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Galaxy Digital reported its second consecutive quarterly loss on Tuesday, signaling that tepid crypto market conditions continued to weigh on the financial services firm.
The company posted a first-quarter net loss of $216 million, or $0.49 per share, improving from a deficit of $295 million a year earlier. For the period ended March 31, analysts had forecast a loss per share of $0.93, according to Yahoo Finance.
Galaxy’s losses narrowed on a consecutive basis. In the prior quarter, the company reported a net loss of $482 million, or $1.08 per share. The firm continued to point to depreciation in digital asset prices as the main driver of losses.
Galaxy’s total assets fell 12% quarter-over-quarter to $9.99 billion from $11.3 billion. The decline was driven mostly by a $316 million drop in the value of its digital assets and related investments.
Founder and CEO Mike Novogratz said the balance sheet lost money because crypto prices are down, but he added that the first-quarter deficit was partially offset by reduced headcount and a major shift in exposure to Hyperliquid’s native token.
As of March 31, Galaxy’s treasury included $134 million in “Other Token Exposure.” Its exposure to Bitcoin, Ethereum, and Solana was $431 million, $61 million, and $42 million, respectively, alongside $95 million in other investments.
Novogratz acknowledged the company’s balance sheet impact from lower crypto prices, while describing the firm’s move toward Hyperliquid. He said Hyperliquid’s economic model differs from many other tokens, which he characterized as “association tokens,” and he called it “a good way to look at what the future of crypto is going to look [like].”
Hyperliquid, a decentralized exchange focused on perpetual futures, supports its native token through a buyback-and-burn mechanism intended to increase scarcity. Year-to-date, the token’s price has risen 56% to $39.73, according to CoinGecko.
Galaxy said digital assets generated a first-quarter gross profit of $49 million, down sequentially from $51 million. In its announcement, the company attributed the relative stability of performance to scaling recurring fee revenue and transaction income.
Galaxy’s stock was little changed on Tuesday, with shares trading around $25 after the opening bell. The stock hit an 11-month low of $16.43 last month, and has increased 12% year-to-date.
Galaxy positions itself as a bridge between Wall Street and crypto markets, offering trading, lending, and derivative services to institutions. The company has also launched a retail-facing platform, GalaxyOne, while operating its own data center.
Profits from data centers are expected to ramp up this year, with Galaxy’s first data hall expected to be delivered to CoreWeave, an AI-native cloud provider. During the earnings call, Novogratz emphasized diversification, saying: “We’re optimistic on both sides of the business. The world is in an AI revolution, and we plan on riding that wave and paddling our canoe as fast as possible.”
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