Galaxy Digital Announces First Quarter 2019 Financial Results and Provides Corporate Updates
Galaxy Digital Announces First Quarter 2019 Financial Results and Provides Corporate Updates
Canada NewsWire
NEW YORK, May 29, 2019
All figures are in U.S. Dollars unless otherwise noted.
NEW YORK, May 29, 2019 /CNW/ - Galaxy Digital Holdings Ltd. (TSXV: GLXY; Frankfurt: 7LX) ("Galaxy Digital", "GDH Ltd.", or the "Company") today released both Galaxy Digital Holdings LP's ("GDH LP" or the "Partnership") and GDH Ltd.'s financial results for the three months ended March 31, 2019 ("Q1 2019" or "the first quarter"), as well as the Partnership's corporate updates through the date of this press release.
"I am very pleased with our first quarter results and the progress we continue to make in building out and diversifying our business in a smart and disciplined manner. Notably, our digital assets portfolio significantly outperformed broader markets. As we previously announced, after the end of the first quarter, our Principal Investments team successfully monetized a portion of our largest position, generating significant and flexible liquidity for the firm as we go forward," said Michael Novogratz, Founder and CEO of Galaxy Digital. "We are excited about the future prospects for the sector and continue to be singularly focused on bringing greater institutionalization and growth to the digital assets and blockchain technology ecosystem. As the landscape continues to evolve, I am confident that our platform remains well-positioned to identify and invest in new and unique opportunities as they emerge."
Corporate Highlights
- As previously disclosed on April 18, 2019 the Partnership accepted a tender offer in the ordinary shares of Block.one. On May 20, 2019, the transaction closed and the Partnership received $71.2 million for the tendered shares, representing a majority of the Company's position and a 123% return on the realized investment.
- During the first quarter of 2019, the Principal Investments team closed three new investments and two add-on investments, representing $6.1 million and $1.0 million of invested capital, respectively. These investments included:
- Three new equity investments, including (i) Symbiont.io, Inc. ($3.5 million), a financial technology company delivering enterprise blockchain solutions, (ii) Ciphertrace, Inc. ($2.2 million), a company developing cryptocurrency and blockchain tracing and security capabilities, and (iii) Tagomi Holdings, Inc. ($0.4 million), the first live electronic brokerage offering prime services on an agency basis for sophisticated investors of digital assets.
- An additional $0.3 million of eligible loans purchased from BlockFi Lending LLC, a wholly owned subsidiary of BlockFi, Inc., a digital asset-secured consumer lending platform in which the Partnership also has an equity investment. Furthermore, the Partnership purchased an additional 5% interest in Galaxy Lending SPV I LLC (the "SPV") from BlockFi, Inc. ($0.1 million). The SPV is a special purpose vehicle created to buy and house digital asset-backed loans from BlockFi Lending LLC that is owned by a subsidiary of the Partnership and BlockFi, Inc. After the purchase of the 5% interest, the Partnership owns 95% of the SPV and BlockFi, Inc. owns 5%.
- An add-on investment in the Galaxy EOS VC Fund, LP, a Galaxy Digital Capital Management ("GDCM") managed fund ($0.6 million).
- Since the start of 2019, GDCM has been capitalizing on the improvement in the digital assets market, generating inflows into the Galaxy Benchmark Crypto Index Fund (the "GBCIF") and making meaningful progress towards future commitments. The GBCIF is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the "BGCI"), an index co-branded and administered by Bloomberg which is designed to track the performance of the largest, most liquid portion of the digital assets market. In the first quarter, the BGCI returned 7.96%. Year-to-date, the BGCI has returned 99.48%1.
- Additionally, in the first quarter of 2019, the Galaxy EOS VC Fund, LP (the "EOS VC Fund"), made investments in Lucid Sight, Inc., Ciphertrace, Inc., and Digital Assets Data Inc. Subsequent to March 31, 2019, the EOS VC Fund made additional investments in Out There Labs, Inc., Azarus, Inc., FinCo Services, Inc., and an add-on investment in AlphaPoint Corporation.
- Galaxy Digital Trading ("GDT"), the Partnership's trading business, continued to see counterparty engagement acceleration in the first quarter of 2019. This engagement was led from Asia and the U.S., with Europe progressing forward at a measured pace.
- GDT continues to further develop quantitative infrastructure to provide enhanced liquidity and strategy diversification across the global platform.
- During the first quarter of 2019, the Advisory Services business added key hires and has made significant progress, with several active mandates for clients across financing, mergers and acquisitions, and other strategic matters.
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1 | Data as of market close on May 28th, 2019. Source: Bloomberg. |
Select GDH LP Financial Highlights (Q1 2019)
- As of March 31, 2019, digital assets, including digital assets posted as collateral, stood at $94.7 million, an increase from $69.8 million as of December 31, 2018. This increase was primarily due to additional purchases during the quarter.
- Investments increased from $179.4 million to $202.2 million as of March 31, 2019. The increase was primarily a result of $16.9 million of unrealized gain during the quarter as well as $6.6 million of capital deployed by the Principal Investments team.
- Total equity increased by $19.7 million during the quarter to $325.4 million as of March 31, 2019 primarily due to $12.9 million of net comprehensive income and further increased by $10.3 million of equity-based compensation which does not have a net effect on equity due to the accounting treatment for equity-based compensation.
- As of March 31, 2019, the Partnership's net book value per unit2 was approximately C$1.51 (US$1.13).
- For the three months ended March 31, 2019, net comprehensive income was $12.9 million, as compared to net comprehensive loss of $134.0 million for the three months ended March 31, 2018. The current quarter income was largely a result of realized gain on digital assets and unrealized gain on investments, partially offset by the quarter's operating expenses. The net comprehensive loss for the three months ended March 31, 2018 was primarily a result of unrealized loss on digital assets and investments and realized loss on digital assets.
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2 | Net book value per unit is calculated as GDH LP's partners' capital divided by the outstanding number of units as of March 31, 2019. |
GDH LP's Q1 2019 Financial Results
March 31, | December 31, | |||||
2019 | 2018 | |||||
Assets | ||||||
Current assets | ||||||
Cash | $ | 29,869,182 | $ | 66,488,012 | ||
Digital assets | 90,576,823 | 69,765,339 | ||||
Investments | 202,183,869 | 179,365,696 | ||||
Receivable for digital asset trades | 2,630,364 | 8,579,058 | ||||
Digital asset loans receivable | 2,960,643 | — | ||||
Assets posted as collateral | 5,885,362 | — | ||||
Receivables | 1,336,281 | 1,238,694 | ||||
Prepaid expenses and other assets | 1,827,955 | 2,002,880 | ||||
Loans receivable | 1,653,326 | 2,369,024 | ||||
338,923,805 | 329,808,703 | |||||
Loans receivable | 15,920,316 | 15,892,320 | ||||
Property and equipment | 8,759,084 | 4,223,252 | ||||
24,679,400 | 20,115,572 | |||||
Total assets | $ | 363,603,205 | $ | 349,924,275 | ||
Liabilities | ||||||
Current liabilities | ||||||
Digital assets sold short | $ | 19,053,551 | $ | 18,666,957 | ||
Accounts payable and accrued liabilities | 6,810,258 | 14,558,914 | ||||
Payable for digital asset trades | 3,441,641 | 9,832,737 | ||||
Digital asset loans payable | 2,960,643 | — | ||||
Collateral payable | 1,172,015 | — | ||||
Lease liability | 711,254 | — | ||||
Due to related party | — | 1,177,498 | ||||
34,149,362 | 44,236,106 | |||||
Lease Liability | 4,053,626 | — | ||||
Total liabilities | 38,202,988 | 44,236,106 | ||||
Equity | ||||||
Partners' capital | 321,053,515 | 301,520,591 | ||||
Non-controlling interest | 4,346,702 | 4,167,578 | ||||
Total equity | 325,400,217 | 305,688,169 | ||||
Total liabilities and equity | $ | 363,603,205 | $ | 349,924,275 | ||
Three months | Three months | ||||
ended | ended | ||||
March 31, | March 31, | ||||
2019 | 20183 | ||||
Income (loss) | |||||
Advisory and management fees | $ | 1,520,511 | $ | 29,911 | |
Net realized gain (loss) on digital assets | 17,471,124 | (13,526,843) | |||
Interest income | 705,763 | 925 | |||
Other income | 608,996 | 19,822 | |||
20,306,394 | (13,476,185) | ||||
Operating expenses | |||||
Equity based compensation | 10,321,503 | — | |||
Compensation and compensation related | 6,954,165 | 6,307,582 | |||
Professional fees | 2,605,326 | 1,774,900 | |||
General and administrative | 2,521,290 | 1,472,623 | |||
Interest | 688,326 | 658,754 | |||
Insurance | 426,850 | 735,000 | |||
Director fees | 50,000 | — | |||
(23,567,460) | (10,948,859) | ||||
Net unrealized loss on digital assets | (664,530) | (85,540,413) | |||
Net unrealized gain (loss) on investments | 16,902,771 | (24,038,136) | |||
Unrealized foreign currency gain | 91,072 | — | |||
Realized foreign currency loss | (110,512) | — | |||
16,218,801 | (109,578,549) | ||||
Income (loss) for the period | $ | 12,957,735 | $ | (134,003,593) | |
Income (loss) attributed to: | |||||
Unit holders of the Partnership | 12,570,628 | (134,003,593) | |||
Non-controlling interest | 387,107 | — | |||
$ | 12,957,735 | $ | (134,003,593) | ||
Other comprehensive loss | |||||
Foreign currency translation adjustment | (92,934) | — | |||
Comprehensive income (loss) for the period | $ | 12,864,801 | $ | (134,003,593) | |
Comprehensive income (loss) attributed to: | |||||
Unit holders of the Partnership | $ | 12,477,694 | $ | (134,003,593) | |
Non-controlling interest | 387,107 | — | |||
$ | 12,864,801 | $ | (134,003,593) | ||
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3 | Certain prior period balances were restated to conform to current period's presentation. There were no changes to the balances |
Income and expenses by each reportable segment of GDH LP for the three months ended March 31, 2019 are as follows:
Principal | Asset | Advisory | Corporate | ||||||||||||||
Trading | Investing | Management | Services | and Other | Totals | ||||||||||||
Income (loss) | |||||||||||||||||
Advisory and management fees | $ | — | $ | — | $ | 1,317,386 | $ | 203,125 | $ | — | $ | 1,520,511 | |||||
Net realized gain on digital assets | 1,821,249 | 15,649,875 | — | — | — | 17,471,124 | |||||||||||
Interest Income | 65,314 | 610,627 | — | 16,524 | 13,298 | 705,763 | |||||||||||
Other Income | 612,714 | (7,694) | — | 3,976 | — | 608,996 | |||||||||||
2,499,277 | 16,252,808 | 1,317,386 | 223,625 | 13,298 | 20,306,394 | ||||||||||||
Operating expenses | 4,733,601 | 2,888,993 | 6,146,240 | 3,392,232 | 6,406,394 | 23,567,460 | |||||||||||
Net unrealized loss on digital assets | (329,352) | (335,178) | — | — | — | (664,530) | |||||||||||
Net unrealized gain on investments | — | 16,902,771 | — | — | — | 16,902,771 | |||||||||||
Unrealized foreign currency gain (loss) | 104,146 | — | — | (13,074) | — | 91,072 | |||||||||||
Realized foreign currency loss | (110,512) | — | — | — | — | (110,512) | |||||||||||
(335,718) | 16,567,593 | — | (13,074) | — | 16,218,801 | ||||||||||||
Net income (loss) | $ | (2,570,042) | $ | 29,931,408 | $ | (4,828,854) | $ | (3,181,681) | $ | (6,393,096) | $ | 12,957,735 | |||||
Income and expenses by each reportable segment of GDH LP for the three months ended March 31, 2018 are as follows:
Principal | Asset | Advisory | Corporate | ||||||||||||||
Trading | Investing | Management | Services | and Other | Totals | ||||||||||||
Income (loss) | |||||||||||||||||
Advisory and management fees | $ | — | $ | — | $ | 19,444 | $ | 10,467 | $ | — | $ | 29,911 | |||||
Net realized loss on digital assets | (8,942,905) | (4,583,938) | — | — | — | (13,526,843) | |||||||||||
Interest income | — | 925 | — | — | — | 925 | |||||||||||
Other income | 5,162 | 14,660 | — | — | — | 19,822 | |||||||||||
(8,937,743) | (4,568,353) | 19,444 | 10,467 | — | (13,476,185) | ||||||||||||
Operating expenses | 2,888,682 | 1,527,666 | 1,033,355 | 459,113 | 5,040,043 | 10,948,859 | |||||||||||
Net unrealized gain (loss) on digital assets | 12,383,401 | (97,923,814) | — | — | — | (85,540,413) | |||||||||||
Net unrealized loss on investments | — | (24,038,136) | — | — | — | (24,038,136) | |||||||||||
12,383,401 | (121,961,950) | — | — | — | (109,578,549) | ||||||||||||
Net income (loss) | $ | 556,976 | $ | (128,057,969) | $ | (1,013,911) | $ | (448,646) | $ | (5,040,043) | $ | (134,003,593) | |||||
Assets and liabilities by reportable segment of GDH LP as of March 31, 2019 are as follows:
Principal | Asset | Advisory | Corporate | |||||||||||||||
Trading | Investing | Management | Services | and Other | Totals | |||||||||||||
Total assets | $ | 40,754,604 | $ | 309,963,542 | $ | 849,690 | $ | 945,452 | $ | 11,089,917 | $ | 363,603,205 | ||||||
Total liabilities | $ | 7,439,559 | $ | 19,756,002 | $ | 702,128 | $ | 13,227 | $ | 10,292,072 | $ | 38,202,988 | ||||||
Assets and liabilities by reportable segment of GDH LP as of December 31, 2018 are as follows:
Principal | Asset | Advisory | Corporate | |||||||||||||||
Trading | Investing | Management | Services | and Other | Totals | |||||||||||||
Total assets | $ | 65,520,661 | $ | 265,533,063 | $ | 2,427,877 | $ | 1,081,640 | $ | 15,361,034 | $ | 349,924,275 | ||||||
Total liabilities | $ | 9,946,848 | $ | 18,936,146 | $ | 105,946 | $ | 157,811 | $ | 15,089,355 | $ | 44,236,106 | ||||||
Select statement of financial position information
The fair value of each asset class by reporting segment of GDH LP as of March 31, 2019 is as follows:
Principal | Asset | Advisory | Corporate | ||||||||||||||
Trading | Investing | Management | Services | and Other | Totals | ||||||||||||
Digital assets: | |||||||||||||||||
Cryptocurrency | $ | 7,969,162 | $ | 82,607,661 | $ | — | $ | — | $ | — | $ | 90,576,823 | |||||
Digital assets posted as collateral | 339,064 | 3,728,180 | — | — | — | 4,067,244 | |||||||||||
Investments: | |||||||||||||||||
Pre-ICO | — | 2,844,204 | — | — | — | 2,844,204 | |||||||||||
Convertible Notes | — | 1,250,000 | — | — | — | 1,250,000 | |||||||||||
Preferred Stock | — | 65,609,037 | — | — | — | 65,609,037 | |||||||||||
Common Stock | — | 97,211,965 | — | — | — | 97,211,965 | |||||||||||
LP/LLC Interests | — | 34,827,530 | — | — | — | 34,827,530 | |||||||||||
Warrants/Trust Units | — | 441,133 | — | — | — | 441,133 | |||||||||||
$ | 8,308,226 | $ | 288,519,710 | $ | — | $ | — | $ | — | $ | 296,827,936 | ||||||
The fair value of each asset class by reporting segment of GDH LP as of December 31, 2018 is as follows:
Principal | Asset | Advisory | Corporate | ||||||||||||||
Trading | Investing | Management | Services | and Other | Totals | ||||||||||||
Digital assets: | |||||||||||||||||
Cryptocurrency | $ | 20,920,345 | $ | 48,844,994 | $ | — | $ | — | $ | — | $ | 69,765,339 | |||||
Investments: | |||||||||||||||||
Pre-ICO | — | 3,444,204 | — | — | — | 3,444,204 | |||||||||||
Convertible Notes | — | 1,250,000 | — | — | — | 1,250,000 | |||||||||||
Preferred Stock | — | 59,586,719 | — | — | — | 59,586,719 | |||||||||||
Common Stock | — | 80,483,775 | — | — | — | 80,483,775 | |||||||||||
LP/LLC Interests | — | 33,248,472 | — | — | — | 33,248,472 | |||||||||||
Warrants/Trust Units | — | 1,352,526 | — | — | — | 1,352,526 | |||||||||||
$ | 20,920,345 | $ | 228,210,690 | $ | — | $ | — | $ | — | $ | 249,131,035 | ||||||
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 months ended March 31, 2019 and (ii) GDH Ltd.'s Management Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2019 (together, the "Consolidated Financial Statements" and "MD&As"), which have been filed on SEDAR at www.sedar.com.
About GDH Ltd. and GDH LP (Galaxy Digital)
Galaxy Digital Holdings Ltd.'s only significant asset is a minority investment in GDH LP. GDH LP is a diversified, multi-service merchant bank dedicated to the digital assets and blockchain technology industry. GDH LP's multi-disciplinary team has extensive experience spanning investing, portfolio management, capital markets, operations, and blockchain technology. GDH LP currently operates four distinct business lines, which include: Trading, Asset Management, Principal Investing and Advisory Services. The CEO of GDH Ltd. and the general partner of GDH LP is Michael Novogratz. GDH LP is headquartered in New York City, with offices in London, Tokyo, Hong Kong, the Cayman Islands (registered office) and New Jersey. Additional information about GDH LP's businesses and products is available on www.galaxydigital.io.
Disclaimers and Additional Information
The TSXV has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release. The Ontario Securities Commission has not passed upon the merits of the disclosure record of Galaxy Digital.
Forward-Looking Statements
Certain information in this press release, including, but not limited to, statements regarding the future of the industry and our results, business or opportunities, may constitute forward looking information (collectively, forward-looking statements), which can be identified by the use of terms such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue" or "believe" (or the negatives) or other similar variations. Because of various risks and uncertainties, including those referenced below, actual events or results may differ materially from those reflected or contemplated in such forward-looking statements. Factors that could cause actual results to differ materially from those described in such forward-looking statements include, but are not limited to, a decline in the digital asset market; the failure or delay in the adoption of digital assets and the blockchain ecosystem by institutions; a delay or failure in developing infrastructure for the trading business or achieving mandates for the advisory business and those risks discussed in the risks and uncertainties section in the Partnership's and the Company's Management Discussion and Analysis for the year ended December 31, 2018. In connection with the forward-looking statements contained in this press release, the Company has made assumptions that no significant events occur outside of the Company's and Partnership's normal course of business. Forward-looking statements are not guarantees of future performance, accordingly, you should not put undue reliance on forward-looking statements. Information identifying assumptions, risks and uncertainties relating to Galaxy Digital is contained in Galaxy Digital's filings with the Canadian securities regulators available at www.sedar.com. The forward-looking statements in this press release are applicable only as of the date of this release or as of the date specified in the relevant forward-looking statement.
SOURCE Galaxy Digital Holdings Ltd.
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