Exodus Movement Inc
For the period ended Jun 30, 2024. Filed Aug 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 12, 2024
EXOD$4.07+3.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-16.
0000950170-24-060765
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0000950170-24-095516
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 47 previous paragraphs and 53 current paragraphs.
23 unchanged; 16 reworded; 11 added; 8 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 5 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Based on the services offered and transactions conducted by API Providers, the following table shows the digital assets that are most material to our business by revenue.
Current report
Monthly Active Users
Current report
To measure user activity, we rely on the number of monthly active users (“MAUs”) of our Exodus Platform. We define an MAU as any user with transaction history in any month. A user has “transaction history” if, in the last 30 calendar days, the user performed any activity within the application such as opening their application to check digital asset prices, reading news, or accessing the services of our API Providers. A user will not have “transaction history” if it merely opens our wallet application without further action. MAUs provide a measurement of attraction and retention levels and user engagement by allowing management to compare “churn users,” defined as users who have been inactive on the Exodus Platform for three consecutive months, against “renewing users,” defined as users who have been active on the Exodus Platform for two consecutive months, and “new users,” defined as users new to the platform that month. Within each cohort of churn users, renewing users, and new users, we then identify the funded users to assess users’ ability to engage with the Exodus Platform. The term “funded users” refers to users whose wallet currently holds digital assets of value as determined by blockchain and pricing provider data. MAUs consist of both funded wallets and unfunded wallets. Because Exodus does not have accounts, users do not close an account or otherwise leave the platform. Therefore, churn users may become new users in the next month or at any point in the future as they re-engage with the platform. A positive MAUs percentage indicates that new and renewing users exceed churned users in a given month and that interest in the Exodus Platform is increasing. Management views increasing interest in the Exodus Platform over time as a key indicator of increasing revenue, especially for MAUs outside of the United States as the likelihood of revenue generating transactions increases as user interest increases.
Current report
Total revenue increased $9.9 million, or 80%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily driven by exchange aggregation revenue, which increased $8.3 million, or 72%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. See Note 3 Revenue Recognition for further details. Additionally, non-exchange aggregation revenue increased $1.6 million, or 203%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The revenue growth from all sources for the three months ended June 30, 2024 was primarily attributable to user growth (as discussed under “Monthly Active Users” above) and growth related to our business to business partner efforts. For the three months ended June 30, 2024, we saw increases in exchange aggregation and fiat onboarding revenues related to our business to business partnerships. For the three months ended June 30, 2024, four API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $15.5 million. For the three months ended June 30, 2023, five API providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $10.7 million. See Note 2 - Summary of Significant Accounting Policies, Concentration of Revenue.
Current report
Total revenue increased $25.6 million, or 99%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase was primarily driven by exchange aggregation revenue, which increased $22.4 million, or 93%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. Additionally, non-exchange aggregation revenue increased $3.2 million, or 212%, compared to the six months ended June 30, 2023. The revenue growth from all sources for the six months ended June 30, 2024 was primarily attributable to user growth (as discussed under “Monthly Active Users” above) and growth related to our business to business partner efforts. For the six months ended June 30, 2024, we saw increases in exchange aggregation and fiat onboarding revenues related to our business to business partnerships. For the six months ended June 30, 2024, four API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $36.7 million. For the six months ended June 30, 2023, five API providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $22.0 million. See Note 2 - Summary of Significant Accounting Policies, Concentration of Revenue.
Current report
Cost of revenues increased $3.6 million, or 51%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily due to a $1.2 million increase in employee compensation and benefit expense as a result of increased headcount, a $1.1 million increase in cloud infrastructure service costs due to increased database capacity needs as a result of the continued expansion of our platform and addition of new users, a $0.6 million increase in partner fee expense, a $0.3 million increase in subscription expenses and a $0.5 million increase in consulting expenses, partially offset by a $0.2 million increase in capitalized labor.
Current report
Cost of revenues increased $7.4 million, or 53%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase was primarily due to a $2.6 million increase in employee compensation and benefit expense as a result of increased headcount, a $1.9 million increase in cloud infrastructure service costs due to increased database capacity needs as a result of the continued expansion of our platform and addition of new users, a $1.0 million increase in partner fee expense, a $0.3 million increase in subscription expenses, a $0.5 million increase in consulting expenses, a $0.4 million increase in software amortization expense and a $0.5 million decrease in capitalized labor.
Current report
General and administrative expenses increased $5.0 million, or 126%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily due to a $2.2 million increase in employee compensation and benefit expenses, a $1.4 million increase in legal and consulting expenses, a $0.8 million increase in meeting and travel expenses, a $0.4 million increase in marketing expenses and a $0.2 million increase in foreign currency expense.
Current report
Net cash used in operating activities for the six months ended June 30, 2024, was $1.9 million. The Company had net income of $45.2 million, $7.4 million deferred tax expense, $3.7 million in stock-based compensation and $2.5 million in depreciation and amortization, offset by $1.1 million in changes to working capital, $39.6 million net gain on digital assets due to market fluctuations and $19.0 million in other operating activities settled in digital assets and USDC which consisted of $51.9 million in revenue, reduced by $11.2 million in expenses primarily related to payroll and $19.1 million in conversions to cash.
Current report
Net Cash Used In Financing Activities
Current report
Net cash used in financing activities for the six months ended June 30, 2023 was $0.3 million, which was used for the repurchase of shares of our common stock to pay employee withholding taxes as part of the 2021 Plan.
Removed paragraphs (8)
Previous report
Operating Revenues - We have seen a significant increase in the number of users on the Exchange Aggregator in 2024 compared to prior periods. The change in market conditions can have a favorable or unfavorable impact depending on changing user base, market price and increasing interest in the digital asset ecosystem. These drivers may continue to improve the revenue earned as the markets continue to perform at increasing prices and number of users.
Previous report
Cost of revenues increased $3.8 million, or 56%, in the three months ended March 31, 2024, when compared with the three months ended March 31, 2023. The increase was primarily driven by increases in employee compensation and benefit expense of $1.4 million as a result of increased headcount, cloud infrastructure services of $0.8 million that was due to increased database capacity as a result of the continued expansion of our platform and new users, $0.4 million of contractual obligations for API exchange affiliates, depreciation and amortization of $0.3 million, and lower capitalized labor of $0.7 million.
Previous report
Net Cash from Operating Activities
Previous report
Net cash provided by operating activities for the three months ended March 31, 2023 was $1.3 million. The Company had net income of $0.8 million for the three months ended March 31, 2023, changes in working capital of $2.0 million, stock based compensation of $1.9 million, depreciation and amortization of $1.0 million, partially offset by $3.8 million of non-cash activities settled in digital assets and USDC as discussed in Note 5 - Intangible Assets and a net gain on digital assets of $0.4 million.
Previous report
Net Cash from Investing Activities
Previous report
Net Cash from Financing Activities
Previous report
Our primary financing activity for the three months ended March 31, 2024 amounted to $0.3 million. This consisted of $0.3 million of repurchased shares to pay employee withholding taxes as a part of our 2021 Equity Incentive Plan (the “2021 Plan”).
Previous report
Material Cash Requirements
Reworded paragraphs (16)
Previous wording
We are engaged principally in the business of creating and distributing self-custodial wallets for digital assets. Our profitability is dependent on a number of factors including the pricing of digital assets, the volume of transactions and the quality of our third-party relationships.
Current wording
We are engaged in the business of creating and distributing self-custodial wallets for digital assets. Because a majority of our revenue is derived from services provided by API Providers to persons located outside the United States pursuant a transaction-based structure, our profitability is dependent on a number of factors including the pricing of digital assets, the volume of transactions and the quality of our third-party relationships.
Previous wording
Depreciation expense relating to software development; and
Current wording
Amortization expense relating to software development; and
Previous wording
Cloud based infrastructure expense - We anticipate increased cloud infrastructure expenses as the platform continues to grow due to increased database capacity as a result of the continued expansion of our platform and new users.
Current wording
Cloud based infrastructure expense - Cloud infrastructure expenses increased by $1.1 million and $1.8 million for the three and six months ended June 30, 2024, respectively, compared to the corresponding prior year period. We anticipate increased cloud infrastructure expenses as the platform continues to grow due to increased database capacity and new users.
Previous wording
Investment in human capital- As the Exodus platform continues to evolve and new services are introduced to the platform, we anticipate the need to add more team members to accommodate the growth in services which could materially increase compensation costs. This is expected to materially increase expenses in both cost of revenues and general and administrative expenses. Also, to promote compliance with the evolving regulatory environment, increased expense will be incurred to ensure the team is properly staffed to accommodate the evolving regulatory environment.
Current wording
Investment in human capital - Costs related to investment in human capital (including recruiting costs, salary, incentive and compensation costs) increased $3.4 million and $4.5 million for the three and six months ended June 30, 2024, respectively, compared to the corresponding prior year period. As the Exodus platform continues to expand, we anticipate the need to add more team members to accommodate the growth in our business, which is expected to materially increase both cost of revenues and general and administrative expenses as a result of the impact on the human capital costs described above. Human capital costs are also expected to increase due to the need to add additional team members to address compliance with the evolving regulatory environment.
Previous wording
Marketing expenses- We have primarily focused on an organic growth-based marketing strategy. We continue to evaluate our marketing strategy and in the future may decide to refocus the current organic growth strategy in growing our user base to a more competitive approach and that may incur future expenses related to marketing. Any increased marketing efforts would increase expenses, and we may not be able to realize the anticipated revenue gain and increase in user base that would offset the expense over time.
Current wording
Marketing expenses – Marketing-related costs increased $0.4 million and $0.5 million for the three and six months ended June 30, 2024, respectively, compared to the corresponding prior year period. The increase in both periods was primarily due to increased spending on website advertisements targeted at the crypto space and on social platforms. To date, we have primarily focused on an organic growth-based marketing strategy. We continue to evaluate our marketing strategy and in the future may decide to refocus the current organic growth strategy in growing our user base to a more competitive approach, which would be expected to further increase marketing-related expenses.
Previous wording
Total revenue for the three months ended March 31, 2024 was $29.0 million compared to $13.3 million for the three months ended March 31, 2023, an increase of $15.7 million or 118%. This growth was largely driven by a $14.1 million increase in revenue from exchange related-activities, due primarily to an increase in monthly active users ("MAUs") and a 102% increase in volume processed by exchange providers. We define a monthly active user as any user with transaction history that opens our wallet in a given month. MAUs are a measure of our attraction and retention levels and the size of our global funded user community. Additionally, revenue from non-exchange-related activities such as staking, fiat onboarding, and other operations climbed by 227%, rising to $2.3 million for the three months ended March 31, 2024 from $0.7 million for the three months ended March 31, 2023. Our strategic focus remains on expanding our revenue-generating user base, improving app features, and expanding our presence in our other sector as provided in the Note 3 - Revenue Recognition. We believe that over the long term, interest in digital assets and digital asset markets will increase. However, during any given period, we cannot be certain that our MAU growth efforts will be effective or that interest in digital assets will increase. The top four API providers primarily drove exchange revenue of $21.2 million during the three months ended March 31, 2024 compared to the top five API providers generating $11.2 million in revenue during the three months ended March 31, 2023.
Current wording
Monthly active users ("MAUs") were 1.5 million and 1.2 million as of June 30, 2024 and 2023, respectively, reflecting an increase of 0.3 million, or 25.4%. We believe the increase in MAUs was primarily attributable to a positive movement in consumer-related sentiment related to the cryptocurrency markets, leading to higher prices and increased trading activity. Our strategic focus remains on expanding our active user base, improving app features, and expanding our business-to-business partnerships. We believe that over the long term, interest in digital assets and digital asset markets will increase. However, during any given period, we cannot be certain that our MAU growth efforts will be effective or that interest in digital assets will increase.
Previous wording
Results of operations for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
Results of operations for the three and six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
General and administrative expenses increased in the three months ended March 31, 2024 by $2.1 million, or 35%, compared to three months ended March 31, 2023. This increase was primarily due to increases legal and consulting expenses of $1.1 million, foreign currency expense of $1.0 million partially offset by decreased employee compensation and benefit expenses of $0.2 million.
Current wording
General and administrative expenses increased $7.1 million, or 71%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. This increase was primarily due to a $1.9 million increase in employee compensation and benefit expenses, a $2.6 million increase in legal and consulting expenses, a $0.8 million increase in meeting and travel expenses, a $0.5 million increase in marketing expenses and a $1.2 million increase in foreign currency expense.
Previous wording
Primarily driven by market volatility, the Company experienced a favorable fluctuation in the market price of digital assets held during the first quarter of fiscal year 2024. During the three months ended March 31, 2024, the Company recognized net realized gains from exchange of digital assets and net unrealized gains from remeasurement of digital assets of $4.0 million and $52.8 million, respectively. For the three months ended March 31, 2023, there was a gain on digital assets of $0.4 million, due to a gain on $1.2 million on assets sold for greater than their carrying value, partially offset by a loss of $0.8 million, primarily due to impairment of bitcoin.
Current wording
The Company experienced an unfavorable fluctuation in the market price of digital assets held during the three months ended June 30, 2024, primarily driven by market volatility. During the three months ended June 30, 2024, the Company recognized net realized gains from exchange of digital assets of $1.8 million and net unrealized losses from remeasurement of digital assets of $19.0 million. Realized gains in 2023 were calculated using impaired balances compared to cost basis in 2024. For the three months ended June 30, 2023, the Company recorded net gain on digital assets of $0.2 million.
Previous wording
Net cash provided by operating activities for the three months ended March 31, 2024, was $0.5 million. We had net income of $54.8 million, $11.3 million deferred tax expense, $1.2 million in depreciation and amortization, $1.7 million in stock-based compensation and $1.9 million in changes to working capital, partially offset by $13.9 million in other operating activities settled in digital assets and USDC as discussed in Note 5 - Intangible Assets and a net gain on digital assets of $56.8 million primarily related gains caused by market fluctuations.
Current wording
Net cash provided by operating activities for the six months ended June 30, 2023, was $2.0 million. The Company had net income of $2.6 million, $2.2 million in depreciation and amortization, $3.4 million in stock based compensation and $2.2 million in changes to working capital, partially offset by $6.8 million in in other operating activities settled in digital assets and USDC (as discussed in Note 5 - Intangible Assets) and net gain on digital assets of $0.6 million.
Previous wording
Net cash used in investing activities for the three months ended March 31, 2024 was $9.6 million. This primarily consisted of a $29.8 million investment in treasury bills and digital assets held of $2.0 million, partially offset by $29.6 million of treasury bills redemption and disposal of digital assets held of $11.9 million.
Current wording
Net cash provided investing activities for the six months ended June 30, 2024 was $19.5 million. This primarily consisted of $46.2 million provided by redemption of treasury bills and $20.6 million provided by disposal of digital assets held, partially offset by $44.4 million used in investment in treasury bills, $2.5 million used in purchase of digital assets and $0.2 million used in the purchase of a domain name.
Previous wording
Net cash used in investing activities for the three months ended March 31, 2023 was $3.8 million. This primarily consisted of a $22.0 million of treasury bills redemption, offset by $18.2 million of investments in treasury bills and $0.1 million purchases of fixed assets.
Current wording
Net cash used in investing activities for the six months ended June 30, 2023 was $6.3 million. This primarily consisted of $38.6 million used in investment in treasury bills, partially offset by $32.3 million provided by redemption of treasury bills.
Previous wording
Our primary financing activities for the three months ended March 31, 2023 was $0.2 million primarily due to the repurchase of shares to pay employee withholding taxes as part of our 2021 Plan.
Current wording
Net cash used in financing activities for the six months ended June 30, 2024 was $1.2 million, which was used for the repurchase of shares of our common stock to pay employee withholding taxes as a part of our 2021 Plan.
Previous wording
The Company holds the following cash and cash equivalents (including treasury bills with a maturity date of less than three months), USDC, treasury bills with a maturity date of greater than three months, and digital asset holdings.
Current wording
The following tables show the Company’s holdings of digital assets and cash and cash equivalents (including treasury bills with a maturity date of less than three months), USDC, treasury bills with a maturity date of greater than three months.
Previous wording
We currently have no material commitments for capital expenditures. At this time, we currently believe that our cash on hand, as well as the sources of liquidity described above, will be sufficient to fund our operations through the next twelve months and thereafter for the foreseeable future.
Current wording
At this time, we currently believe that our cash on hand, as well as the sources of liquidity described above, will be sufficient to fund our operations through the next twelve months.
Previous wording
Investors are encouraged to review the related GAAP financial measures and the reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure, and not to rely on any single financial measure to evaluate our business. We calculate Adjusted EBITDA as net income, adjusted to exclude provision for or benefit from income taxes, depreciation and amortization, interest expense, crypto asset borrowing costs, stock-based compensation expense, impairment, unrealized gain or loss on foreign exchange, fair value gain or loss on derivatives, non-recurring legal reserves and related costs, and other loss.
Current wording
Investors are encouraged to review the related GAAP financial measures and the reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure, and not to rely on any single financial measure to evaluate our business. We calculate Adjusted EBITDA as net income, adjusted to exclude provision for or benefit from income taxes, depreciation and amortization, interest expense, stock-based compensation expense, gains and losses on digital assets, unrealized gain or loss on investments, fair value gain or loss on derivatives, non-recurring legal reserves and related costs, and other loss.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
During the six months ended June 30, 2024, the Company recognized net realized gains from exchange of digital assets of $5.8 million and net unrealized gains from remeasurement of digital assets of $33.7 million. For the six months ended June 30, 2023, the Company recorded net gain on digital assets of $0.6 million.
Current report — wording carried from elsewhere
Net Cash (Used In) Provided By Operating Activities
Current report — wording carried from elsewhere
Net Cash Provided By (Used In) Investing Activities