By Michael Kim
NASDAQ:DEFT
READ THE FULL DEFT RESEARCH REPORT
After the market close on 8/14/25, DeFi Technologies (NASDAQ:DEFT) reported 2Q25 earnings results. On an IFRS basis, DEFT reported net income per share of ($0.00). After excluding the application of the Discount for Lack of Marketability (DLOM) applied to certain SOL and AVAX tokens acquired via equity investments in private investment funds reflecting lock-up periods through 2028, Adjusted EPS came it at $0.05, or below our $0.10 estimate.
While mark-to-market noise make actual vs. estimate analysis a bit more challenging), we note core revenue (staking and lending income, management fees, trading commissions, research revenue, and DeFi Alpha arbitrage trades) came in approximately $10 million shy of our $38 million forecast – partially driven by lower-than-expected quarter-end assets and a less favorable mix (with lower-yielding BTC accounting for a higher percentage of assets). More specifically, AUM as of June 30, 2025, totaled $773 million, shy of our $891 million forecast (mostly a function of crypto market depreciation since we last marked-to-market our model).
Core expenses (operating, general and administration, share-based payments, finance costs, and fees and commissions) of $13.8 million matched our $13.9 million forecast, with higher operating, general and administrative costs and fees and commissions offset by lower share-based payments.
After updating our model for 2Q25 results, we are taking up our 2025 and 2026 forecasts from $0.39/$0.48 to $0.44/$0.52. Our revisions primarily reflect a steeper revenue growth trajectory, with our model now calling for total revenues of $218.5 million for 2025 – consistent with management’s updated guidance of $219 million, up from $201 million last quarter – given the broader crypto market rebound thus far in 3Q25, as well as more favorable margin given rising operating leverage. In fact, our back-of-the-envelope math suggests Valour’s AUM are up ~27% on a weighted-average basis since June 30, 2025, based solely on market appreciation. Notably, our 2025 revenue assumption includes a considerable step up in DeFi Alpha trading gains in the back half of this year (~$85 million vs. $17.3 million in 1H25) reflecting a building pipeline of larger potential trading opportunities.
Turning to valuation, we continue to believe DeFi Technologies is uniquely positioned to capitalize on the burgeoning digital assets ecosystem, with a diversified and differentiated portfolio of asset management, trading, infrastructure, venture capital, and research businesses. We see further room to run, as awareness and appreciation of the company’s unique business model, durable competitive advantages, considerable growth prospects, and unsustainable valuation disconnect continue to build, particularly following the stock’s more recent uplisting to the Nasdaq Capital Market. Indeed, management recently engaged service providers to better understand trading anomalies in DEFT shares across exchanges.
No change to our DCF-derived price target of $7.00 representing considerable upside potential from current levels. From a relative perspective, DEFT is currently trading at just 5.9x our revised 2025 EPS estimates of $0.44 and 5.0x our 2026 forecast, or well below other asset managers with meaningful crypto ETF offerings. While we recognize most peers are significantly larger and more mature, with considerable infrastructure, resource, and financial advantages, DEFT maintains a sizeable advantage in terms of projected growth, thereby justifying a comparable (if not higher) P/E multiple, in our minds. On top of that, we expect DEFT’s recent uplisting to the Nasdaq Capital Market to drive an upward revaluation for the stock over time reflecting stepped up liquidity and pent-up institutional investor demand.
Following our review of 2Q25 results, we highlight the following key takeaways:
1. Differentiation increasingly driving scale: As of July 31, 2025, Valour managed $947 million of assets, up 23% from $773 million as of the end of 2Q25, and just a touch below $1.0 billion as of 7/22/25. While market appreciation continues to drive AUM gains, net inflows remain a key contributor, with Valour generating $14.5 million in July following $25 million in the second quarter of this year. Through the first seven months of 2025, Valour raised $90.4 million of net inflows translating into a 19% annualized organic growth rate, as demand across geographies remains strong for differentiated digital asset-focused ETPs. More specifically, Valour’s Bitcoin and SUI AUM both hit record highs of $302 million and $64 million, respectively, in mid-July reflecting market gains and ongoing net inflows. Furthermore, Valour remains the largest institutional Solana asset manager in North America, with the firm’s Solana ETP AUM approaching $300 million during 2Q25 – reinforcing the benefits of Valour’s diversified platform.
2. Continuing to broaden the footprint: Senior executives remain focused on continuing to bring new ETPs to market, expand into new geographies, and launch complementary business lines. On the product side, Valour remains on track to manage 100 ETPs by the end of this year, with 75+ digital asset products currently available following the launch of 14 new solutions during 2Q25. Recent ETP additions include products listed on Sweden’s Spotlight Stock Market tracking Mantra (OM), Tron (TRX), Stellar (XLM), Tether Gold (XAUt), Bitcoin Cash (BCH), Unus Sed Leo (LEO), OKB, Polygon (POL), Algorand (ALGO), Filecoin (FIL), Arbitrum (ARB), and Stacks (STX). Moreover, Valour recently listed the 1Valour Hedera (HBAR) and 1Valour Internet Computer (ICP) staking ETPs on the SIX Swiss Exchange.
From a geographic perspective, senior officials continue to leverage Valour’s first-mover advantages in high-growth markets across Africa, Asia, and the Middle East. Indeed, Valour recently engaged GulfCap Investment Bank to oversee the cross-listing of the firm’s full suite of digital asset ETPs on the Nairobi Stock Exchange (NSE). Moreover, DEFT recently established a partnership with local banks in Turkiye to launch ETPs, thereby providing access to regulated digital asset solutions to investors in the region. Turkiye maintains high adoption rates, with over half of the country’s investors active in cryptocurrencies.
Turning to strategic initiatives, the company recently entered into a joint venture with Fire Labs, a digital asset infrastructure firm, to launch a USD-backed stablecoin issued by a U.S. chartered bank targeting institutional investors. Related economics for DEFT include trading fees, yield participation, as well as cross-selling opportunities. Next, the company introduced DeFi Advisory, a separate business line providing digital asset treasury solutions (including custody and execution) leveraging the company’s existing research and domain expertise. DeFi Advisory’s first mandate involves managing Nuvve Holding Corp.’s (NVVE) treasury strategy. Related fees are based on AUM, thereby further augment DETF’s recurring revenue profile. Finally, Reflexivity Research entered into a strategic partnership with Beluga, a crypto investing site, to broaden distribution reach, enhance business development capabilities, and introduce collaborative advisory services.
3. Powerful revenue model increasingly shining through: Beyond traditional management fees (based on a percentage of AUM), Valour earns incremental staking/lending fees from underlying digital asset holdings held in ETPs, thereby optimizing recurring revenue capture. Indeed, blended yield across all staked AUM have historically approximated 8% (<5% in 2Q25 implying room to run assuming a more favorable mix skewed toward high-yielding alt coins), well north of management fees typically running below 2% (and subject to ongoing pricing pressure). Furthermore, DEFT generates staking income from Bitcoin held at the corporate level, as part of the company’s digital asset treasury program.
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