Galaxy Digital Announces Fourth Quarter 2020 Financial Results

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Galaxy Digital Holdings Ltd. (TSX: GLXY) (“Galaxy Digital” the “Company” or “GDH Ltd.”) today released financial results for the year ended December 31, 2020 for both itself and Galaxy Digital Holdings LP (the “Partnership” or “GDH LP”).

“I am proud to share the results of Galaxy Digital’s transformational fourth quarter, as net comprehensive income increased over 1,100%, AUM increased over 98%, and counterparty trading volumes increased over 80%,” said Michael Novogratz, Founder and CEO of Galaxy Digital. “That dramatic growth accelerated further into the first quarter, which we expect to be another record quarter.”

“Moreover, and as a key component of our growth strategy, I am pleased to announce we are actively preparing for a U.S. listing in the second half of 2021. I am also excited to welcome industry veteran Alex Ioffe as our new Chief Financial Officer, and I want to thank Ash Prithipaul for his significant contributions and for leaving Galaxy well positioned for even brighter days ahead. We believe our industry is at an inflection point as we participate in a once in a lifetime secular shift into cryptocurrencies as an institutionalized asset class. Galaxy Digital is committed to leading our clients and the industry through this transformation.”

Select Financial Highlights for the Fourth Quarter 2020, compared to Fourth Quarter 2019

  • Net comprehensive income1 increased 1,175% to $335.7 million, from a net comprehensive loss of $31.2 million in the prior year period.
    • The increase was primarily a result of realized and unrealized gains on digital assets and on investments, coupled with strong contributions from our trading business, partially offset by higher operating expenses.
    • Income from our trading business increased 842% to $238.7 million, from a loss of $32.2 million in the prior period.
  • Fair Value of Net Asset Holdings3 increased 272% to $813.5 million, from $218.7 million in the prior year period.
    • The increase was primarily a result of unrealized gains on digital assets and on investments.
    • The Partnership had a material holding in bitcoin of $433.0 million as of December 31, 2020, an increase of $351.8 million from December 31, 2019, excluding non-controlling interests.
    • Investments stood at $260.4 million as of December 31, 2020, an increase of $102.2 million from December 31, 2019. The change was primarily due to the increase in unrealized gains and $39.3 million of new capital deployed by the Principal Investments team during the year, which were partially offset by the sale of some investments.

Operating Highlights and Other Updates for the Fourth Quarter 2020, compared to Third Quarter 2020

  • Galaxy Digital Trading (“GDT”) generated a record in: counterparty trading volumes, the size of its counterparty loan book, and in gross counterparty loan book originations in the fourth quarter 2020, compared to the third quarter 2020.
    • In the quarter ended December 31, 2020, GDT counterparty volumes were up 80%+ sequentially quarter over quarter and 230%+ year over year.
    • In the quarter ended December 31, 2020, GDT’s counterparty loan book grew in excess of 300% to approximately $110 million, and the Company grew gross counterparty loan originations in excess of 90% to approximately $110 million.
  • Galaxy Digital Asset Management (“GDAM”) reported assets under management (“AUM”) of $807.3 million as of December 31, 2020, an increase of over 98% from $407.4 million as of September 30, 2020. AUM consisted of $482.3 million in GDAM’s Galaxy Fund Management products, and $325.0 million in the Galaxy Interactive fund.
    • Recent product launches include the CI Galaxy Bitcoin Fund (Ticker: BTCG), a TSX-listed closed end mutual fund in partnership with CI Financial. Additionally, the Bloomberg Galaxy Bitcoin Index (Ticker: BTC) went live.
    • Galaxy Bitcoin Fund, LP, Galaxy Institutional Bitcoin Fund, LP, and Galaxy Institutional Bitcoin Fund, Ltd. (collectively the “Bitcoin Funds”) track the Bloomberg CFIX pricing of bitcoin (“XBT”), and the XBT returned 170.8% in the fourth quarter of 2020, and 305.6% for the year ended December 31, 2020.
    • Galaxy Benchmark Crypto Index Fund LP (the “Index Fund”) is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the “BGCI”). The BGCI returned 120.5% in the fourth quarter of 2020 and 276.7% for the year ended December 31, 2020.
  • Galaxy Digital Investment Banking (“GDIB”) continued to make progress for clients across financing, mergers and acquisitions, and other strategic matters, with several active mandates in various stages of execution.
    • GDIB recognized an advisory fee from serving as sell-side advisor to Blockfolio on its announced sale to FTX Trading Limited for $150.0 million, which closed in October 2020. Blockfolio is a leading mobile app for cryptocurrency portfolio tracking and management and has over six million users globally.
  • Principal Investments: The Company completed seven new investments in companies and held approximately 70 investments across 50 portfolio companies as of December 31, 2020.

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1 

Excluding non-controlling interests (“NCI”).

2

AUM is an internal estimate inclusive of a sub-advised fund, committed capital in a closed-end vehicle, and seed investments by affiliates. Changes in AUM are generally the result of performance, contributions, and withdrawals.

3

This supplementary financial measure is defined as Digital assets plus Investments, less Digital assets sold short, less Investments sold short, less Non-controlling interests.

Operating Highlights and Other Updates through March 22, 2021

  • The Company has appointed Alex Ioffe as its new Chief Financial Officer, effective April 1, 2021. Mr. Ioffe was most recently the CFO of Virtu Financial and prior to that spent over 15 years as CFO for the brokerage business at Interactive Brokers. Mr. Ioffe is taking over the role from Ashwin Prithipaul, who is stepping down to spend more time with his family and will be remaining on through the second quarter of 2021 to ensure a smooth transition.
  • Galaxy Digital Trading (“GDT”) expects to generate records in: counterparty trading volumes, the size of its counterparty loan book, and in gross counterparty loan book originations in the first quarter 2021.
    • In the period between January 1, 2021 and March 22, 2021, GDT counterparty trading volumes continued significant growth, up 40%+ from the quarter ended December 31, 2020, and over 270% year over year.
    • GDT continued to experience strong growth in the Company’s counterparty loan book for the period from January 1, 2021 to March 22, 2021, increasing in excess of 240% to approximately $380 million, and grew gross counterparty loan originations in excess of 400% since December 31, 2020 to approximately $560 million.
  • Galaxy Digital Asset Management (“GDAM”) expects to report preliminary assets under management (“AUM”) of $1.24 billion as of March 22, 2021. AUM consisted of $911.0 million in GDAM’s Galaxy Fund Management products, and $325.0 million in the Galaxy Interactive fund.
    • Recent product launches include: the CI Galaxy Bitcoin ETF (Ticker: BTCX), and the Galaxy Ethereum Funds. The Galaxy Ethereum Funds track the newly launched Bloomberg Galaxy Ethereum Index (Ticker: XET), the third in the Bloomberg-Galaxy family of indices.
    • In March 2021, Morgan Stanley began offering its wealth management clients access to bitcoin funds, including the Galaxy Bitcoin Fund LP, and the Galaxy Institutional Bitcoin Fund LP.
    • Galaxy Bitcoin Fund, LP, Galaxy Institutional Bitcoin Fund, LP, and Galaxy Institutional Bitcoin Fund, Ltd. (collectively the “Bitcoin Funds”) track the Bloomberg CFIX pricing of bitcoin (“XBT”), and the XBT has returned 92.0% on a year-to-date basis through March 22, 2021.
    • Galaxy Benchmark Crypto Index Fund LP (the “Index Fund”) is a passively managed index fund which tracks the Bloomberg Galaxy Crypto Index (the “BGCI”). The BGCI has returned 105.6% on a year to date basis through March 22, 2021.
  • Galaxy Digital Investment Banking (“GDIB”) continued to make progress for clients across financing, mergers and acquisitions, and other strategic matters, with several active mandates in various stages of execution.
    • Key activities as of March 22, 2021 include consulting on a recent cryptocurrency company’s fundraising round.
    • GDIB also acted as a Strategic Advisor in connection with a public offering in the FinTech space.
    • GDIB increased client coverage to 90%+ of its target universe.
  • Galaxy Digital Mining (“GDM”) established its own proprietary bitcoin mining operation, hosting its machines at a third-party data center in the United States, and has begun proprietary mining.
    • GDM closed its first two mining financing deals.
    • GDM has built a strong pipeline, speaking with over 70+ companies in the space.
  • Principal Investments: The Company made 12 new investments and now holds approximately 80 investments across approximately 60 portfolio companies.
    • The Company recognized a liquidity event of over $125 million from one of its portfolio companies during the first quarter 2021.
    • There was no significant change in the Company’s digital asset holdings (excluding non-controlling interests) since December 31, 2020, and the Company has, as a result, benefited from the increase in asset prices since the start of the year.

Select Financial Highlights for the Fiscal Year 2020 compared to Fiscal Year 2019

  • Net comprehensive income increased 1,396% to $385.5 million, from $25.8 million in the prior year.
    • The increase was primarily a result of realized and unrealized gains on digital assets and on investments, coupled with strong contributions from our trading business, partially offset by higher operating expenses.
    • Income from our trading business increased 202% to $270.9 million, from $89.6 million in the prior year.
  • Fair Value of Net Asset Holdings increased 272% to $813.5 million, from $218.7 million in the prior year.
    • The increase was primarily a result of realized and unrealized gains on digital assets and on investments.
    • The Partnership had a material holding in bitcoin of $433.0 million as of December 31, 2020, an increase of $351.8 million from December 31, 2019, excluding non-controlling interests.
    • Investments stood at $260.4 million as of December 31, 2020, an increase of $102.2 million from December 31, 2019. The change was primarily due to the increase in unrealized gains and $39.3 million of new capital deployed by the Principal Investments team during the year, which were partially offset by the sale of some investments.

Earnings Conference Call

An investor conference call will be held today, March 30, 2021 at 8:30 AM Eastern Time. A live webcast with the ability to ask questions will be available at: https://www.galaxydigital.io/investor-relations/ or directly at: http://public.viavid.com/index.php?id=143959. The conference call can also be accessed by investors in the United States or Canada by dialing 1-877-407-0789, or 1-201-689-8562 (outside the U.S. and Canada). A replay of the webcast will be available and can be accessed in the same manner as the live webcast on the Company’s Investor Relations website. Through April 27, 2021, the recording will also be available by dialing +1-844-512-2921, or 1-412-317-6671 (outside the U.S. and Canada) passcode: 13717682.

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