Antalpha Platform Holding (NASDAQ:ANTA) Q1 2026 Earnings Call

0:00 Good day, and thank you for standing by. Welcome to Antalpha's First Quarter twenty twenty six Earnings Conference Call. Today's call is being recorded. All participants are now in a listen only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to Chris Mamone, Managing Director of the BlueShirt Group and representative for Antalpha's investor relations team. Mister Mamone, please go ahead.

0:33 Thank you, operator. Welcome to everyone participating in this call. Joining me today is Paul Gang, Antalpha's chief financial officer. Please note the following. First, all year over year comparisons in today's call are for q one twenty twenty six versus q one twenty twenty five unless otherwise stated. Second, consolidated financial statements, including Aurelian, began from Q4 twenty twenty five. As such, Q1 twenty twenty five comparative figures reflect the Antalpha standalone results. Third, our remarks today will include forward looking statements based on current expectations. These statements involve risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to Antalpha's filings with the SEC. We do not undertake any obligation to update forward looking statements, except as required by law.

1:23 This call also contains references to unaudited non GAAP financial measures. Reconciliations to the most comparable GAAP measures can be found in our press release and SEC filings. Now I'll turn the call over to Paul Liang, who will provide the Q1 operating and strategic overview as well as the financial highlights and outlook. Paul, please go ahead. Thanks, Chris. Good day, everyone.

1:47 Thank you again for joining us. I'm Paul Leung, CFO of ANTALVA. Let me start with a brief framing of the quarter. Q one twenty twenty six was a period of solid execution and business development for ANTA, amid of a dynamic and challenging market backdrop for the crypto ecosystem. We delivered fifty two year over year revenue growth and maintain our record of zero principal loss. At the same time, our loan book saw a onetime reduction driven by substantial repayments from certain large borrowers, notably can go inc. I will address this in detail.

2:40 But the key point is all borrowers will pay with no loss of principal, and we view it as a strong reflection of our borrowers' overall financial health and the soundness of our credit model. Finally, we also launched two important strategic growth initiatives, the beta launch of our Web Free AI agent and the transition of our tokenization gold holdings into yield generating deployment. I want to provide some extra context on the Kangol repayment before moving to the loan book. On the large borrower Cango's Cango repayment, I want to provide some extra context here before the financial results section.

3:33 During the first quarter and into early quarter two, Cango Inc, a NASDAQ listed Bitcoin miner, has repaid approximately 530,000,000 US dollar of its outstanding loan balance. This represents over 95% of Cango's outstanding balance as of 12/31/2025. Cango funded the repayment through a combination of publicly disclosed Bitcoin asset sales and equity transactions. This is the type of positive positive outcome of that our credit model is designed to produce, so we were pleased with with how it all play out in practice.

4:22 I will now cover our loan book update and risk management activities, followed by our strategic initiatives, then walk through the rest of the financials and close with our q two outlook.

4:39 ANTALVA's operating philosophy is a risk management first philosophy. We have been consistent in this approach since our inception, and it's central to how we manage the platform in q one. Bitcoin prices were under considerable pressure in q one, declining approximately 40% from their October 2025 peak. In this familiar environment, our approach was deliberate. We maintain active dialogue with every kind to review market conditions, stress test test positions, and discuss their options as we do in our daily operation, especially especially every period of price volatility.

5:32 We do not simply wait for the market to move. We engage proactively. Our over collateralization model continue to underpin the loan book. We require over collateralization at origination, and Bitcoin mine mine kind is deposited directly into our wallets, allowing the collateral pool to build continuously. The result of this approach is a proven track record. We are proud to stand behind. As of 03/31/2026, ANTA has recorded no loss of principal since the inception of the company, and it is the direct outcome of the prioritization of risk management above all else amid of amidst every market with bad job.

6:35 Before reviewing our loan book matrix, let me provide some broader market context. We just discussed the devaluation of Bitcoin versus the October 2025, which created a more cautious environment for new loan deployment and borrowers' activity. While the need to send the near term sentiment for digital assets has been softer and the long term demand backdrop remains constructive. Spot BT Bitcoin ETF assets under management stood at approximately 102,000,000,000 US dollar as of mid May twenty twenty six, reflecting continued institutional participation in the asset class.

7:27 Historically, periods of price softness have been also coincide with increased interest in machine upgrade financing, as miners began positioning for the next cycle. We expect this dynamic to once again support the loan demand as market conditions stabilize. With that context, let me walk through the loan book metrics and in detail, starting with TBL per client, which I think it gives the clear a clear picture of the underlying business. PVL per client increased 36% year over year, reflecting growth in average loan size across the client base, and the continued deepening of our client relationships.

8:24 This growth stems from our proactive strategy to prioritize lower risk consumers, ensuring a higher quality portfolio. Total value of loans were 1,600,000,000 as of March thirty six, twenty twenty six, and was down 3% year over year. This change reflects three factors. First, more measured new loan deployment in a weaker Bitcoin price environment. Second, substantial one time loan repayment from two large borrowers, mostly from from Kango, which we mentioned earlier, which should repay approximately 526,000,000 during the first quarter of twenty twenty six, for a modest reduction of approximately 3% in the remaining portfolio on the sequential basis.

9:31 It is worth reemphasizing that we have never had a credit loss. We have never had a loss on principal across the entire loan book. And we enter the recovery phase of the cycle with a well protected portfolio. As market conditions stabilize, we are positioned to redeploy capital and grow the loan book. Hash rate loans financed approximately 34.2 exahash of hash rate capacity as of 03/31/2026, representing approximately 3.3% of global hash rate.

10:21 This compares to 81.3 X hat as of 12/31/2025. The decrease was mainly attributable to Canco's repayment as Canco's facility were predominantly Hash rate backed loans. In summary, the overall health of our loan book remains quite sound. Shifting gears now to our strategic initiatives. Let me cover our Web three AI agent first, followed by our tokenization goal update. In May 2026, ANTA launched a Web three AI agent in public beta.

11:08 I want to take some time discussing this initiative because we think it is important for the market to understand what we are building, why we are building it now, and how it interconnects into the core of ANTALPA. Nina is an early stage of Web3AI agent and part of ANTALVA's broader innovation into AI driven infrastructure. It is built on our proprietary in house MCP or model context protocol framework, which is designed to support intelligent routing and coordination across data and execution environments. As is called, NINA reflects our view that the next generation of digital in infrastructures should make AI and web three more intuitive for users to engage with.

12:05 As AI becomes more deeply embedded in financial and digital system, users will need an intelligent interface that can help them navigate increasingly complex blockchain based environment with greater confidence and convenience. Right now, three factors come together to make this the right time to introduce a new solution like this. First, the capability of AI models to interpret natural language and reliable translate it into on chain execution has only recently reached a level where user facing product is viable.

12:55 The technical barrier that previous require developer knowledge to interact with blockchain networks can now be adjusted through AI. That barrier has been broken. Second, there's no established market leader in Web Free AI today, in particular, in Asia Pacific region. So we see a clear opportunity to build a scalable solution that is available now. For and I want to be specific about this, ANTALFAS is further leveraging the domain in those best. We have built a deep operational knowledge of battery input infrastructure, on chain data, and blockchain system through years of running our finance financing platform.

13:48 Our interconnections with within the Bitcoin mining ecosystem give us a unique foundation in the space that other new entrants to Web3AI does not process. We are applying existing capabilities and relationships to an adjacent market. And next, I will talk about the tokenization goal. As of 03/31/2026, ANTALPA held 39,371 units of XAOT. In Q1, we recognized 12,900,000 US dollar in unrecognized fair value gains on these holdings.

14:35 In April, subsequent to the quarter end, we took the next step in our organization growth strategy by committing 6,052 units of XAUT T to the XAUEU protocol. Albredian, our subsidiary, separately committed another additional 10,000 units to the same protocol. This is the first deployment of our activity holdings into a yield generating arrangement, which represents a meaningful transition from holding activity as treasury and balance sheet asset to actively deploy to generate yield.

15:22 And now let's move to discuss our financial performance in the first quarter. Total revenue was 20,700,000 in Q1 twenty twenty six, up 52% year over year, reflecting a continued growth in both our key revenue components. Technology financing fees on supply chain loan were $15,000,000 up 49% year over year, driven by continued strength in our HASH A loan portfolio. Technology platform fees on margin loan were 5,700,000, up 62% year over year, reflecting healthy takeaways and continued utilization of our margin loan facilities.

16:16 The net fee margin increased 21 basis point year over year, reflecting price discipline across the platforms.

16:27 The expansion was led by our margin loan business where net fee margin improved year over year and remained healthy on a sequential basis. Our supply chain loan net fee margin saw a modest year over year decrease, driven by a higher proportion of Hash rate loans within the portfolio. Hash rate loans carry a lower blended rate than machine loan, and as the mix shifted towards hash rate loan through the period, it created some downward pressures on the branded supply chain loan margins. Now let's turn to operating expense and profitability.

17:13 Total operating expense, excluding unrealized gain of crypto assets, were 25,000,000 in Q1, up 102% year over year. This includes funding causes of 10,400,000, one time restructuring charges of approximately 3,300,000, and non cash equity based compensation of approximately 1,300,000. Excluding these two items, non GAAP operating expense were 20,400,000. On funding costs, as 79% of technology financing fee on supply chain loans, funding costs increased modestly from 65% in q one twenty twenty five.

18:08 For additional context, funding costs were 70% of technology financing fee in Q4 twenty twenty five. The sequential improvement reflects a reduction in the loan base following a substantial repayment received in the period. Turning to profitability. GAAP operating income was 6,600,000, representing an operating margin of 32%. This was mainly reflects 10,900,000 unrealized fair value gain from XAOT Holdings, flowing through our operating results.

18:54 Non GAAP operating income, which exclude one time restructuring costs and non cash ESOP expense totaling 4,600,000 was 11,200,000, representing a non GAAP operating margin of 54.

19:18 Net income attributable to ANTA was 2,700,000 in Q1 twenty twenty six compared to 1,500,000 in Q1 twenty twenty five. As a reminder, Q1 twenty twenty five reflects ANTALPA's standalone result as a con as consolidation of Aurelien began in Q4 twenty twenty five. Adjusted EBITDA was 13,300,000, representing an adjusted EBITDA margin of 64% compared to 18% in the prior year period. This includes approximately 12,900,000 in unrealized gain on the fair value of XLT Holdings.

20:07 Uh-huh. Ex excluding XLT related gains, adjusted EBITDA was approximately 400,000

20:14 with a margin of approximately 2%. The consolidated result I just walked through include contribution from both Antalpha Prime, the lending business, and Aurilion. To give investor a clear picture of each component, let me briefly separate them before turning to the valuation framework. ANTA Prime, our core lending platform, generated stand alone revenue of 20,700,000, up 52% year over year, and stand alone adjusted EBITDA of 4,400,000, a 77% improvement from 2,500,000 in Q1 last year.

21:02 Standalone GAAP operating loss was 2,300,000, including the 3,300,000 one time restructuring costs and 900,000 noncash ESOP compensation in the period. If we exclude that charge, stand alone operating income was approximately 1,900,000 compared with 1,500,000,000 in the first quarter of last year. The EBITDA is 12% for standalone and of our prime lending lending business. Aurilion contributed to the remaining 9,300,000 of operating income at the consolidated level, driven by entirely buying ex ALT flat value gains.

21:51 With that separation established, let me now turn to Aurilance result and our sum of parts valuation framework. Turning to ANTA's Aurilance balance sheet. As of 03/31/2026, Aurilance NAV was 116,400,000 or 3.16 per share, reflecting

22:21 33,318 units of XOT value at 4,606 t 7 per unit, net of 41,200,000 in-depth. Consistent with prior quarter's, ANTAFA's 42% economic interest in Aurilance represents approximately 37,000,000 of attributable NAV. Disrupting this from ANTAFA's market cap of 206,000,000 based on last Friday's closing price, this imply implied value of ANTA's core lending platform is approximately 169,000,000 or approximately 1.9 times of

23:15 trailing twelve months revenue of $86,800,000 and 11.7 times trailing twelve month net income attributable to ANTA's fourteen fourteen point three 14,500,000. Orion's value is time to go appreciation and is ex AUT treasury strategy. ANTA's core platform value reflects the lending business fundamentals. We present this framework so investor can better assess each on its own terms. And now turning to outlook. We expect second quarter twenty twenty six revenue between 11,000,000 and 30,000,000, Excluding the impact of the single customer can go, the year over year decline will be between 7% to 2010 to 222%.

24:23 The main driver of this sequential change from q one is the reduction in our interest bearing loan base following the onetime repayment received in early twenty twenty six. Importantly, net fee margin and operating margin are expected to remain broadly stable quarter over quarter.

24:46 New loan deployment activity was limited in February through April period, reflecting market conditions. We remain engaged with existing and prospective plans on new loan deployment opportunities, and we'll provide updates as the loan book develop.

25:07 Our guidance reflect the strong visibility we have in the business and assumes continued demand for crypto collateralized financing in the market environment. Further consistent consistent with what we see today. As always, actual actual results may differ from our expectation, and we will provide updates on our next quarterly call as appropriate.

25:34 And now let me close with our three priorities for 2026. First, risk management. We will continue to apply disciplined collateral management and maintain active plan dialogue through what remains a volatile market environment. Our zero loss of principal record reflects the way we have run this business since inception. Second, core lending growth. PBL per client growth of 36% year over year reflects the quality and engagement of our client base. We are actively redeploying capital, and we may focus on growing the loan book with the right clients.

26:26 The demand for crypto

26:29 collateralized financing is intact, and we are well positioned to continue to grow. For additional strategic growth curves, Our tokenization growth strategy is advancing. XAVT is now deployed into yield generating protocols, which is a meaningful step forward. And our Web3 AI agent launched this month, applying our Web3 domain expertise to an adjacent market where we see a clear scaling opportunity.

27:08 Both initiatives are at a very early stage, and we look forward to updating investors as they develop. With that,

27:21 let me open the call to q and a. And, operators, please go ahead. Thank you. Our first question comes from the line of Devin Ryan from Citizens Bank. Please go ahead. Your line is open.

27:54 Hey, team. Is Noah Katz on for Devin. For the Good morning. Lots of developments here to dive into. First, just want to touch on your announced further expansion into AI infrastructure with the Web3 AI agent, Nina. Can you help us unpack this a bit more and tell us why Nina is the right product for your AI strategy? And should we think of Nina as a user acquisition tool and a way to deepen engagement with your clients or as more of a foundational piece for future AI revenue streams? Thank you. Yeah. Thanks thanks, Noah. Thanks for the question. So I I think, firstly, we believe, LLM has become the next generation of entry point. And and now so I think now we we are turning to I mean, all the users interact with, like, digital work basically through AI to some extent.

28:55 So, this shift kind of create a meaningful value, especially in the AI industry. As today, the very users experience remain highly fragmented. Users often need to move across, like, multiple wallets, protocols, data source, analytical tools. And so this is a little bit complicated sometimes if they they do this on their own, especially for those by the the use the new users. So and so we we we do think that it's a very highly attractive vertical opportunities for us here in the battery area.

29:54 It's yeah. I think it's very difficult for most of the users to navigate around, so so so this create a very strong user case for AI native products, And we understand the pain point of the users, and Nina is basically designed to bridge this gap, and it provides a neutral, like natural language interface to help the users to access web free information and services. So the goal our goal is to lower the barrier to web free participants to support a broader adoption.

30:42 And we do think that ANTALVA is kind of unique, have some like unique competitiveness advantages. So we firstly, we developed our own MCP framework, which give us a greater control over the underlying connection between user status and web free environments. And over time, this could become a important platform level capability. And and the second, Nina just a real pain point as mentioned just now in the battery. Instead of requiring users to set up and manage a lot of different tools separately, NENA basically provide a simpler and more integrated experience.

31:37 And ANTAFA has accumulated deep knowledge through the years operating in this area and in this ecosystem. We understand data, the workflow, the user needs, and operational compress compress complexity of the market, which gives us a very strong foundation to build a differentiated AI product for VAP3. And looking ahead, I think the first priority for us is to continue to strengthen the function of NINA across kind of like the data infrastructure model adoption.

32:29 And I think we are kind of also we have been knowing this industry quite quite well. Right? So we have also a lot of connection with our miners. I think it's easily for us to get some to have like the resources of the the compute computing power to support our growth. I I believe that give us a kind of unique competitiveness also. In terms of revenue, I think this is not our priority priority at this moment. I think I think we will spend more some time to understand the needs of the user. I think, firstly, I think we need to accumulate, some meaningful users before we talk about, monetization.

33:27 Yeah. I hope this, yeah, helps. Yeah. That that was very helpful. I was gonna dive into, maybe what differentiates Nina from other Web three AI agents, but I think I think you answered it unless you have anything else you wanna add there. Yeah. That's yeah. Okay. Not really. I mean, compared with the other AI agent, I think I mean, nowadays, you can find a lot of, like, generic generic one. Right? But in terms of that three, and there's not a specific product at this moment. But we we do think some startups are doing exploring, but we think that we are a listed company. We understand the industry well. I think we are in a very good position to to to promote this the NINA, the AI agent product.

34:29 But, definitely, there's a lot of, like, general products outside. People, use it a lot, but it's not specifically for factory users. Okay. That's helpful. Thank you for answering my questions there. If I could sneak one more in, I wanna touch on updates on the Clarity Act as it stands today. Are you thinking about the opportunity for Antalpha if digital asset rules become clearer clearer and more defined? And could clearer rules change the pace at which you continue to scale? Thanks. Thanks. I think it's not that I mean, at at at this stage, I think so definitely, we we we need to take a a second look mean, a deeper look on on on how it impacts.

35:23 But based on my understanding right now, it doesn't affect that much on from our side, we are basically connecting we we are in the kind of, like, infrastructure level. We provide financing to the miners, and and and it will not create a lot of impact on us at this moment, but definitely with a more clarity on on on the regulation level, it helps basically the whole ecosystem or the whole state base to develop definitely is gonna help us also to some, I mean, to some extent, you know, broader level.

36:19 All right. Thank you. Thanks, Noah. Thank you. We'll now move on to our next question. Our next question comes from the line of Ed Engel from Compass Point. Please go ahead. Your line is open. Hi, thanks for taking my question. I just wanted to drill down quickly on the impact of the Cango loan payment. Did this did the entire 500,000,000 get paid off in the first quarter, or was some of the impact also in the early second quarter? Yeah. Think mostly is paid in the first quarter. I think we mentioned roughly like just a small portion was repaid in in April, the second quarter.

37:09 Great. Thanks for that. And then on the XAUT generation deployment, Just kind of curious, can you just give more color on, I guess, how those tokens are generating yield and then definitely the expected yield or target yield that you're hoping for the allocation? Thanks. Okay. For the the new generation, basically, so they they the foundation issuing the XLT, they have some kind of, like, very conservative investment opportunities using the using the existing XLT, which we based on our estimation at this moment is roughly between one to 2%.

37:59 It's it's not that much, but, anyway, it's a kind of a step forward comparing with the pure holding of XCT in the past. Great. Thank you for the color. Thank you. We'll now move on to our next question. Our next question comes from the line of Dylan Hynes from B. Riley Securities. Please go ahead. Your line is open. Hey, thanks for taking the question. I'm just wondering on top of Kangle, you expect any other repayments coming up? And then I just have a follow on question after that.

38:47 I think the the loan balance at this most moment is roughly 40,000,000, and we we don't anticipate any repayment at this moment, but we never know. But anyway, the impact will not be significant since the balance has been reduced significantly compared with the previous quarter. Gotcha. Thank you. And then I was wondering, you mentioned initiative in the Asian Pacific. I was wondering if you could go over again what you were talking about there? Can I can can you kind of ask the question again? The eight?

39:33 Yeah. There's a there's a initiative you're talking about in Asia Pacific regarding blockchain operators. Was wondering if could go over that again. I missed that. You mean the the AI agent or or any other initiative we talk about? I'm not sure. You said something about Asia Pacific, but I'll have to go over it again, but okay. So nothing else for me then. Thank you. Okay. Thanks. Thanks, Steven. That concludes the questions and answers period. Thank you again for joining our call today. You may now disconnect. Thank you. Thank you.