase in marketing expense, partially offset by a $0.1 million decrease in travel expense.
General and administrative expenses increased $41.1 million for the nine months ended September 30, 2026 compared to the same period in 2025. The increase was primarily driven by a $20.0 million increase in transaction-related incentives, a $11.6 million increase in professional services expense, a $5.1 million increase in subscription, bank and network, depreciation and amortization and other general and administrative expenses, a $3.9 million increase in compensation and benefit expenses (including $2.4 million of stock-based compensation expense related to founder equity awards resulting from the voluntary cancellations of outstanding unvested equity awards), a $2.8 million increase in foreign currency expense, a $2.2 million increase in restructuring expenses, and a $1.5 million increase in marketing expense, partially offset by a $3.5 million decrease in travel expense and a $2.5 million decrease in regulatory settlement expense.
Income tax (benefit) expense
Income tax expense was $0.8 million for the three months ended September 30, 2026, compared to an expense of $3.3 million for the three months ended September 30, 2025. The effective tax rate during the three months ended September 30, 2026 was (8.6)%, compared to 16.1% during the three months ended September 30, 2025.
Income tax benefit was $11.0 million for the nine months ended September 30, 2026, compared to an expense of $4.2 million for the nine months ended September 30, 2025. The effective tax rate during the nine months ended September 30, 2026 was 15.4%, compared to 9.1% during the nine months ended September 30, 2025. For the nine months ended September 30, 2026, the change from the statutory tax rate to the effective rate was primarily due to non-deductible incentive expenses partially offset by a benefit related to stock option exercises net of non-deductible executive compensation, U.S. Foreign derived intangible income and research and development tax credits. For the nine months ended September 30, 2025, the change from the effective rate was primarily impacted by the change in permanent differences, including the tax benefit from the foreign derived intangible income and non-deductible expenses, and discrete items, including stock-based compensation and tax effect of realized and unrealized digital asset gains and losses during the period.
Changes in tax laws
The Pillar 2 approach, which came into effect in 2023 in certain jurisdictions, will establish a global minimum tax rate of 15%, such that multinational enterprises with an effective tax rate in a jurisdiction below this minimum rate will need to pay additional tax. While many aspects of the application of Pillar 2 remain to be clarified, including how the jurisdictions in which we operate, and those in which we and our subsidiaries are based, choose to implement the Organization for Economic Cooperation and Development's approach in their tax treaties and domestic tax laws, we do not expect Pillar 2 to apply in 2026. On July 4, 2025, the "One Big Beautiful Bill Act" (P.L. 119-21) was enacted into law. The legislation reinstates and extends several provisions of the 2017 Tax Cuts and Jobs Act, including permanent 100% bonus depreciation, enhanced Section 179 expensing, full R&D expense deduction for domestic expenditures and modification to the international tax framework.
Non-GAAP Financial Measure
Adjusted EBITDA is a supplemental non-GAAP financial measure that management uses to evaluate the operating performance of the Company's business. We define Adjusted EBITDA as net (loss) income before interest income net, income tax (benefit) expenses, and depreciation and amortization, further adjusted to exclude certain non-cash and other items that management does not consider indicative of the Company's ongoing operating performance.
Management uses Adjusted EBITDA to evaluate the Company's ongoing operations and for internal planning and forecasting purposes. Management believes these adjustments provide investors with additional insight into the Company's ongoing operating performance by removing the effects of items that are not indicative of the Company's underlying operating performance. We believe Adjusted EBITDA assists investors in evaluating the underlying trends of the Company's business, facilitates period-to-period comparisons, and enhances comparability with other companies. However, Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for net (loss) income or any other financial measure prepared in accordance with U.S. GAAP. In addition, other companies may calculate Adjusted EBITDA differently or may use other measures to evaluate their performance, which could reduce the usefulness of Adjusted EBITDA as a comparative measure.
Beginning in the third quarter of 2026, Adjusted EBITDA also excludes restructuring expenses and integration expenses. Restructuring expenses consist of employee severance and benefit costs incurred in connection with the 2026 Restructuring Plan, net of the related non-cash benefit from the modification of stock-based awards for affected employees. Integration
expenses consist of third-party legal and consulting costs incurred to integrate the Acquired Entities. No such expenses were incurred in the prior periods presented.
A reconciliation of Adjusted EBITDA is presented below. Investors are encouraged to review the related U.S. GAAP financial measure and the reconciliation, and not to rely on any single financial measure to evaluate the Company's business.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net (loss) income attributable to Exodus Movement, Inc. | $ | (8,267) | $ | 17,041 | $ | (59,018) | $ | 41,835 | |||||||||||||||
| Interest income, net | 153 | (599) | (5,880) | (2,188) | |||||||||||||||||||
| Tax expense (benefit) | 775 | 3,265 | (11,017) | 4,194 | |||||||||||||||||||
| Depreciation and amortization expense | 1,635 | 853 | 3,869 | 2,931 | |||||||||||||||||||
| EBITDA | $ | (5,704) | $ | 20,560 | $ | (72,046) | $ | 46,772 | |||||||||||||||
| Stock based compensation expense | 5,386 | 5,186 | 13,665 | 10,941 | |||||||||||||||||||
| Staking and other income | (1,400) | (264) | (4,100) | (241) | |||||||||||||||||||
| (Gain) loss on digital assets, net | (11,377) | (21,003) | 32,017 | (44,694) | |||||||||||||||||||
| Loss (gain) on disposed investments | - | - | 2 | (2,000) | |||||||||||||||||||
| Impairment on other assets | - | - | 413 | 137 | |||||||||||||||||||
| Gain on debt extinguishment | - | - | (20,377) | - | |||||||||||||||||||
| Other loss, net | 94 | 32 | 171 | 494 | |||||||||||||||||||
| Transaction expenses | 4,951 | 1,339 | 34,665 | 4,343 | |||||||||||||||||||
| Integration expenses | 923 | - | 923 | - | |||||||||||||||||||
| Restructuring expenses | 3,208 | - | 3,208 | - | |||||||||||||||||||
| Adjusted EBITDA | $ | (3,919) | $ | 5,850 | $ | (11,459) | $ | 15,752 | |||||||||||||||
Liquidity and Capital Resources
Overview
Our primary sources of liquidity are cash flows generated from operations, together with our balances of cash and cash equivalents, stablecoins and digital assets. Our primary uses of liquidity are funding operating expenses, working capital requirements, strategic investments and product development initiatives that support the growth of our business. Based on our current operating plans, we believe our existing cash and cash equivalents, stablecoins and digital assets will be sufficient to fund our operations, strategic initiatives and anticipated growth.
We expect that increased adoption of digital assets and blockchain technology, together with continued growth of the Exodus Platform, expansion of our payment processing services, continued market acceptance of our products and services, and our ability to attract and retain customers, will support our ability to generate sufficient cash flows to meet our liquidity requirements and execute our long-term growth strategy.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
| (in thousands) | Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | $ Change | ||||||||||||||
| Net cash used in operating activities | $ | (78,259) | $ | (16,243) | (62,016) | ||||||||||||
| Net cash provided by investing activities | $ | 533,796 | $ | 41,659 | 492,137 | ||||||||||||
| Net cash used in financing activities | $ | (327,704) | $ | (12,751) | (314,953) | ||||||||||||
| Effects of exchange rate changes on cash | $ | (3,242) | $ | - | (3,242) | ||||||||||||
| Net increase in cash and cash equivalents | $ | 124,591 | $ | 12,665 | 111,926 | ||||||||||||
*Percentage variances not considered meaningful.
Net Cash Used In Operating Activities
Net cash used in operating activities increased by $62.0 million for the nine months ended September 30, 2026 compared to the same period in 2025. The increase was primarily driven by a $102.3 million increase in net loss, a $22.4 million increase in deferred tax benefit, a $20.4 million gain on extinguishment of debt, a $12.1 million increase in other current assets, a $7.0 million increase in prepaid expenses, a $4.3 million increase in accounts receivable, a $3.9 million decrease in accounts payable, a $3.9 million increase in staking and other income, and a $1.5 million increase in accrued interest income, partially offset by a $76.7 million increase in net loss on digital assets, a $24.6 million decrease in operating activities settled in digital assets and stablecoins, a $4.9 million increase in payroll liabilities, a $3.7 million decrease in income tax receivable, a $2.3 million increase in stock-based compensation expense, a $2.0 million increase in loss (gain) on disposed investments, and $1.6 million of other items, net.
Net Cash Provided By Investing Activities
Net cash provided by investing activities increased by $492.1 million for the nine months ended September 30, 2026 compared to the same period in 2025. The increase was primarily driven by a $436.2 million net cash related to the Acquired Entities, a $93.0 million increase in proceeds from the disposal of digital assets, and a $4.9 million decrease in purchases of treasury bills, partially offset by a $35.7 million decrease in redemptions of treasury bills, a $2.0 million decrease in proceeds from the sale of disposed investments, a $1.6 million payment of an acquisition deposit, a $2.3 million increase in capitalized software, and $0.4 million of other investing activities, net.
Net Cash Used In Financing Activities
Net cash used in financing activities increased by $315.0 million for the nine months ended September 30, 2026 compared to the same period in 2025. The increase was primarily driven by a $325.5 million increase in net cash outflows from customer funds, partially offset by a $10.5 million decrease in repurchases of shares to satisfy employee tax withholding obligations.
Total Digital Assets and Liquid Assets
The following tables show the Company's holdings of digital assets and cash and cash equivalents (including treasury bills with a maturity date of less than three months) and stablecoins.
The digital asset holdings as of September 30, 2026 and December 31, 2025 were:
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(in thousands, except units)
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September 30, 2026 | ||||||||||||||||
| Units | Cost Basis | Fair Value | |||||||||||||||
| Bitcoin | 293 | $ | 11,600 | $ | 24,468 | ||||||||||||
| Ether | 162 | 421 | 435 | ||||||||||||||
| Solana | 210 | 21 | 25 | ||||||||||||||
| Other | * | 309 | 336 | ||||||||||||||
| Digital assets | $ | 12,351 | $ | 25,264 | |||||||||||||
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(in thousands, except units)
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December 31, 2025 | ||||||||||||||||
| Units | Cost Basis | Fair Value | |||||||||||||||
| Bitcoin | 1,704 | $ | 53,449 | $ | 149,164 | ||||||||||||
| Ethereum | 1,898 | 3,476 | 5,633 | ||||||||||||||
| Solana | 12,473 | 2,385 | 1,552 | ||||||||||||||
| Other | * | 102 | 98 | ||||||||||||||
| Digital assets | $ | 59,412 | $ | 156,447 | |||||||||||||
•Other digital assets unit balances are not considered meaningful.
The liquid asset holdings as of September 30, 2026 and December 31, 2025 were:
| (in thousands) | Carrying Value |
Quoted Prices Level 1 |
Significant Other Observable Inputs Level 2 |
Unobservable Inputs Level 3 |
|||||||||||||||||||
|
As of September 30, 2026
|
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|
Cash and cash equivalents (1)
|
$ | 10,189 | $ | 10,189 | $ | - | $ | - | |||||||||||||||
| Stablecoins | 6,550 | $ | 6,550 | $ | - | $ | - | ||||||||||||||||
| Total liquid assets | $ | 16,739 | |||||||||||||||||||||
|
As of December 31, 2025
|
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| Cash and cash equivalents | $ | 4,938 | $ | 4,938 | $ | - | $ | - | |||||||||||||||
| Stablecoins | 222 | $ | 222 | $ | - | $ | - | ||||||||||||||||
| Total liquid assets | $ | 5,160 | |||||||||||||||||||||
(1) Includes $0.6 million of cash held by the consolidated variable interest entity ("VIE"), which may only be used to settle obligations of the VIE. Refer to "Note 4 - Variable Interest Entity".
Material Capital Commitments
As of September 30, 2026, the Company had material contractual cash requirements related primarily to long-term marketing sponsorship and cloud infrastructure arrangements. Remaining contractual commitments totaled approximately $59.5 million, consisting primarily of approximately $46.5 million under a long-term marketing sponsorship agreement and approximately $13.0 million under long-term cloud infrastructure agreements. Based on the contractual payment terms, approximately $3.7 million is expected to be paid during the remainder of 2026, $20.7 million in 2027, $20.3 million in 2028, and $14.8 million in 2029. Management expects these obligations to be funded through existing cash balances, digital asset holdings, and cash generated from operations.
Critical Accounting Estimates
Except as described below, there have been no material changes to the critical accounting estimates disclosed in the Company's Annual Report on Form 10-K in the section titled "Critical Accounting Estimates" set forth under "Item 7. Management's Discussion and Analysis of the Financial Condition and Results of Operations".
Business Combinations
During the second quarter of 2026, the Company completed the acquisitions of Monavate and Baanx. The accounting for these acquisitions required significant estimates and assumptions in determining the preliminary fair values of the assets acquired and liabilities assumed, including acquired intangible assets and their useful lives, deferred consideration, and goodwill. These estimates are preliminary and may be revised during the measurement period as additional information becomes available.
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