Exodus Movement Inc
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
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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.
Sep 30, 2024 · Filed Nov 13, 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 2024-06-30; filed 2024-08-12.
0000950170-24-095516
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0000950170-24-125820
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 53 previous paragraphs and 47 current paragraphs.
24 unchanged; 23 reworded; 0 added; 5 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 5 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.
Removed paragraphs (5)
Previous report
Non-GAAP Financial Measure
Previous report
Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA
Previous report
In addition to our results determined in accordance with GAAP, we believe Adjusted EBITDA, a non-GAAP measure, is useful in evaluating our operating performance. We use Adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Adjusted EBITDA may be helpful to investors because it provides consistency and comparability with past financial performance. However, Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures, including Adjusted EBITDA, differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
Previous report
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.
Previous report
The Company believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. Management’s determination of the components of Adjusted EBITDA are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by industry analysts.
Reworded paragraphs (23)
Previous wording
Cost of revenues (primarily include software development, user support and security and wallet operations);
Current wording
Cost of revenues (primarily including software development, user support and security and wallet operations);
Previous wording
General and administrative expenses (primarily include administrative, legal, financial operations, information technology services, marketing and advertising expenses).
Current wording
General and administrative expenses (primarily including administrative, legal, financial operations, information technology services, marketing and advertising expenses).
Previous 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.
Current wording
Cloud based infrastructure expense - Cloud infrastructure expenses increased by $0.6 million and $2.5 million for the three and nine months ended September 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 - 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.
Current wording
Investment in human capital - Costs related to investment in human capital (including recruiting costs, salary, incentive and compensation costs) increased $2.7 million and $7.3 million for the three and nine months ended September 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 – 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.
Current wording
Marketing expenses – Marketing-related costs increased $0.8 million and $1.3 million for the three and nine months ended September 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
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.
Current wording
Monthly active users were 1.6 million and 1.1 million as of September 30, 2024 and 2023, respectively, reflecting an increase of 0.5 million, or 40%. 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 and six months ended June 30, 2024 and 2023 (in thousands):
Current wording
Results of operations for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Previous wording
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 wording
Total revenue increased $8.1 million, or 68%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily driven by exchange aggregation revenue, which increased $6.9 million, or 62%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. See Note 3 Revenue Recognition for further details. Additionally, non-exchange aggregation revenue increased $1.2 million, or 163%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. For the three months ending September 30, 2024, revenue growth across all sources was primarily driven by an increase in user growth (as discussed under “Monthly Active Users” above) and expansion through our business-to-business partner initiatives. For the three months ended September 30, 2024, four API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $13.8 million. For the three months ended September 30, 2023, five API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $10.1 million. See Note 2 - Summary of Significant Accounting Policies, Concentration of Revenue.
Previous wording
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 wording
Total revenue increased $33.8 million, or 89%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily driven by exchange aggregation revenue, which increased $29.3 million, or 83%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Additionally, non-exchange aggregation revenue increased $4.4 million, or 196%, compared to the nine months ended September 30, 2023. For the nine months ending September 30, 2024, revenue growth across all sources was primarily driven by an increase in user growth (as discussed under “Monthly Active Users” above) and expansion through our business-to-business partner initiatives. For the nine months ended September 30, 2024, four API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $50.6 million. For the nine months ended September 30, 2023, five API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $32.1 million. See Note 2 - Summary of Significant Accounting Policies, Concentration of Revenue.
Previous wording
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 wording
Cost of revenues increased $3.6 million, or 46%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily due to a $1.1 million increase in team member compensation and benefit expense as a result of increased headcount, a $0.6 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 $0.5 million increase in partner fee expense, a $0.2 million increase in subscription expenses, a $0.3 million increase in consulting expenses, a $0.5 million decrease in capitalized labor and a $0.2 million increase in software amortization expense.
Previous wording
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 wording
Cost of revenues increased $11.1 million, or 51%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The increase was primarily due to a $3.7 million increase in team member compensation and benefit expense as a result of increased headcount, a $2.5 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 $1.3 million increase in partner fee expense, a $0.6 million increase in subscription expenses, a $0.9 million increase in consulting expenses, a $0.6 million increase in software amortization expense and a $1.0 million decrease in capitalized labor.
Previous wording
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 wording
General and administrative expenses increased $3.9 million, or 84%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase was primarily due to a $1.6 million increase in team member compensation and benefit expenses, a $1.5 million increase in legal and consulting expenses, a $0.8 million increase in meeting and travel expenses, a $0.7 million increase in marketing expenses, a $0.3 million increase in charitable donations and a $0.1 million increase in subscription expenses, partially offset by a $1.1 million decrease in foreign currency expense.
Previous 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.
Current wording
General and administrative expenses increased $11.0 million, or 75%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. This increase was primarily due to a $3.5 million increase in team member compensation and benefit expenses, a $4.0 million increase in legal and consulting expenses, a $1.7 million increase in meeting and travel expenses, a $1.2 million increase in marketing expenses, a $0.3 million increase in subscription expenses, a $0.3 million increase in charitable donations and a $0.1 million increase in foreign currency expense.
Previous 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.
Current wording
During the three months ended September 30, 2024, the Company recognized net realized losses from exchange of digital assets of $0.7 million and net unrealized gains from remeasurement of digital assets of $0.4 million. Realized gains in 2023 were calculated using impaired balances compared to cost basis in 2024. For the three months ended September 30, 2023, the Company recorded a net impairment on digital assets of $0.4 million.
Previous wording
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 wording
During the nine months ended September 30, 2024, the Company recognized net realized gains from exchange of digital assets of $5.1 million and net unrealized gains from remeasurement of digital assets of $34.1 million. For the nine months ended September 30, 2023, the Company recorded net gain on digital assets of $0.3 million.
Previous wording
Our primary source of funds is from API fee revenues. Our primary use of funds is payment of our operating costs, which consist primarily of compensation and benefit expenses and security costs.
Current wording
Our primary source of funds is from API fee revenues. Our primary use of funds is payment of our operating costs, which consist mostly of compensation and benefit expenses and security costs.
Previous wording
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 wording
Net cash used in operating activities for the nine months ended September 30, 2024, was $6.8 million. The Company had net income of $46.0 million, $6.8 million deferred tax expense, $5.3 million in stock-based compensation and $3.9 million in depreciation and amortization, $0.2 unrealized loss on investments offset by $3.5 million in changes to working capital, $39.2 million net gain on digital assets due to market fluctuations and $23.8 million in other operating activities settled in digital assets and USDC which consisted of $70.9 million in revenue, reduced by $16.7 million in expenses, $2.9 million in expenses primarily related to accrued payroll and $27.1 million in conversions to cash.
Previous 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.
Current wording
Net cash provided by operating activities for the nine months ended September 30, 2023, was $2.9 million. The Company had net income of $2.4 million, $3.4 million in depreciation and amortization, $4.7 million in stock based compensation and $2.4 million in changes to working capital, partially offset by $9.6 million in other operating activities settled in digital assets and USDC (as discussed in Note 5 - Intangible Assets) and net gain on digital assets of $0.3 million.
Previous 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.
Current wording
Net cash provided investing activities for the nine months ended September 30, 2024 was $24.7 million. This primarily consisted of $74.8 million of treasury bill redemption and $26.1 million provided by disposal of digital assets held, partially offset by $73.3 million invested in treasury bills, $2.5 million used in purchase of digital assets, $0.2 million used in the purchase of fixed assets and $0.2 million used in the purchase of a domain name.
Previous 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.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2023 was $10.5 million. This primarily consisted of $69.3 million used in investment in treasury bills, partially offset by $58.8 million provided by redemption of treasury bills.
Previous 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.
Current wording
Net cash used in financing activities for the nine months ended September 30, 2024 was $2.7 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
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.
Current wording
Net cash used in financing activities for the nine months ended September 30, 2023 was $0.5 million, which was used for the repurchase of shares of our common stock to pay employee withholding taxes as part of the 2021 Plan.
Previous 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.
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, and treasury bills with a maturity date of greater than three months.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The following table summarizes our adjusted EBITDA for the periods indicated (in thousands):