Exodus Movement, Inc.

Previous wording

The following discussion and analysis of Exodus’ financial condition and results of operations should be read in conjunction with the unaudited, condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 1A. Risk Factors” in the Form 10-K and “Cautionary Note on Forward Looking Statements” and in other parts of this Quarterly Report on Form 10-Q.

Current wording

The following discussion and analysis of Exodus' financial condition and results of operations should be read in conjunction with the unaudited, condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 1A. Risk Factors” in the Form 10-K and "Cautionary Note Regarding Forward Looking Statements" and in other parts of this Quarterly Report on Form 10-Q.

Previous wording

We are engaged principally in the business of creating and distributing self-custodial wallets for digital assets. Due to a majority of our revenue being derived from services provided by application programming interface (“API”) providers (“API Providers”) to persons located outside the United States pursuant to 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.

Current wording

We are engaged principally in the business of creating and distributing self-custodial wallets for digital assets. Due to a majority of our revenue being derived from services provided by API Providers to persons located outside the United States pursuant to 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

Cloud based infrastructure expense – Cloud infrastructure expenses increased $0.7 million and $0.3 million for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, respectively. 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 were $1.8 million and $1.9 million for the three months ended March 31, 2026 and 2025, respectively. 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 increased $5.7 million and $8.3 million for the three and nine months ended September 30, 2025 compared to three and nine months ended September 30, 2024, respectively, primarily due to an increase in salaries, payroll taxes and stock based compensation. 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 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, including as a publicly traded company.

Current wording

Investment in human capital – Costs related to investment in human capital were $15.2 million and $13.1 million for the three months ended March 31, 2026 and 2025, respectively. 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 expenses as a result of the impact on the human capital costs. 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 $2.7 million and $7.2 million for the three and nine months ended September 30, 2025 compared to three and nine months ended September 30, 2024, respectively. The increase was primarily due to increased spending on website advertisements targeted at the digital asset focused spaces and on online platforms, such as the App Store, and marketing agency expenses. To date, we have primarily focused our marketing strategy toward user growth. We continue to evaluate our marketing strategy and in the future may decide to refocus the current organic growth-based 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 were $2.6 million and $1.2 million for the three months ended March 31, 2026 and 2025, respectively. The increase was primarily due to increased spending on website advertisements targeted at digital asset focused spaces and on online platforms, such as the App Store, and marketing agency expenses. To date, we have primarily focused our marketing strategy toward user growth. We continue to evaluate our marketing strategy, and in the future, may decide to refocus the current strategy to a more competitive approach, which would be expected to substantially increase marketing-related expenses.

Previous wording

Changes in tax laws –We operate in various jurisdictions and are subject to changes in applicable tax laws, treaties or regulations in those jurisdictions. A material change in the tax laws, treaties or regulations, or their interpretation, of any jurisdiction with which we do business, or in which we have significant operations, could adversely affect us. For example, the new Pillar 2 approach, which came into effect in 2023 in certain jurisdictions, will establish a global minimum tax rate of 15%, such that multinational enterprises with an effective tax rate in a jurisdiction below this minimum rate will need to pay additional tax. While many aspects of the application of Pillar 2 remain to be clarified, including how the jurisdictions in which we operate, and those in which we and our subsidiaries are based, choose to implement the Organization for Economic Cooperation and Development’s approach in their tax treaties and domestic tax laws, we do not expect Pillar 2 to apply in 2025. On July 4, 2025, the “One Big Beautiful Bill Act” (P.L. 119‑21) was enacted into law. The legislation reinstates and extends several provisions of the 2017 Tax Cuts and Jobs Act, including permanent 100% bonus depreciation, enhanced Section 179 expensing, full R&D expense deduction for domestic expenditures and modification to the international tax framework. The primary impact of the legislation is the acceleration of deductions related to research and development costs incurred in the US which did not have a material impact on the Company’s effective tax rate in the quarter ended September 30, 2025. We are continuing to assess its impact on our consolidated financial statements.

Current wording

Changes in tax laws – The Pillar 2 approach, which came into effect in 2023 in certain jurisdictions, will establish a global minimum tax rate of 15%, such that multinational enterprises with an effective tax rate in a jurisdiction below this minimum rate will need to pay additional tax. While many aspects of the application of Pillar 2 remain to be clarified, including how the jurisdictions in which we operate, and those in which we and our subsidiaries are based, choose to implement the Organization for Economic Cooperation and Development’s approach in their tax treaties and domestic tax laws, we do not expect Pillar 2 to apply in 2026. On July 4, 2025, the "One Big Beautiful Bill Act" (P.L. 119‑21) was enacted into law. The legislation reinstates and extends several provisions of the 2017 Tax Cuts and Jobs Act, including permanent 100% bonus depreciation, enhanced Section 179 expensing, full R&D expense deduction for domestic expenditures and modification to the international tax framework.

Previous wording

During the three and nine months ended September 30, 2025, the Company incurred $1.3 million and $4.3 million, respectively, in expenses associated with the evaluation, negotiation, and travel due to prospective business acquisitions. The Company expects these expenses to continue throughout 2025 as it continues to evaluate potential acquisition targets. These expenses primarily include legal and advisory costs and are recorded within general and administrative expenses in the accompanying condensed consolidated statements of operations. There were no growth initiative expenses in the three and nine months ended September 30, 2024.

Current wording

During the three months ended March 31, 2026 and 2025, the Company incurred $2.8 million and $1.8 million, respectively, in expenses associated with the evaluation and negotiation of, and travel due to, prospective business acquisitions. The Company expects these expenses to continue throughout 2026 as it continues to evaluate potential acquisition targets. These expenses primarily include legal and advisory costs and are recorded within general and administrative expenses in the accompanying condensed consolidated statements of operations.

Previous wording

In addition, the Company incurred $5.0 million and $11.7 million in revenue sharing expenses related to its business-to-business partnerships for the three and nine months ended September 30, 2025, respectively and $0.5 million and $1.3 million in revenue sharing expenses related to its business-to-business partnerships for the three and nine months ended September 30, 2024. While the Company does not control the operations or growth of its partners, their success can directly impact our own performance. As these partners grow or as new partnerships are formed, our associated revenue sharing expenses are expected to increase. These expenses represent costs of revenue and are included within technology, development, and user support expenses in the condensed consolidated statements of operations.

Current wording

In addition, the Company incurred $3.4 million and $4.3 million in revenue sharing expenses related to its business-to-business partnerships for the three months ended March 31, 2026 and 2025, respectively. While the Company does not control the operations or growth of its partners, their success can directly impact our own performance. As these partners grow or as new partnerships are formed, our associated revenue sharing expenses are expected to increase. These expenses represent costs of revenue and are included within technology, development, and user support expenses in the condensed consolidated statements of operations.

Previous wording

QFUs totaled 1.8 million and 1.5 million as of September 30, 2025 and 2024, respectively, reflecting an increase of 0.3 million, or 20%. This growth reflects user engagement in addition to active user count. We expect MAUs to fluctuate more significantly in response to app usage patterns and broader market conditions. In contrast, QFUs provide a longer-term view of engagement, representing a more stable cohort—users with funded wallets actively participating in the Exodus platform.

Current wording

QFUs totaled 1.4 million and 1.8 million as of March 31, 2026 and 2025, respectively, reflecting a decrease of 0.4 million, or 22.2%. This decrease reflects a reduction in user engagement as the cryptocurrency market cap has decreased from the first quarter of the prior year. We expect MAUs to fluctuate more significantly in response to app usage patterns and broader market conditions. In contrast, QFUs provide a longer-term view of engagement, representing a more stable cohort—users with funded wallets actively participating in the Exodus Platform.

Previous wording

Results of operations for the three and nine months ended September 30, 2025 and 2024 (in thousands):

Current wording

The following table presents our condensed consolidated results of operations for the three months ended March 31, 2026 and 2025:

Previous wording

Revenue increased $10.2 million, or 51%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase was primarily driven by exchange aggregation revenue, which increased $8.8 million, or 48%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, which was primarily attributable to volume exchange growth related to our business-to-business partner efforts. Non-exchange aggregation (i.e., fiat onboarding, staking, consulting, and other) revenue increased $1.5 million, or 73%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The non-exchange revenue increase was driven by higher staking revenue with an increase of $1.3 million or 272%, reflecting growth in total staked assets and reward mechanisms, while also having an increase in fiat-onboarding, reflecting growth of 55%, or $0.5 million.

Current wording

Revenue decreased $13.2 million, or 36.8%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The decrease was primarily driven by exchange aggregation revenue, which decreased $13.8 million, or 40.8%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, which was primarily attributable to a decrease in user exchange volume growth. Non-exchange aggregation (i.e., fiat onboarding, staking, consulting, and other) revenue increased $0.6 million, or 25.4%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The non-exchange revenue increase was driven by fiat onboarding revenue with an increase of $0.8 million, or 70.8%, offset by a decrease in consulting revenue, reflecting a decrease of $0.2 million or 68.0%.

Previous wording

For the three months ended September 30, 2025, four API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $18.4 million. For the nine months ended September 30, 2025, five API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $64.3 million. For the three and 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 $13.8 million and $50.6 million, respectively.

Current wording

For the three months ended March 31, 2026, five API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $14.8 million. For the three months ended March 31, 2025, six API Providers accounted for more than 10% each of total revenue and collectively generated exchange aggregation revenue of $28.4 million.

Previous wording

The following table summarizes the revenue by users of the platform and the business-to-business partnerships for the three and nine months ended September 30, 2025 and 2024:

Current wording

The following table summarizes the revenue by users of the platform and the business-to-business partnerships for the three months ended March 31, 2026 and 2025:

Previous wording

Technology, development and user support increased $5.7 million, or 50%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase was primarily due to a $4.5 million increase in partner fee expense as a result of a correlated increase in revenue from business-to-business partnerships, a $2.1 million increase in team member compensation and benefit expense as a result of increased team member compensation and a $0.7 million increase in cloud services expenses, partially offset by a $0.6 million decrease in subscription expenses primarily driven by higher costs associated with key infrastructure vendors for development tools, application development, performance optimization and security protections and a $0.5 million decrease in depreciation and amortization expenses.

Current wording

Technology, development and user support increased $1.3 million, or 9.1%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase was primarily due to a $2.3 million increase in team member compensation and benefit expense as a result of increased team member compensation, payroll taxes and stock-based compensation, an increase of $0.7 million in fiat onboarding fees, partially offset by a $0.9 million decrease in partner fee expense as a result of a correlated decrease in revenue from business-to-business partnerships, $0.4 million decrease in depreciation and amortization expenses and a $0.1 million decrease in cloud services expenses and a $0.1 million increase in capitalized labor.

Previous wording

General and administrative expenses increased $6.4 million, or 76%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024. Expenses driving the increase include a $3.6 million increase in team member compensation and benefit expenses, $2.7 million increase in marketing expenses, a $0.7 million increase in foreign currency expense, a $0.5 million increase in legal and consulting expenses, a $0.4 million increase in expense associated with the issuance of warrants, a $0.2 million increase in subscription expense and a $0.2 million increase in miscellaneous expenses partially offset by a $0.3 million decrease in meeting and travel expenses and a $0.1 million decrease in political contributions.

Current wording

General and administrative expenses increased $1.1 million, or 8.0%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Expenses driving the increase include a $1.4 million increase in marketing expenses, an increase of $0.6 million in foreign currency expenses, a $0.3 million increase in legal and consulting expenses, a $0.2 million increase in network fees and a $0.1 million increase in depreciation and amortization expenses, partially offset by a $0.9 million decrease in meeting and travel expenses and a $0.8 million decrease in political contributions.

Previous wording

The Company experienced a favorable fluctuation in the market price of digital assets held during the three months ended September 30, 2025, primarily driven by institutional inflows and ETF adoption, regulatory clarity and stablecoin legislation, and macro and geopolitical tailwinds. During the three months ended September 30, 2025, the Company recognized net realized gains from exchange of digital assets of $3.6 million and net unrealized gains from remeasurement of digital assets of $24.6 million. 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.

Current wording

The Company experienced an unfavorable fluctuation in the market price of digital assets held during the three months ended March 31, 2026, primarily driven by market volatility due to macroeconomic headwinds, including the Federal Reserve's revised economic outlook, with a lower growth forecast and a higher inflation outlook, and the current administration's tariff policy. During the three months ended March 31, 2026, the Company recognized net realized gains from exchange of digital assets of $40.4 million and net unrealized losses from remeasurement of digital assets of $76.8 million. The Company experienced an unfavorable fluctuation in the market price of digital assets held during the three months ended March 31, 2025, primarily driven by market volatility due to macroeconomic headwinds, including the Federal Reserve's revised economic outlook, with a lower growth forecast and a higher inflation outlook, and the looming threat of broader tariffs. During the three months ended March 31, 2025, the Company recognized net realized gains from exchange of digital assets of $5.1 million and net unrealized losses from remeasurement of digital assets of $33.9 million. The Company expects that volatility in digital asset prices will continue and may result in significant fluctuations in the Company’s results of operations in future periods.

Previous wording

Income tax expense was $3.3 million for the three months ended September 30, 2025, compared to an expense of $0.1 million for the three months ended September 30, 2024. The effective tax rate during the three months ended September 30, 2025 was 16.1%, compared to 11.4% during the three months ended September 30, 2024. Income tax expense was $4.2 million for the nine months ended September 30, 2025, compared to an expense of $9.4 million for the nine months ended September 30, 2024. The effective tax rate during the nine months ended September 30, 2025 was 9.1%, compared to 16.9% during the nine months ended September 30, 2024. For the nine months ended September 30, 2025, the change from the effective rate was primarily impacted by federal research tax credits and the change in permanent differences, including the tax benefit from the foreign derived intangible income, non-deductible expenses, and discrete items, including stock-based compensation and tax effect of realized and unrealized digital asset gains and losses during the period. For the nine months ended September 30, 2024, the change from the effective rate was primarily impacted by the change in permanent differences and discrete items, including the tax benefit from foreign derived intangible income and the effect of digital asset gains and losses, specifically recognized in the period.

Current wording

Income tax benefit was $8.7 million for the three months ended March 31, 2026, compared to a benefit of $8.9 million for the three months ended March 31, 2025. The effective tax rate during the three months ended March 31, 2026 was 21.2%, compared to 40.8% during the three months ended March 31, 2025. For the three months ended March 31, 2026, the change from the statutory tax rate to the effective rate was primarily due to a benefit related to stock option exercises net of non-deductible executive compensation, U.S. Foreign Derived Intangible Income and research and development tax credits partially offset by nondeductible expenses. For the three months ended March 31, 2025, the change from the effective rate was primarily impacted by the change in permanent differences, including the tax benefit from the foreign derived intangible income and non-deductible expenses, and discrete items, including stock-based compensation and tax effect of realized and unrealized digital asset gains and losses during the period.

Previous wording

Our primary source of funding is from API fee revenues. We fund our operational costs from these revenues. Our primary use of funds is payment of our operating costs, which consist mostly of compensation and benefit expenses and security costs. As of the date of this filing, based on current operating plans, we believe that our existing cash and cash equivalents, treasury bills, USDC and digital assets, together with cash generated from our operations, will be sufficient to fund our operations and anticipated growth for the next twelve months and thereafter for the foreseeable future. We may seek to opportunistically raise additional capital through private or public equity securities offerings in the future.

Current wording

Our primary source of funding is from API fee revenues. We fund our operational costs from these revenues. Our primary use of funds is payment of our operating costs, which consist mostly of compensation and benefit expenses and security costs. As of the date of this filing, based on current operating plans, we believe that our existing cash and cash equivalents, treasury bills, stablecoins and digital assets will be sufficient to fund our operations and anticipated growth for the next twelve months and thereafter for the foreseeable future. We may seek to opportunistically raise additional capital through private or public equity securities offerings in the future.

Previous wording

The following table summarizes our cash flows for the periods indicated (in thousands):

Current wording

The following table summarizes our cash flows for the periods indicated:

Previous wording

Net cash used in operating activities increased by $9.4 million for the nine months ended September 30, 2025 as compared to September 30, 2024. The primary drivers of the change were an increase of $10.0 million in operating activities settled in digital assets and USDC, an increase in stock based compensation of $5.7 million, a net increase in gains on digital assets of $5.5 million, a decrease in net income of $4.2 million, offset by a decrease of $6.3 million in working capital and a decrease in deferred tax expense of $0.9 million. The primary drivers of the increase in operating activities settled in digital assets and USDC included an increase to revenue of $21.1 million related to increased transaction volume, $12.5 million of increased expenses, $1.5 million of conversion of digital assets and USDC to cash, net for use in operational expense and $1.1 million in accounts receivable, partially offset by decreased payroll liabilities of $2.6 million and decreased currency conversion of $1.3 million.

Current wording

Net cash used in operating activities decreased by $3.6 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The primary drivers of the change were a decrease of $14.7 million in operating activities settled in digital assets and stablecoins, an increase in working capital of $11.5 million, a net increase in loss on digital assets of $7.6 million, an increase in stock-based compensation expense of $1.8 million, partially offset by an increase in net loss of $19.3 million, an increase in deferred tax benefit of $8.2 million, an increase in accrued interest income of $3.9 million, a decrease in the other loss, net of $0.4 million and a decrease in depreciation and amortization of $0.2 million. The primary drivers of the change in operating activities settled in digital assets and stablecoins included a decrease to revenue of $11.8 million related to decreased transaction volume, $6.6 million of increased expenses, $5.9 million decrease in conversion of digital assets and stablecoins to cash, and an increase in accounts receivables and other assets of $1.1 million.

Previous wording

Net cash provided by investing activities increased by $16.9 million for the nine months ended September 30, 2025 as compared to September 30, 2024. The increases were related to $29.2 million of net change in treasury bills investments and redemptions, proceeds for the sale of future token interests of $2.0 million, partially offset by a decrease of $14.5 million of digital assets sold for cash and a decrease in purchases of $0.1 million of digital assets.

Current wording

Net cash provided by investing activities increased by $38.2 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The increases were related to an increase of $67.4 million of net digital assets sold for cash, of which the proceeds are to be used to fund the W3C acquisition. This increase was partially offset by a $29.0 million of net change in treasury bills investments and redemptions.

Previous wording

Net cash used in financing activities increased by $10.1 million for the nine months ended September 30, 2025 as compared to September 30, 2024. This was primarily driven by cash used for the repurchase of shares of our common stock to pay employee withholding taxes as a part of our 2019 and 2021 Plan.

Current wording

Net cash used in financing activities decreased by $4.3 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. This was primarily driven by cash used for the repurchase of shares of our common stock to pay employee withholding taxes.

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, and 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) and stablecoins.

Previous wording

The digital asset holdings as of September 30, 2025 and December 31, 2024 were (in thousands, except units):

Current wording

The digital asset holdings as of March 31, 2026 and December 31, 2025 were:

Previous wording

The liquid asset holdings as of September 30, 2025 and December 31, 2024 were (in thousands):

Current wording

The liquid asset holdings as of March 31, 2026 and December 31, 2025 were: