Galaxy Digital (GLXY) Earnings

Management highlights

### Strategic Positioning - Galaxy is positioned as a rare infrastructure builder for two converging structural trends: on-chain digital financial markets and AI-powered computing, building capabilities across both digital asset infrastructure and large-scale data center infrastructure. - The company maintains a diversified business model with recurring revenue that is increasingly uncorrelated to digital asset market volatility. ### Digital Asset Business Highlights - Continued market share gains despite a challenging bear market environment with subdued token prices and trading volumes, reducing earnings dependence on overall market direction. - Launched multiple new institutional-focused products: an OTC prediction markets offering for multi-asset event-driven hedging, the Galaxy On-Chain Financing Rate (GOFR) on-chain lending solution which generated nearly $300 million in early loan originations, and the Galaxy Curator institutional vault curation offering for curated on-chain yield strategies. - Launched the Galaxy FinTech Fund (a long-short equity hedge fund focused on digital financial transformation) with over $100 million in assets at launch, and partnered with State Street Investment Management to launch Sweep, a tokenized private equity/money market fund offering 24-7 liquidity that qualifies as margin collateral on Galaxy's platform. - Secured a landmark multi-year strategic engagement with Bank of New York (the world's largest custodian) to serve as a design partner for BNY's end-to-end institutional digital asset infrastructure, including staking support for BNY's custody platform. - Expanded institutional distribution partnerships: selected by Morgan Stanley Wealth Management to power staking for two new digital asset ETPs and to support a digital asset lending referral program, building on the prior quarter's selection by BlackRock as a validator for its Ethereum staking fund. ### Data Center Business Highlights - Delivered Phase 1 of the Helios data center campus on schedule and on budget, with the first 133 megawatts of critical IT capacity brought online for anchor customer CoreWeave, and the campus now generating cash flow. - Completed a $3.5 billion five-year senior secured high-yield note offering (the largest in Galaxy's history) to fully fund the remaining construction of Helios Phase 2, which will add an additional 260 megawatts of critical IT capacity starting in 2027. - Acquired three new large-scale AI/HPC data center development sites in Texas (Merlin, Caspian, Celine), expanding the total development pipeline to more than 5.7 gigawatts of potential power capacity, positioning Galaxy as one of the world's largest data center developers focused on AI infrastructure. - All expansion site acquisitions are structured with modest upfront capital commitments, with the bulk of spending contingent on meeting development milestones and securing long-term tenant leases.

Guidance

• Starting in Q3 2026, Helios Phase 1 is expected to generate a full quarter of approximately $80 million in leasing revenue, with a project-level adjusted EBITDA margin of over 90%. • CapEx for the data center segment is expected to continue increasing in coming quarters alongside the pace of Helios construction. • Helios Phase 2 data hall deliveries are on schedule to begin in Q2 2027, with seven of eight total data halls online by the end of 2027, and the final data hall coming online in early 2028. • Helios Phase 3 (133 megawatts of additional critical IT capacity) is expected to come online throughout 2028, completing the Helios 1 build-out. All required equity for Phase 3 is already pre-funded, with a separate debt financing expected to be arranged closer to construction ramp. • The initial 74 megawatt phase of the new Merlin data center campus is projected to begin energization in 2028, with potential for expansion to 500 megawatts over time. • Galaxy expects to raise the 2026 vintage of the Galaxy Ventures franchise in H2 2026, which is projected to be larger than the inaugural fund and will continue to focus on blockchain, stablecoins, digital payments, and tokenization.

Segment performance

1. Digital Assets Segment: Generated adjusted gross profit of $66 million, up 34% quarter-over-quarter. This segment contributed 76.7% of combined operating businesses adjusted gross profit ($86 million total) for Q2 2026. Within the segment: - Global Markets: Adjusted gross profit was $49 million, up significantly from Q1 despite a 7% decline in trading volumes, driven by strong electronic trading performance and disciplined risk management. - Asset Management and Infrastructure Solutions: Adjusted gross profit was $17 million, ending the quarter with $7 billion in combined assets under management and assets under stake, down 12% quarter-over-quarter due to lower digital asset prices and modest net outflows. 2. Data Centers (Digital Infrastructure) Segment: Generated $20 million in adjusted gross profit and $11 million in adjusted EBITDA in Q2 2026, reflecting phased delivery of Helios Phase 1 data halls. This segment contributed 23.3% of combined operating businesses adjusted gross profit. Total segment assets at quarter end were approximately $2.5 billion, with total liabilities of $1.5 billion. A $32 million federal clean electricity investment tax credit benefit was recognized in the segment this quarter. Total Q2 CapEx for the segment was $448 million, up from $354 million in Q1. 3. Corporate/Treasury Segment: Reported an adjusted gross loss of $42 million in Q2 2026, driven by depreciation of digital asset prices during the quarter. Consolidated Firmwide Results: Reported GAAP net loss of $85 million (9 cents per share), firm-wide adjusted EBITDA of negative $77 million. Combined operating businesses adjusted gross profit was $86 million, adjusted EBITDA was $1 million, both up significantly from Q1. Total firm assets at quarter end were $10.8 billion (up 9% quarter-over-quarter), total equity was $2.7 billion (flat quarter-over-quarter), cash and stablecoins totaled $2.5 billion (down 6% QoQ), and net digital assets and investments totaled $1.2 billion (down 15% QoQ).

Risks & headwinds

• Persistent digital asset bear market conditions with depressed token prices and trading volumes continue to pressure near-term treasury and corporate segment results, and could slow digital asset infrastructure adoption by institutional clients. • Texas' ERCOT regulatory process for grid interconnection has been delayed following Governor Abbott's directive for a comprehensive audit of all pending data center projects, pushing back expected announcements of batch zero classification for new development sites. • Large-scale data center development faces inherent timing and execution risks, including supply chain constraints for long-lead electrical equipment, construction labor shortages, and grid interconnection approval delays that could push back energization timelines. • Prospective tenants for late 2028 power capacity (such as the 830 megawatts of approved capacity at Helios 2) are currently prioritizing securing near-term power supply, which slows lease closing for longer-dated capacity. • Developing behind-the-meter power generation for data centers adds significant complexity, cost, and timing risk to projects, and remains unproven at large scale.

Analyst Q&A

• Q: Analyst asks for an update on discussions for the 830 megawatts of unleased approved capacity at Helios 2, including tenant funnel composition and key gating factors for signing a lease. /

  A: Management confirms talks are ongoing with all tenant types, including hyperscalers, neoclouds, and new market entrants. The primary gating factor is Helios 2's 2028 energization schedule, as most prospective tenants are currently prioritizing securing 2026 power delivery given industry-wide supply backlogs. New market structures that allow higher-quality credit counterparties to wrap tenant commitments are emerging, and management is waiting for these structures to solidify before committing to a deal to expand the opportunity set and improve risk-reward.

• Q: Analyst asks what the key near-term growth and investment priorities are for Galaxy's digital asset business, differentiating between trading and infrastructure, and where early traction is strongest. /

  A: Management states the top priority is large-scale institutional partnership engagements to help established financial firms build and own their own custom digital asset infrastructure, with the BNY engagement as the first example. Key product focus areas for these partnerships include staking, tokenization, wallet infrastructure, and vault/curation offerings, where Galaxy has unique existing engineering and product experience. The firm is being selective given limited resources, prioritizing partnerships that allow for long-term deepening of relationships beyond the initial engagement.

• Q: Analyst asks how strategic TradFi infrastructure partnerships like the BNY engagement will show up in financial results, and how soon BNY could become a material contributor. /

  A: Management explains these engagements are structured to first generate near-term fee revenue from engineering and development work, with healthy margins, as firms build out their infrastructure. Over the long term, the partnerships create broader distribution for Galaxy's products and services through the partner's existing client platform, driving growth across trading, asset management, and other business lines. No specific timeline for material contribution was given, as engagements follow long development cycles.

• Q: Analyst asks where Galaxy sees tangible convergence between its AI data center and on-chain digital asset themes, and whether the two businesses can create more value together than separately. /

  A: CEO Mike Novogratz notes there is no immediate direct operational convergence in the short term, as data centers are built for large third-party hyperscaler clients, and diverting capacity for internal crypto use is not material. Both businesses are aligned on building long-term infrastructure for a common theme of a digitized economy powered by code. The key synergies are that cash flow from the growing data center business provides Galaxy with more stability to navigate the ongoing digital asset industry transition, and the capital base built from the crypto business allowed the firm to accelerate development of its large-scale data center pipeline.