By Michael Kim
NASDAQ:DEFT
READ THE FULL DEFT RESEARCH REPORT
Pre-market open on 11/14/25, DeFi Technologies (NASDAQ:DEFT) reported 3Q25 earnings results. On an IFRS basis, DEFT reported net income per share of $0.01, or below our $0.18 estimate. While mark-to-market noise make actual vs. estimate analysis a bit more challenging, we note core revenue (staking and lending income, management fees, trading commissions, research, and advisory revenue) came in at $12.8 million, or a bit below our $14.9 million estimate, with most of the shortall related to lower staking/lending income. To the point, 58% of the company’s digital assets were staked as of the end of 3Q25, down from 75% a year ago due to temporary rebalancing. As such, we look for a step up in related yields assuming the staking percentage rises to a level consistent with prior periods. Furthermore, DeFi Alpha contributions were limited, as management navigated a more competitive backdrop given the step up in the number of Digital Asset Treasury (DAT) companies in the market resulting in fewer arbitrage trading opportunities and tighter spreads. Finally, AUM as of September 30, 2025, totaled $989 million, shy of our $1.1 billion forecast (mostly a function of crypto market depreciation since we last marked-to-market our model). Total operating expenses of $13.5 million came in slightly ahead of our $13.1 million forecast, with higher operating, general and administrative costs partially offset by lower share-based payments.
After updating our model for 3Q25 results, we are taking down our 2025 and 2026 forecasts from $0.44/$0.52 to $0.14/$0.25. Our revisions primarily reflect a flatter revenue growth trajectory, with our model now calling for total revenues of $116.6 million for 2025 – consistent with management’s updated guidance, but down from $219 million last quarter reflecting fewer arbitrage trading opportunities for DeFi Alpha given stepped up competition/liquidity and narrowing spreads. Furthermore, broader crypto market declines thus far in 4Q25 have likely pressured AUM levels, thereby impacting management, staking, and lending fees, all else equal. To be sure, our back-of-the-envelope math suggests Valour’s AUM are down 20%+ on a weighted-average basis since September 30, 2025, based solely on market depreciation.
Turning to valuation, we continue to believe DeFi Technologies is uniquely positioned to capitalize on the burgeoning digital assets ecosystem, with a diversified and differentiated portfolio of asset management, trading, infrastructure, venture capital, and research businesses. We see further room to run, as awareness and appreciation of the company’s unique business model, durable competitive advantages, considerable growth prospects, and unsustainable valuation disconnect continue to build, particularly following the stock’s more recent uplisting to the Nasdaq Capital Market. Indeed, management recently engaged service providers to better understand trading anomalies in DEFT shares across exchanges.
As a result of our lower earnings outlook, we are taking down our DCF-derived price target by $1 to of $6.00, still representing considerable upside potential from current levels. From a relative perspective, DEFT is currently trading at just 5.0x our 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, DEFT 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, we expect DEFT’s more recent uplisting to the Nasdaq Capital Market to drive an upward revaluation for the stock over time reflecting stepped up liquidity and pent-up institutional investor demand.
Following our review of 3Q25 results, we highlight the following key takeaways:
- Continuing to broaden the franchise: Following last quarter’s launch of DeFi Advisory, a separate vertical providing digital asset treasury solutions (including custody and Stillman Digital trade execution) leveraging the company’s existing Reflexivity research and domain expertise, management recently announced the business’s second client engagement with TenX Protocols, a Layer 1-focused DAT company. Related economics include $600,000 in advisory revenue in addition to trade execution commissions, as well as performance fees. Next, the company invested in local companies in Canada and Africa to support the development of regulated stablecoin frameworks as rails for e-commerce payments, treasury operations, and remittances. Furthermore, DeFi and SovFi plan to launch sovereign debt vehicles wherein coupon payments convert into Bitcoin within ETPs issued by Valour, thereby enhancing capital-appreciating potential. From an economic perspective, the model incorporates bond and BTC sleeve fees, along with related staking income translating into an outsized revenue opportunity, as the products capture incremental share of the $100+ trillion market. Finally, Stillman Digital joined forces with market leaders to develop GoDark, an institutional dark trading pool for digital assets, with a focus on executing large, price-sensitive block trades off exchange, while preserving discretion and institutional-grade execution.
- Building ETP scale: Valour reached management’s goal of offering 100 ETPs by the end of this year following the recent launch of 23 new products on the Spotlight Stock Market in Sweden to further expand the company’s European product suite. Separately, Valour recently introduced the 1Valour Bitcoin Physical Staking ETP, the first physically-backed BTC Staking ETP on the London Stock Exchange offering investors yield-enhanced exposure in a transparent and regulated exchange-traded structure. In total, Valour now manages 100 listed ETPs across major European exchanges across Sweden, Germany, Switzerland, the United Kingdom, France, and the Netherlands.
- Enhanced liquidity: In September, DEFT raised $100 million of gross proceeds from a securities purchase agreement with a group of institutional investors including Galaxy Digital (GLXY, Not Rated). Under the agreement, DEFT sold 45.7 million shares of common stock at $2.19 per share, as well as warrants to purchase 34.2 million incremental shares at $2.63 per share. Proceeds are earmarked for funding new business initiatives, seeding new ETPs, financing trading/lending/staking transactions, and/or capitalizing on incremental M&A opportunities.
- Accelerating capital management: The company announced the initiation of a Normal-Course Issuer Bid (NCIB) stock buyback program in late August to repurchase shares on the Nasdaq and/or the CBOE Canada. Management plans to utilize the 12-month authorization to efficiently capitalize on market dislocations and/or return excess capital to shareholders. Through September 30, 2025, management repurchased 935,900 shares.
- CEO transition: In conjunction with the 3Q25 earnings release, the company announced Olivier Roussy Newton resigned as Chief Executive Officer and Executive Chairman of the Board. Co-Founder Johan Wattenström assumes both roles, while Mr. Newton remains as a Strategic Advisor to the company, as well as a meaningful shareholde
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