Antalpha Platform Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
June 17, 2025

Key Takeaways

  • Positive Sentiment: On May 16, N Alpha completed a traditional IPO on Nasdaq, becoming one of the first crypto-native companies to list in the U.S. since 2021.
  • Positive Sentiment: N Alpha delivered 41% year-over-year revenue growth to $13.6 billion and expanded its adjusted EBITDA margin to 18% (up from 5%), while total loans outstanding rose 64% to $1.77 billion.
  • Positive Sentiment: The company plans to introduce Ethereum-collateralized loans and explore AI GPU financing, aiming to consolidate clients’ digital asset financing on its prime fintech platform.
  • Positive Sentiment: N Alpha launched a digital gold treasury strategy with a $20 million purchase of XAUT (Tether Gold) to hedge macroeconomic volatility and strengthen its collateral pool.
  • Positive Sentiment: Assuming Bitcoin holds at $100,000, N Alpha expects Q2 revenue of $60–70 million, representing 40–50% year-over-year growth.
AI Generated. May Contain Errors.
Earnings Conference Call
Antalpha Platform Q1 2025
00:00 / 00:00

There are 7 speakers on the call.

Operator

Hello, and thank you for standing by for N Alpha First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in listen only mode. Following management prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

Operator

I would now like to turn the meeting over to Lin Chen, representing N Alpha Investor Relations. Thank you. Please go ahead.

Speaker 1

Hi, everyone. Welcome to N Alpha's first quarter twenty twenty five earnings conference call. Joining us today are our CFO, Paul Leung and our Head of Strategy, He Mei Yu. After our prepared remarks, we'll hold a Q and A session. Please note our discussion today will contain forward looking statements made under the Safe Harbor provision of The U.

Speaker 1

S. Private Securities Litigation Reform Act of 1995. Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For discussions of these risks and uncertainties, please refer to our filings with the SEC. N Alpha does not undertake any obligation to update any forward looking statements except as required by law.

Speaker 1

This call includes discussions of certain unaudited non GAAP financial measures. Please see our press release for reconciliation to the most comparable GAAP measures. This conference call will be recorded and the webcast of this call and our press release will be available on our IR website at ir.nalpha.com. I'll now turn the call over to Herman to begin today's call.

Speaker 2

Herman? Good morning, everyone, and thank you for joining our call. Thank you for joining us on our first earnings call. On May 16, we reached an important milestone, listing on the Nasdaq to become one of the first crypto native companies to list in The US through a traditional IPO since 2021. At the heart of N Alpha is our simple business model, supply chain financing for Bitcoin mining.

Speaker 2

We work with only institutional investors, prioritize license application, and leverage our prime fintech platform to allow customers and ourselves to perform risk management on collateral, which is central to crypto lending. Our focus on a simple business model and on risk management has allowed us to list through a traditional IPO faster than many other crypto related companies that have filed before us. I wanna thank our investors, including Tether, who believed in us and supported us through the IPO process. Thank you. Turning to first quarter.

Speaker 2

The crypto market entered 2025 with heightened volatility impacted by tariff negotiations and other macroeconomic uncertainties. Notably, compared to past stock market swings, Bitcoin withstood market volatility better than previously. Bitcoin's improved performance and market uncertainty underscores the increased adoption, market capitalization that it has become today. We believe as Bitcoin users further grow beyond the estimated 1,400,000,000 users today and BDC derivatives such as BDC ETFs expanding beyond the current market cap of approximately a $130,000,000,000, Bitcoin will continue to lead in the digital asset class, especially as a storage of value. Institutions and corporates will want to acquire more Bitcoin and its mining machines to produce more Bitcoin.

Speaker 2

Amid the market volatility in the first quarter, N Alpha demonstrated strong operational performance. Our first quarter twenty twenty five revenue grew 41% year over year and adjusted EBITDA margin reached 18%, up from 5% a year ago. In other words, for every $100 in incremental revenue from a year ago, 50% fell to the adjusted EBITDA line in Q1, demonstrating the scalability of the N alpha prime platform. Our loan outstanding or total value loan or TBL at the end of Q1 reached $1,770,000,000 growing 64% year over year. Supply chain loans grew 22% year over year, while Bitcoin loans surged 98% year over year.

Speaker 2

N Alpha's financing product lines are curated with the aim to better weather the volatility of Bitcoin prices. Historically, mining machine loans tend to perform better when Bitcoin prices are low, while Bitcoin loans tend to perform better in periods of rising Bitcoin prices. Beyond our strong core business performance, we are exploring new opportunities in digital asset lending based on feedback from our customers. We plan to offer Ethereum collateralized loans on the N Alpha platform as well as experiment with AI GPU financing. We believe our clients can make the best use of their collateral by consolidating all of their digital asset financing needs on the n alpha platform.

Speaker 2

We also are excited to announce our digital gold treasury strategy. As of today, N Alpha has purchased $20,000,000 in XAUT, also known as Tether Gold. We plan to continually buy gold and add gold to our collateral pool, which creates a strategic hedge against macroeconomic volatility and further straightens the resilience of our collateral pool. We are unique in the deployment of a gold treasury strategy in that it is synergistic to our core business. Declining digital gold will not only improve N Alpha's risk management, it will also pave the way for expansion into new businesses.

Speaker 2

Next, I will hand over to our Chief Financial Officer to talk about our Q1 financials.

Speaker 3

Thanks Herman. And hello, And I'm excited to share with you our first quarter twenty twenty five financial highlights on this first earnings call with you. For Q1 twenty twenty five, our total revenue reached $13,600,000,000 an increase of 41% year over year. Supply chain loan revenue grew 15% year over year. Hefscher loan revenue continue with strong growth, and we estimate that our Hefscher loans financed approximately 62 extra hash at the end of first quarter twenty five.

Speaker 3

Supply chain loans outstanding at the end of the first quarter increased 22% year over year. In August 24, we discontinued purchase order loans, which resulted in the retirement of 86,600,000.0 in mining machine loans. Excluding the PO loans, the branching loan outstanding at the end of first quarter would have grown 50% year over year. For q one, the branching loan net fee, which is tech financing fee rate minus funding rate, averaged 2.8% compared to 3.1% a year ago. The decrease was primarily due to the change in product mix.

Speaker 3

Cash rate loan, which use a lower tech financing fee rate, increased to approximately two third of total supply chain loan. Our BTC loan tech fee rate remains stable at approximately 1.2%. Non GAAP net income, which excludes stock compensation of $400,000 was $1,800,000 in Q1 compared to $300,000 a year ago. As we leverage the N alpha prime platform to grow globally. We are seeing revenue growing much faster than non funding operating expenses.

Speaker 3

Q1 adjusted EBITDA was $2,500,000 up 392% year over year. Lastly, let me talk about N alpha q two outlook. Assuming Bitcoin price remains at 100,000 level, we expect q two revenue to reach between 60,000,000 to 70,000,000, presenting a year over year growth rate of 40 to 50%. So with that, operator, we are ready to take questions. Thank you.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press 11 on your telephone and wait for your name to be announced. If you wish to cancel a request, please press star one and one again. First question comes from the line of Ed Angel from Compass Point.

Operator

Please ask your question.

Speaker 4

Hi. Thanks for taking my question, and congrats on on the the IPO for last month. I just wanted to ask two quick things. The first one is, are you able to offer what the LTV ratio was at the end of the first quarter? And then also the LTV ratio across the current portfolio might be right now.

Speaker 4

I guess the reason I ask is, I guess, how much extra room is there for some of your customers to kinda use that collateral to continue to to issue new loans before your the kind of LTV how the LTV ratio is reached?

Speaker 3

Yeah. Okay. Thanks for the question. And the LTV right now is roughly 52%, which go up a little bit compared with the fourth quarter of last year, which is mainly due to at the end of first quarter twenty five, the the BTC price dropped to dropped to roughly $80,000 by that time. So this is basically the differences compared with the fourth quarter of last year.

Speaker 3

But in terms of the BDC, we have on hand is relatively, quite stable. So it's it's basically the adjustment of the BDC price as compared with the fourth quarter of last year. And as you, on your questions about, how much room we have, as you as you know, our, HashA loan is started at 60% right at origination. So and and for BTC loan is 50 to 70% at origination, so which means that we still have a quite big room for us to grow the our landings.

Speaker 4

Great. Thanks. And just to clarify, I guess, given that Bitcoin is up quite substantially since the end of the first quarter, would that mean that your the current LTV that you have today is probably meaningfully lower than than the 52% at the end of the first quarter?

Speaker 2

First of all, at the end of first quarter, it's 50.7 to be exact. Mhmm. Your your question is because our our loan origination is at 60% for hash rate loan if if there's room to to take out based on the current collateral?

Speaker 4

Yeah. I guess the question is, I guess, you said it's about 51% at the end of third quarter. But today, I would assume it's gonna be much lower, now that we're almost done with the the the second quarter.

Speaker 2

So the way our loan works is that the the collateral that the customer provide is based on the loan that we give out. So if they wanna take out new loans, they would have to put in new collateral. We we don't, for example, if the machine loans that they have, just because it it it went below 50%, we don't allow them to take take more loans out of the machines that they gave us.

Speaker 4

Mhmm. Okay. That's helpful. Right. And then, just wanted to touch on, for the you you talked about adding Ethereum and and AI GPUs, to your collateral base.

Speaker 4

What does the financing for that look like? Are are the LTVs, that you typically require similar? And, I guess, curious, I guess, when you're expecting that to to be rolled out.

Speaker 2

Okay. Yeah. So those are so so Ethereum collateralized loans and AI or GPUs are something that we're working on. We we have not signed a a loan yet, so we we're not definitive. But, currently, as we're talking to customers, we're looking at LTV around 50%.

Speaker 4

Great. Thanks for so much. And, yeah, I'm here. Catch again.

Speaker 2

Okay. Great. Thank you very much.

Operator

Thank you for the question. Your next questions come come from the line of Darren Aftahi from Roth. Please go ahead.

Speaker 5

Good evening. Thanks for taking my questions, and congrats again on the IPO. I guess just following up on the GPU financing. I mean, that's a market where there's a fair amount of competition, maybe not as unique as you're offering in Bitcoin. So I'm just kind of curious How are you thinking about that opportunity?

Speaker 5

Is it specific to certain geographies? Any kind of insight you guys can can offer? And then will you guys be competing, you know, directly against some of the the the server houses, the Dells, and the HPs of the world? I'm just trying to get an understanding of strategic positioning there. Thanks.

Speaker 2

Okay. My understanding, most of the GPU finance you're talking about are are, like, h 100, h 200 for these LLMs, or or is your understanding you're talking about inference GPUs using inference chips like the forty nineties and '59?

Speaker 5

Well, I I think it's all of the above, but I I'm just more curious about, you know, what, hypothetically, this road map might look like for N alpha.

Speaker 2

Yeah. So so we're differentiating in several ways. Our, you know, our our customer base are among most people who do, crypto mining, and what we have found is that, you can, use, 40 and 50 nineties to do, crypto mining for POWs. Okay. So because these machines can buy POW tokens on a positive ROI, and when they build up scale on this thing, as agenic AI takes off, there's going to be more demand for inference compute, and as a result, they could shift their compute capacity to this new demand.

Speaker 2

So I think we're differentiated because of the customer set, and I think most of the compute that you hear, the financing you hear, they're probably for LLMs rather than for inference compute.

Speaker 5

Got it. Would that require you to find new data center compute just given that, you know, HPC is a little bit of a different animal than than Bitcoin?

Speaker 2

So that's a very good question. That is something that we're working on right now. Our first location we're experimenting with Tennessee. The idea is that we wanna be able to put both of these machines in one data center. If you look at Bitmain's new machine s 23, which recently launched, that has the ability to be housed with these inference GPUs.

Speaker 2

So that's something that we're exploring right now. I think, ideally, that's where we wanna go, and that's why we're, you know, working with partners to make these kind of tests.

Speaker 5

Great. That's helpful. And then just two more, if I may. Just on the on the core business, on the supply chain loan, like, as you move forward in into '25, like, strategically, geographies are kind of emerging as growth drivers outside of Asia?

Speaker 2

So we we expanded to Middle East last year, and this year, we we are, expanding into, The US. So I think, you know, as The US with the regulatory tailwind that we've seen, I think that it's going to be a good growth region for us going forward.

Speaker 5

Got it. That's helpful. And then just one last one. On your financing rates, you know, how are you thinking about that figure going forward and any kind of kind of new channels to to kinda lower your your funding costs in in '25 and beyond? Thanks.

Speaker 2

I think that if you look at our funding cost right now, it's it's relatively low low. You know, we we the founder and I, we were in New York at the end of last year, and we went around our funding cost is quite competitive in the market. I I think where where the opportunity is is the the funding fees that we charge. You know, our our funding fee on average is between 8% to 10% and as we go through New York, we are noticing other places charge much higher. I think this is something that we will further explore as we look at The US market.

Speaker 2

With regards to funding rate, I think that is a function of treasury rate. Right? So as treasury comes down, there's probably room for us to do better here. We have not spent the time to look at our finding source other than North Star. As you know, for the IPO, n alpha was spin off from a parent company, and we only completed that since November.

Speaker 2

And so far, we haven't seen funding being a deterrent for us as we talk to other people. In fact, some of the lenders that we've given loans to, they actually re lend out. So they think that our prices are more like a wholesale and they could re lend out at a higher price. So and we have several of those customers like that. That's helpful.

Speaker 2

Appreciate it. Thanks, Sermon. Okay. Great.

Operator

Thank you for the questions. One moment for the next question. Our next question comes from the line of Kevin Dede from H. C. Wainwright.

Operator

Please ask your question.

Speaker 6

Thanks for having me on the call, Herman. Appreciate it, Paul. I'm kind of curious about some of the underlying assumptions that you have for your second quarter view and maybe what you can offer about what you see in the balance of the year regarding overall hash rate demand, you know, Bitcoin mining machine demand? And, you know, to piggyback off of Darren's question, where you see that demand originating

Operator

geographically?

Speaker 2

Okay. Think Hashrate is we've been pretty consistent. You know, you're seeing quarterly growth, and I think it's just a function of the machines that we have in existence. Although we have standalone, you know, hatchery loans, that is a smaller part of our overall hatchery. So I think you're gonna see hatchery loans, you know, continue to go forward as we have.

Speaker 2

You know, in our perspectives at the end of last year, we said that we are machine loans have average of fifteen month left. At the May March, we have eighteen months left. So that means you're gonna see not only, you know, machine revenues, you're also gonna see revenue from cash flow loans. On machine loans, the way it has worked historically is, you know, when you have, you know, new machines that that come onto the market and then, you know, initially people are going to pay full price and they're going to the ones that really want the machines, they're going to buy directly from Bitmain. And as these machines give it a few quarters later, typically then there's promotions including financing.

Speaker 2

So I actually see there's a good chance for our machine loans to have a better growth on a quarterly basis in and out a few quarters. So S23 just came along, so S21 hydro, machines like that, that would be interesting in a few quarters. And then BTC loan is a function of BTC prices. So we'll see, I think. BTC continues to grow as we have seen in the last three to six months that there has opportunities there.

Speaker 6

Can you talk a little bit about the effect on your portfolio on the price of machines themselves on like a dollar per terahash basis? Like if Bitcoin continues to ramp up through the balance of the year, then you would think that the demand for machines would increase and the price per terahash would increase. And I'm just kinda wondering how you see that reflected in your business.

Speaker 2

I I don't see that as a a strong correlation. If if bitcoin prices continue to go up, there's probably greater demand for the machine. As a result, there's less need for us to do financing. Right? So so so machine loans are usually better when the market, you know, is more bearish.

Speaker 2

When the market is very bullish, everyone's, you know, rushing to buy a machine. Some probably wanna add a premium because when they place a purchase order, it's gonna be at least a six to eight month wait. You see that? Whereas us, when when it's a very bullish market, you know, it's it's when when when people are trying to get the machine, you know, fast as possible, then, you know, for flash, probably financing is is not as strong then.

Speaker 6

Ah, okay. Okay. And could you offer just a little bit more of the strategic thinking on using x a u t as Yeah. I'm just kinda curious on how how you looked at that.

Speaker 2

Yeah. Yeah. So think of it, from a risk management perspective. I think number one is, you you you see, MicroStrategy being very successful using treasury strategy. For us, it is twofold.

Speaker 2

Number one is I think building up gold makes sense given the fact that it also fights inflation very well. But for us, it's particularly important because our our business is a lending business. Right? So right now, if you think about all the Hashpay loans, we use BTC that the customer give us, and we hypothecate to Noistar. Right?

Speaker 2

And and BDC is is quite volatile. So so, you know, we we have seen BDC doing very well since November going up. But as, you know, being a volatile asset, there there's also a chance that that it could go down. Right? So if everything you have in your collateral is a BTC, that and and we're LTV based, you know, that that puts it at risk.

Speaker 2

Whereas if you have, you know, a mix of that, being gold, which is, more stable over time, that that the mix of gold plus BCC as collateral will allow us to, you know, manage our collateral much better. So you can see us on the one hand, we could do a treasury strategy where whereas we need to, you know, do type of financing, debt or equity financing, and then we increase the goal holding for the long term. And then on the other hand, leveraging this makes our collateral, believe, over time, more stable. And also by having, you know, digital gold, on our balance sheet and so forth, there's opportunity to also expand our product line.

Speaker 6

Okay. Okay. Well, thank you. Appreciate the color, Norm.

Speaker 2

Yeah. Yeah. Because you you guys look at it from from our business of of trying to, you know, get our clad more stable. And I think, once we have that, since most of our customers are large, you know, institutional BDC holders, they also want want stability too. So that drives demand, that drives business opportunity for them to say, well, how do they get a portion of their collateral to be more stable?

Speaker 2

So that's the whole idea. We would do it ourselves and show our customers and also help them, you know, do risk management on on their collateral.

Speaker 6

And how how do you validate your holdings so your customers can see them?

Speaker 2

So what so, you know, for example, xAUT, you could see them. It it's live. The the data is live. Right? So Tethr would would would deposit these, in in Switzerland, and, you you can see, you could check 24 by seven, the the amount of gold there.

Speaker 6

Okay. Okay.

Speaker 2

Yeah. Yeah. I visited I visited the place, in in Switzerland, last year, so, I think it's a very, interesting product.

Speaker 6

Okay. Thanks, Norman. Appreciate it.

Speaker 2

Yeah.

Operator

Thank you for the question.

Speaker 2

Thank you.

Operator

That concludes our q and a session. Thank you once again for joining N Alpha first quarter twenty twenty five earnings call. You may now disconnect.

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