Galaxy Digital Holdings ((TSE:GLXY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Galaxy Digital Holdings’ recent earnings call revealed a mixed sentiment, reflecting both significant achievements and notable challenges. The company reported strong performance in 2024, driven by remarkable growth in its operating businesses and strategic expansion into AI data centers. However, these positive results were tempered by legal settlement charges and ongoing challenges in the crypto market, which are expected to impact the first quarter of 2025. Despite these hurdles, Galaxy Digital remains optimistic about its future prospects, expressing confidence in navigating short-term market volatility.
Record Operating Business Performance in 2024
Galaxy Digital marked a milestone in 2024 by achieving over $400 million in operating revenue, marking the first year of profitability for its combined operating businesses. This achievement underscores the company’s robust operational strategies and its ability to capitalize on market opportunities.
AI Data Center Expansion with CoreWeave
A transformative 15-year lease agreement with CoreWeave was announced, positioning Galaxy Digital to develop one of the largest AI data centers in the U.S. This strategic move is expected to generate $4.5 billion in revenue over the term, highlighting the company’s commitment to diversifying its revenue streams and investing in future technologies.
Strong Growth in Trading and Lending
Galaxy Digital’s markets business reported a significant 107% increase in counterparty trading and advisory revenue, totaling $250 million. The lending business also experienced substantial growth, with a 72% year-over-year increase, reflecting the company’s strong position in these sectors.
Significant Growth in Staking Business
The company’s staking business witnessed impressive growth, expanding from $240 million to $4.2 billion in assets under stake. This 147% increase in net blockchain rewards quarter-over-quarter demonstrates Galaxy’s successful engagement in the staking market.
Launch of New Investment Products
Galaxy Digital launched two crypto ETFs with Invesco and two ETPs with DWS, alongside a new crypto venture fund that raised nearly $150 million. These initiatives reflect the company’s proactive approach in broadening its investment product offerings to meet evolving market demands.
Legal Settlement with New York Attorney General
The company faced a $166 million charge due to a legal settlement with the New York Attorney General, which impacted its net income. This settlement represents a significant financial outlay, underscoring the challenges Galaxy Digital faces in navigating regulatory landscapes.
Q1 2025 Preliminary Loss
Galaxy Digital anticipates a pretax loss between $275 million and $325 million in Q1 2025, attributed to increased crypto market volatility and reduced digital asset values. This forecast highlights the ongoing challenges in the crypto market that the company must address.
Challenges in Crypto Asset Valuation
The volatility in the crypto market during Q1 2025 led to reduced client activity, lower assets under management, and diminished value of net digital assets on the balance sheet. These challenges underscore the need for strategic adjustments to mitigate market risks.
Transitioning Bitcoin Mining Operations
Galaxy Digital plans to discontinue its mining activities at the Helios campus in Q2 2025, transitioning to AI data centers. While this shift may impact short-term revenue, it aligns with the company’s strategic focus on AI and future technologies.
Forward-Looking Guidance
CEO Mike Novogratz highlighted the company’s significant achievements and challenges during the earnings call. Despite the $166 million legal settlement, Galaxy Digital reported over $400 million in revenue and a net income of $365 million for the year. Excluding the settlement, net income was $532 million. The company ended 2024 with $7.2 billion in total assets and $2.3 billion in equity capital. Looking forward, Novogratz expressed optimism about potential regulatory changes under the Trump administration, including stablecoin legislation and expanded cryptocurrency regulations, which could positively impact the market.
In conclusion, Galaxy Digital Holdings’ earnings call presented a complex picture of strong growth and strategic initiatives alongside significant challenges. The company’s optimism about future regulatory changes and its strategic investments in AI data centers and new financial products underscore its commitment to long-term growth, despite the short-term volatility in the crypto market.