Pre-market open on 3/31/25, DeFi Technologies (OTC:DEFTF) reported 4Q24 earnings results. On an IFRS basis, DEFTF reported a net loss of $0.03 per share for 4Q24. During 2Q24 and 3Q24, DEFTF incorrectly accounted for certain SOL and AVAX tokens acquired via equity investments in private investment funds as current assets. For 4Q24 and 2024 restated results, DEFTF applied a Discount for Lack of Marketability (DLOM) to the related tokens reflecting lock-up periods through 2028. Excluding the DLOM, as well as the adjustment to BTC collateral held by Genesis Capital, DEFTF reported Adjusted Net Income per share of $0.04, or a couple of pennies shy of our estimate.
While mark-to-market noise, restatements, and revisions to the P&L make actual vs. estimate analysis a bit more challenging, we note core revenue (staking and lending income, management fees, trading commissions, and research revenue) came in slightly ahead of expectations – largely due to higher quarter-end assets. More specifically, AUM as of December 31, 2024, totaled $819 million, meaningfully above our $760 million forecast (mostly a function of further crypto market appreciation since we last marked-to-market our model).
That said, core expenses (operating, general and administration, share-based payments, finance costs, and fees and commissions) of $16.4 million were significantly above our $12.9 million forecast, with much of the variance likely related to higher compensation and travel costs. Looking ahead, senior executives remain focused on cost management, with core operating expenses (ex incentive compensation and incremental marketing initiatives related to international growth) likely remaining generally in line with 2024 run-rates even as AUM, business activity, and revenues continue to ramp up.
After updating our model for 4Q24 results, we are taking down our 2025 forecast from $0.40 to $0.33. Our revision primarily reflects a flatter revenue growth trajectory (our model now calls for total revenues of $161 million for 2025 – consistent with management’s updated guidance) given broader crypto market weakness in 1Q25. Furthermore, we are introducing a 2026 EPS estimate of $0.45 representing 36% year-over-year growth.
Despite our lower earnings outlook, we are raising our price target from $4.00 to $5.00 after incorporating our explicit 2026 EBIT forecasts as well as a lower discount rate in our DCF model reflecting ongoing diversification efforts. From a relative perspective, DEFTF is currently trading at just 6.9x our revised 2025 EPS estimates of $0.33 and 5.0x at 2026 forecast, or well below other asset managers with meaningful crypto ETF offerings. While we recognize most peers are significantly larger and more mature, with considerable infrastructure, resource, and financial advantages, DEFTF maintains a sizeable advantage in terms of projected growth, thereby justifying a comparable (if not higher) P/E multiple, in our minds.
On top of that, a potential uplisting for the stock to a senior exchange in the U.S. represents a meaningful upward revaluation catalyst, in our minds. To that point, we suspect the company’s Form 40-F Registration Statement could be declared effective by the SEC within the next 30 days or so, thereby paving the way for a listing on the Nasdaq. In turn, we expect the stock to benefit from a real-time step up in liquidity and valuation given pent up institutional investor demand.
Following our review of 4Q24 results, we highlight the following key takeaways:
1. Plenty of AUM growth drivers: As mentioned earlier, Valour’s total AUM stood at $819 million as of December 31, 2024, up 114% from $383 million at the end of 2023 reflecting market gains, net inflows, and new product launches. Beyond continuing to launch new products across different geographies outside of Europe (discussed next), key market share drivers likely include: a) targeted expansion efforts, with a focus on market liquidity, regulatory support, and high/growing adoption rates, particularly within regulated investment vehicles; b) increasingly developing partnerships with exchanges and other digital assets solutions providers; and c) leveraging Valour’s broad and deep ETP portfolio to continue to capitalize on evolving investor demand trends.
2. New products, new geographies: To be sure, management remains focused on increasingly penetrating markets across Africa, the Middle East, and Asia to capitalize on strong crypto adoption/demand trends and DEFTF’s first-mover advantages. Indeed, Valour recently signed a Memorandum of Understanding (MOU) with AsiaNext and SovFi, with plans to list Exchange-Traded Products (ETPs) on AsiaNext's Singapore-licensed securities exchange, thereby providing access to the firm’s crypto strategies across Asia. Turning to Europe, Valour recently launched 20 digital asset ETPs on the Spotlight Stock Market in Sweden bringing the firm’s total product portfolio to over 60 strategies available on the continent, with management aiming to offer 100+ funds by the end of this year.
From a new product development standpoint, Valour introduced the Valour Dogecoin (DOGE) ETP on the Spotlight Stock Market in Sweden, the Hedera HBAR ETP on Euronext Amsterdam, and the Valour Dogecoin, Valour Aptos, Valour Sui, and Valour Render ETPs on Börse Frankfurt in Germany, reinforcing the firm’s commitment to broadening access to digit assets across Europe.
3. Continuing to broaden the franchise: Following the previously announced launch of CoreFi Strategy Corp, DEFTF entered into a binding Letter of Intent (LOI) with CoreFi Strategy and Orinswift Ventures, with the goal of listing the resulting company’s shares on the Cboe Canada Stock Exchange. CoreFi Strategy was formed to provide investors access and leveraged exposure to the BTCfi ecosystem, similar to MicroStrategy’s approach with Bitcoin.
Separately, DEFTF took a 10% stake in Neuronomics AG in December 2024 (building on the companies’ existing strategic partnership), and subsequently announced upping its ownership share to 52.5% in early March in exchange for 186K shares plus cash considerations. Neuronomics manages long-only crypto portfolios leveraging Artificial Intelligence (AI) technology to drive outsized risk-adjusted investment returns. Stepping back, the acquisition enhances DEFTF’s asset management and quantitative trading (DeFi Alpha) capabilities, while further diversifying the company’s revenue profile.
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