Net comprehensive loss of $554.7 million against digital asset price declines within quarter
Partners' Capital increased 23% versus second quarter 2021 to $1.8 billion
The Company maintains a strong liquidity position of $1.5 billion
NEW YORK, Aug. 8, 2022 /CNW/ - Galaxy Digital Holdings Ltd. (TSX: GLXY) ("Galaxy Digital", "Galaxy", the "Company" or "GDH Ltd.") today released financial results for the three and six months ended June 30, 2022 for both itself and Galaxy Digital Holdings LP (the "Partnership" or "GDH LP").
"I am proud of Galaxy's outperformance during a challenging market and macroeconomic environment. Prudent risk management, along with our commitment to exacting credit standards, allowed us to maintain over $1.5 billion in liquidity, including over $1.0 billion in cash, said Michael Novogratz, Founder and CEO of Galaxy Digital.
"We remain in strong position to weather prolonged volatility, and to take advantage of strategic opportunities to grow Galaxy in a sustainable manner."
_______________________ | |
1 | Represents coinmarketcap.com total cryptocurrency market capitalization quoted price. |
2 | Represents total value locked in DeFi according to defipulse.com. |
3 | Net digital assets includes all digital assets categorized as assets, less all digital assets categorized as liabilities on the statement of financial position, less non-controlling interests liabilities. |
________________________ | |
4 | GDT Operational Net Revenue includes a credit impairment in the Second Quarter 2022, of approximately $10 million. |
5 | AUM is an internal estimate inclusive of a sub-advised fund, committed capital in a closed-end vehicle, and seed investments by affiliates. Changes in AUM are generally the result of performance, contributions, and withdrawals. |
6 | June 30, 2022, AUM associated with Galaxy EOS VC Fund LP, which has now completed its investment period, is reported as NAV. Note that NAV for the Galaxy EOS VC Fund LP is calculated as of March 31, 2022, the latest available NAV of the portfolio. |
An investor conference call will be held today, August 8, 2022 at 8:30 AM Eastern Time. A live webcast with the ability to ask questions will be available at: https://investor.galaxydigital.io/. The conference call can also be accessed by investors in the United States or Canada by dialing 1-877-407-0789, or 1-201-689-8562 (outside the U.S. and Canada). A replay of the webcast will be available and can be accessed in the same manner as the live webcast on the Company's Investor Relations website. Through August 29, 2022, the recording will also be available by dialing +1-844-512-2921, or 1-412-317-6671 (outside the U.S. and Canada) passcode: 13731282.
Galaxy (TSX: GLXY) is a digital asset and blockchain leader providing institutions, startups, and qualified individuals access to the crypto economy. Our full suite of financial services is custom-made for a digitally native ecosystem, spanning multiple synergistic business lines: Trading, Asset Management, Investment Banking, Mining, and Ventures.
Galaxy's CEO and Founder Michael Novogratz leads a team of crypto enthusiasts and institutional veterans working together on a mission to engineer a new economic paradigm. The Company is headquartered in New York City, with offices in Chicago, New Jersey, London, Amsterdam, Hong Kong, Tokyo and the Cayman Islands (reg. office).
Additional information about Galaxy's businesses and products is available on www.galaxydigital.io.
This press release should be read in conjunction with (i) GDH LP's Management Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three and six months ended June 30, 2022 and (ii) GDH Ltd.'s Management Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three and six months ended June 30, 2022 (together, the "Consolidated Financial Statements" and "MD&As"), which have been filed on SEDAR at www.sedar.com.
The TSX has not approved or disapproved of the information contained herein. The Ontario Securities Commission has not passed upon the merits of the disclosure record of Galaxy Digital.
The information contained herein is provided for informational purposes only, is not complete, and does not contain certain material information about any fund, including important disclosures and risk factors associated with an investment in a fund, and is subject to change without notice. This information is not intended to be, nor should it be construed or used as an offer to sell, or a solicitation of any offer to buy, shares or limited partnership interests in a fund. Investing in a fund and digital assets involves a substantial degree of risk. There can be no assurance that the investment objectives of a fund will be achieved. Any investment in a fund may result in a loss of the entire amount invested. Fund of funds subjects a fund to additional risks and expenses of the underlying funds.
In connection with the proposed reorganization and combination with BitGo, the Company has filed a registration statement, including a management information circular/prospectus and a consent solicitation statement/prospectus, with the SEC, which has not yet become effective. GALAXY AND BITGO SHAREHOLDERS ARE ADVISED TO READ THE FINAL VERSIONS OF SUCH DOCUMENTS, WHEN AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may obtain a free copy of the registration statement (including the management information circular/prospectus and the consent solicitation statement/prospectus) and any other relevant documents from the SEC's website at http://www.sec.gov. Copies of the final versions of such documents can also be obtained, when available, without charge, via Galaxy Digital's investor relations website: https://investor.galaxydigital.io.
The proposed reorganization and domestication is subject to approval by shareholders of the Company and applicable regulatory authorities, including the Toronto Stock Exchange. The Company anticipates holding a shareholder meeting to seek approval following the effectiveness of the registration statement, and further details will be included in the management information circular to be mailed to shareholders and posted on the Company's SEDAR profile at www.sedar.com.
This release shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of any of the proposed transactions. This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.
The information in this release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and "forward-looking information" under Canadian securities laws (collectively, "forward-looking statements"). Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future, including with respect to mining capacity. Statements that are not historical facts, including statements about the pending domestication and the related transactions (the "transactions"), and the parties, perspectives and expectations, are forward-looking statements. In addition, any statements that refer to estimates, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this release may include, for example, statements about: our ability to complete the transactions within a particular timeframe. The forward-looking statements contained in this release are based on our current expectations and beliefs concerning future developments and their potential effects on us taking into account information currently available to us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks include, but are not limited to: (1) the inability to complete the proposed reorganization transactions or combination with BitGo, due to the failure to obtain shareholder, regulatory and stock exchange approvals, the failure to satisfy any other conditions to closing, or otherwise; (2) changes to the proposed structure of the transactions that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining shareholder or stock exchange approval of the transactions or satisfying any other conditions to closing; (3) the outcome of any legal proceedings that may be instituted following the transactions and any definitive agreements with respect thereto; (4) the ability to meet and maintain listing standards following the consummation of the transactions; (5) the risk that the transactions disrupt current plans and operations; (6) costs related to the transactions; (7) changes in applicable laws or regulations; (8) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (9) changes or events that impact the cryptocurrency industry, including potential regulation, that are out of our control; (10) the risk that our business will not grow in line with our expectations or continue on its current trajectory; (11) the possibility that our addressable market is smaller than we have anticipated and/or that we may not gain share of it; (12) the Company's ordinary shares may experience price and trading volume volatility, (13) those other risks contained in the Annual Information Form for the year ended December 31, 2021 available on the Company's profile at www.sedar.com and in the Risks and Uncertainties section of the MD&As and (14) other risks and uncertainties to be indicated from time to time in filings made with the SEC. Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from the forward-looking statements. We are not undertaking any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. You should not take any statement regarding past trends or activities as a representation that the trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements.
(in thousands) | June 30, 2022 | December 31, 2021 | |
Assets | |||
Current assets | |||
Cash | $ 1,013,895 | $ 811,129 | |
Digital assets | 875,068 | 2,420,777 | |
Receivable for digital asset trades | 25,964 | 8,332 | |
Digital assets loans receivable | 69,881 | 192,684 | |
Digital assets receivables | 17,287 | 52,998 | |
Assets posted as collateral | 88,566 | 71,400 | |
Receivables | 42,678 | 26,665 | |
Due from broker | 59,959 | 29,647 | |
Derivative assets | 29,710 | 45,669 | |
Prepaid expenses and other assets | 64,802 | 25,768 | |
Loans receivable | 131,045 | 190,087 | |
Due from related party | ? | 25,023 | |
Total current assets | 2,418,855 | 3,900,179 | |
Digital assets receivables | 6,072 | 18,659 | |
Investments | 753,947 | 1,069,776 | |
Right of use asset | 10,854 | 11,746 | |
Property and equipment | 154,218 | 58,187 | |
Deferred tax asset | 24,811 | 10,259 | |
Intangible asset | 2,460 | 3,087 | |
Goodwill | 24,645 | 24,645 | |
Total non-current assets | 977,007 | 1,196,359 | |
Total assets | $ 3,395,862 | $ 5,096,538 | |
Liabilities and equity | |||
Current liabilities | |||
Investments sold short | 8,923 | 11,630 | |
Derivative liabilities | 41,854 | 25,567 | |
Warrant liability | 625 | 20,488 | |
Accounts payable and accrued liabilities | 78,828 | 146,243 | |
Payable to customers | 142,936 | 142,441 | |
Taxes payable | 34,328 | 42,341 | |
Payable for digital asset trades | 17,494 | 13,216 | |
Digital assets loans payable | 425,108 | 905,013 | |
Loans payable | 105,783 | 33,289 | |
Collateral payable | 189,615 | 480,088 | |
Due to related party | 19,826 | ? | |
Lease liability | 3,479 | 2,164 | |
Non-controlling interest liability | 50,070 | 161,536 | |
Total current liabilities | 1,118,869 | 1,984,016 | |
Notes payable | 424,842 | 475,330 | |
Deferred tax liability | 7,801 | 25,608 | |
Lease liability | 10,949 | 13,233 | |
Total non-current liabilities | 443,592 | 514,171 | |
Total liabilities | 1,562,461 | 2,498,187 | |
Equity | |||
Partners' capital | 1,833,401 | 2,598,351 | |
Total equity | 1,833,401 | 2,598,351 | |
Total liabilities and equity | $ 3,395,862 | $ 5,096,538 |
(in thousands) | Three months | Three months | Six months | Six months |
Income | ||||
Advisory and management fees | $ 6,228 | $ 2,444 | $ 18,101 | $ 4,357 |
Net realized gain (loss) on digital assets | (231,137) | (162,533) | 123,844 | 568,179 |
Net realized gain (loss) on investments | 3,491 | 41,363 | 72,929 | 192,501 |
Interest income | 10,055 | 16,835 | 24,690 | 25,368 |
Net derivative gain (loss) | 80,019 | 118,461 | 161,996 | 73,276 |
Net income from digital asset mining | 10,947 | 2,161 | 20,756 | 3,902 |
Other income | 1,154 | 3,357 | 2,001 | 4,544 |
(119,243) | 22,088 | 424,317 | 872,127 | |
Operating expenses | ||||
Compensation and compensation related | 34,652 | (11,319) | 75,200 | 83,633 |
Equity based compensation | 31,134 | 13,548 | 53,896 | 20,647 |
General and administrative | 34,160 | 9,514 | 52,108 | 15,524 |
Professional fees | 9,940 | 11,527 | 19,531 | 16,093 |
Profit share arrangement expense | ? | 8,033 | ? | 12,165 |
Interest | 12,067 | 18,467 | 24,874 | 32,260 |
Notes interest expense | 7,336 | ? | 14,610 | ? |
(129,289) | (49,770) | (240,219) | (180,322) | |
Net unrealized gain (loss) on digital assets | (233,372) | (495,614) | (733,643) | (132,705) |
Net unrealized gain (loss) on investments | (258,891) | 165,052 | (333,019) | 223,334 |
Net gain (loss) on notes payable - derivative | 51,104 | ? | 57,597 | ? |
Net gain (loss) on warrant liability | 17,177 | 2,663 | 19,698 | (34,154) |
Foreign currency gain (loss) | (1,302) | (922) | 715 | 1,795 |
(Gain) loss attributable to non-controlling interests | 100,606 | 173,612 | 114,017 | (75,007) |
(324,678) | (155,209) | (874,635) | (16,737) | |
Income (loss) before income taxes | (573,210) | (182,891) | (690,537) | 675,068 |
Income taxes | (18,509) | ? | (24,628) | ? |
Net income (loss) for the period | $ (554,701) | $ (182,891) | $ (665,909) | $ 675,068 |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment | $ (19) | $ 14 | $ (487) | $ 298 |
Net comprehensive income (loss) for the period | $ (554,720) | $ (182,877) | $ (666,396) | $ 675,366 |
Three months ended | Three months ended | Six months ended | Six months ended | |
Net income (loss) per unit: | ||||
Basic | $ (1.69) | $ (0.56) | $ (2.03) | $ 2.18 |
Diluted | (1.74) | (0.56) | (2.08) | 1.97 |
Weighted average units: | ||||
Basic | 328,899,160 | 315,298,478 | 328,316,833 | 314,535,548 |
Diluted | 329,139,528 | 315,298,478 | 328,947,139 | 346,562,472 |
Income and expenses by each reportable segment of GDH LP for the three months ended June 30, 2022 are as follows (in thousands):
(in thousands) | Trading | Principal | Asset | Investment | Mining | Corporate and Other | Totals |
Income (loss) | |||||||
Advisory and management fees | 62 | ? | 3,907 | 2,259 | ? | ? | 6,228 |
Net realized gain (loss) | (219,954) | (8,410) | (2,773) | ? | ? | ? | (231,137) |
Net realized gain (loss) | (843) | 4,334 | ? | ? | ? | ? | 3,491 |
Income from lending | 10,032 | 23 | ? | ? | ? | ? | 10,055 |
Net derivative gain | 80,019 | ? | ? | ? | ? | ? | 80,019 |
Income from mining | ? | ? | ? | ? | 10,947 | ? | 10,947 |
Other income | 308 | 780 | 66 | ? | ? | ? | 1,154 |
(130,376) | (3,273) | 1,200 | 2,259 | 10,947 | ? | (119,243) | |
Operating expenses | 47,289 | 2,250 | 14,890 | 2,744 | 9,405 | 52,711 | 129,289 |
Net unrealized gain | 7,337 | (145,611) | (95,098) | ? | ? | ? | (233,372) |
Net unrealized gain | (5,097) | (253,955) | 161 | ? | ? | ? | (258,891) |
Net gain on notes | ? | ? | ? | ? | ? | 51,104 | 51,104 |
Net gain on warrant | ? | ? | ? | ? | ? | 17,177 | 17,177 |
Foreign currency gain | (1,305) | ? | ? | ? | ? | 3 | (1,302) |
Loss attributable to | ? | ? | 100,606 | ? | ? | ? | 100,606 |
935 | (399,566) | 5,669 | ? | ? | 68,284 | (324,678) | |
Income tax benefit | ? | ? | ? | ? | ? | 18,509 | 18,509 |
Net income (loss) for | $ (176,730) | $ (405,089) | $ (8,021) | $ (485) | $ 1,542 | $ 34,082 | $ (554,701) |
Foreign currency | ? | ? | ? | ? | ? | (19) | (19) |
Comprehensive | $ (176,730) | $ (405,089) | $ (8,021) | $ (485) | $ 1,542 | $ 34,063 | $ (554,720) |
Income and expenses by each reportable segment of GDH LP for the three months ended June 30, 2021 are as follows (in thousands):
(in thousands) | Trading | Principal | Asset | Investment | Mining | Corporate and Other | Totals |
Income (loss) | |||||||
Advisory and | $ 60 | $ ? | $ 2,384 | $ ? | $ ? | $ ? | $ 2,444 |
Net realized gain (loss) | (237,991) | (2,525) | 77,983 | ? | ? | ? | $ (162,533) |
Net realized gain (loss) | ? | 41,363 | ? | ? | ? | ? | $ 41,363 |
Income from lending | 16,816 | 19 | ? | ? | ? | ? | $ 16,835 |
Net derivative gain (loss) | 93,461 | 25,000 | ? | ? | ? | ? | $ 118,461 |
Income from mining | ? | ? | ? | ? | 2,161 | ? | $ 2,161 |
Other income | 1,220 | 2,062 | 75 | ? | ? | ? | $ 3,357 |
(126,434) | 65,919 | 80,442 | ? | 2,161 | ? | 22,088 | |
Operating expenses | 33,746 | 1,316 | 5,794 | 336 | 618 | 7,960 | 49,770 |
Net unrealized gain | (177,220) | (67,502) | (249,856) | ? | (1,036) | ? | (495,614) |
Net unrealized gain | ? | 165,052 | ? | ? | ? | ? | 165,052 |
Net gain (loss) on | ? | ? | ? | ? | ? | 2,663 | 2,663 |
Foreign currency gain | (922) | ? | ? | ? | ? | ? | (922) |
(Gain) loss attributable | ? | ? | 173,612 | ? | ? | ? | 173,612 |
(178,142) | 97,550 | (76,244) | ? | (1,036) | 2,663 | (155,209) | |
Net income (loss) for | $ (338,322) | $ 162,153 | $ (1,596) | $ (336) | $ 507 | $ (5,297) | $ (182,891) |
Foreign currency | ? | ? | ? | ? | ? | 14 | 14 |
Comprehensive | $ (338,322) | $ 162,153 | $ (1,596) | $ (336) | $ 507 | $ (5,283) | $ (182,877) |
Assets and liabilities by reportable segment of GDH LP as of June 30, 2022 are as follows (in thousands):
(in thousands) | Trading | Principal | Asset | Investment | Mining | Corporate and Other | Totals |
Total assets | $ 1,873,813 | $ 931,910 | $ 78,595 | $ 22,715 | $ 386,214 | $ 102,615 | $ 3,395,862 |
Total liabilities | $ 928,291 | $ 594 | $ 51,663 | $ 2,183 | $ 5,760 | $ 573,970 | $ 1,562,461 |
Assets and liabilities by reportable segment of GDH LP as of December 31, 2021 are as follows (in thousands):
(in thousands) | Trading | Principal | Asset | Investment | Mining | Corporate | Totals |
Total assets | $ 2,971,090 | $ 1,277,707 | $ 193,436 | $ 10,727 | $ 292,942 | $ 350,636 | $ 5,096,538 |
Total liabilities | $ 1,666,488 | $ 174 | $ 171,784 | $ 122 | $ 3,202 | $ 656,417 | $ 2,498,187 |
The fair value of each asset class by reporting segment of GDH LP as of June 30, 2022 is as follows (in thousands):
(in thousands) | Trading | Principal | Asset | Investment | Mining | Corporate | Totals |
Digital assets | $ 775,537 | $ 50,004 | $ 49,527 | $ ? | $ ? | $ ? | $ 875,068 |
Digital assets receivables | 7,983 | 15,376 | ? | ? | ? | ? | 23,359 |
Digital assets posted as | 88,566 | ? | ? | ? | ? | ? | 88,566 |
Investments: | |||||||
Pre-Launch Network | 2,500 | 2,509 | ? | ? | ? | ? | 5,009 |
Convertible Notes | 5,287 | 4,486 | ? | ? | ? | ? | 9,773 |
Preferred Stock | ? | 304,184 | ? | ? | ? | ? | 304,184 |
Common Stock | 15,534 | 131,859 | ? | ? | ? | ? | 147,393 |
LP/LLC Interests | ? | 287,553 | ? | ? | ? | ? | 287,553 |
Warrants/Trust | ? | 35 | ? | ? | ? | ? | 35 |
$ 895,407 | $ 796,006 | $ 49,527 | $ ? | $ ? | $ ? | $ 1,740,940 |
The fair value of each asset class by reporting segment of GDH LP as of December 31, 2021 is as follows (in thousands):
(in thousands) | Trading | Principal | Asset | Investment | Mining | Corporate | Totals |
Digital assets | $ 2,121,772 | $ 123,210 | $ 165,300 | $ ? | $ 10,495 | $ ? | $ 2,420,777 |
Digital assets receivables | ? | 71,657 | ? | ? | ? | ? | 71,657 |
Digital assets posted as | 71,400 | ? | ? | ? | ? | ? | 71,400 |
Investments: | |||||||
Pre-Launch Network | ? | 6,393 | ? | ? | ? | ? | 6,393 |
Convertible Notes | ? | 9,768 | ? | ? | ? | ? | 9,768 |
Preferred Stock | ? | 382,182 | ? | ? | ? | ? | 382,182 |
Common Stock | 34,991 | 236,303 | ? | ? | ? | ? | 271,294 |
LP/LLC Interests | ? | 383,279 | ? | ? | ? | ? | 383,279 |
Warrants/Trust Units | 7,963 | 8,897 | ? | ? | ? | ? | 16,860 |
$ 2,236,126 | $ 1,221,689 | $ 165,300 | $ ? | $ 10,495 | $ ? | $ 3,633,610 |
Net digital assets includes all digital assets categorized as assets, less all digital assets categorized as liabilities on the statement of financial position, less non-controlling interests liabilities, and is included in the Company's liquidity measure. Net digital assets as of June 30, 2022 is as follows (in thousands):
(in thousands) | As of June 30, 2022 | As of December 31, 2021 |
Assets | ||
Digital assets | $ 875,068 | $ 2,420,777 |
Digital asset loans receivable, net | 69,881 | 192,684 |
Digital assets receivable, current | 17,287 | 52,998 |
Digital assets receivable, noncurrent | 6,072 | 18,659 |
Assets posted as collateral | 88,566 | 71,400 |
1,056,874 | 2,756,518 | |
Liabilities | ||
Payables to customers1 | 10,945 | 18,565 |
Digital asset loans payable | 425,108 | 905,013 |
Collateral payable1 | 96,497 | 458,949 |
Non-controlling interests liability | 50,070 | 161,536 |
582,620 | 1,544,063 | |
Digital assets, net | $ 474,254 | $ 1,212,455 |
Stablecoins, net | $ 256,159 | $ 240,634 |
Digital assets, net excl. stablecoins | $ 218,095 | $ 971,821 |
1 | Excludes cash portion of consolidated balance on the Partnership's balance sheet. |
All figures are in U.S. Dollars unless otherwise noted.
SOURCE Galaxy Digital Holdings Ltd.
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