Exodus Movement, Inc. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included in this report. 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 “Risk Factors,” “Cautionary Note Regarding Forward Looking Statements,” and in other parts of this Annual Report on Form 10-K. Overview of Our Business 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. Our revenues are primarily derived from digital asset-related transactions and consist of fees from third-party API agreements. These API agreements typically consist of transaction-based contracts and tiered subscription contracts where fees are generated based on transaction volume which is primarily driven by users interacting with the API providers. Our expenses primarily consist of: • Technology, development, user support; • Amortization expense relating to software development; and • General and administrative expenses (primarily including administrative, legal, financial operations, information technology services, marketing and advertising expenses). Based on the services offered and transactions conducted by API Providers, the following table shows the digital assets that are most material to our business by revenue. Digital Asset API Provider Service(s) Blockchain(s) Bitcoin Store of value and payment cryptocurrency Exchange Aggregation; Fiat Onboarding Bitcoin Tether Stablecoin Exchange Aggregation; Fiat Onboarding Ethereum, Algorand, Avalanche, Binance Smart Chain, Arbitrum, Polygon, Optimism, Solana, Tron, Fantom, Ether Blockchain economy or blockchain platform Exchange Aggregation; Fiat Onboarding; Staking Ethereum USDC Stablecoin Exchange Aggregation; Fiat Onboarding Ethereum, Algorand, Avalanche, Binance Smart Chain, Arbitrum, Fantom, Polygon, Optimism, Solana, Tron Other All other digital assets Exchange Aggregation; Fiat Onboarding; Staking Multiple Blockchains 48 Table of contents Material Characteristics of the Digital Assets Material to our Business by Revenue • Bitcoin: Bitcoin is a digital asset that can be transferred among participants on the Bitcoin network on a peer-to-peer basis. Bitcoin is primarily used to pay for goods and services and is generally considered a substitute for gold, cash or forms of electronic payment. Unlike other means of electronic payments, it can be transferred without the use of a central party, making its management “decentralized.” A material characteristic of the digital asset is also its scarcity, as only 21 million Bitcoin will ever exist. Bitcoin is the most widely accepted cryptocurrency by merchants, although overall adoption for retail and commercial services currently remains limited and Bitcoin is often converted to a fiat currency, such as the U.S. dollar, immediately upon acceptance by the merchant. • Tether: Tether is a cryptocurrency and stablecoin intended to offer price stability in the cryptocurrency market and to hold stable value against certain fiat currencies, including the U.S. dollar, Euro and Mexican peso. Tether tokens are widely adopted across major exchanges and wallets, and the U.S. Dollar pegged coin is named USDT. Generally, stablecoins are backed by the value of a different asset to keep the price stable, including fiat currency, cryptocurrency or commodities like gold. Different stablecoins have adopted different methods of stabilization, but Tether is backed by cash equivalents and short-term deposits. Unlike Bitcoin and Ether, Tether is a centralized cryptocurrency managed and issued by Tether. While Tether is meant to maintain a stable value, it is not risk-free and is not immune to fluctuations in price. A range of factors may cause Tether to “depeg” from the pegged asset, including supply and demand, market volatility, market confidence and adoption, counterparty risk, liquidity risk and technology risk. As a result, it is possible for Tether to fluctuate significantly in value over time, particularly when the value of the U.S. dollar changes due to inflation. • Ether: Ethereum is an open-source decentralized blockchain network that supports the creation of apps, custom tokens, and general programs using smart contracts. The primary cryptocurrency of the Ethereum blockchain is Ether, which is used to power the network. The Ethereum blockchain is home to thousands of fungible and non-fungible tokens, as well as many other decentralized apps focused on building out Web3, which is a decentralized internet. • USDC: USDC is a cryptocurrency and stablecoin backed by fully reserved assets. It is intended to hold stable value against the U.S. dollar and is commonly used as a method of payment in the digital asset markets, including for Bitcoin. Unlike Bitcoin, USDC is a centralized cryptocurrency issued by the Centre Consortium (a group co-founded by Coinbase Global Inc. and Circle Internet Financial Limited). Similar to other stablecoins, USDC is subject to risk and price fluctuations. The following table shows revenue earned from our API Providers in relation to our primary revenue driver, exchange aggregation, involving the digital assets shown in the table above, disaggregated by geography (based o n the addresses of the C ompany’s API Providers): (in thousands) December 31, 2025 December 31, 2024 Bitcoin Republic of the Marshall Islands $ 11,675 $ 13,801 Hong Kong 5,557 9,235 British Virgin Islands 5,829 3,461 Seychelles 3,424 5,563 Saint Vincent and Grenadines (1) 6,686 1,400 Other (2) 34 32 Total $ 33,205 $ 33,492 Tether Republic of the Marshall Islands $ 2,648 $ 7,889 Hong Kong 2,225 5,485 British Virgin Islands 2,357 3,477 Seychelles 1,446 3,469 Saint Vincent and Grenadines (1) 494 613 Other (2) 898 257 Total $ 10,068 $ 21,190 Ether Republic of the Marshall Islands $ 3,716 $ 4,355 49 Table of contents Hong Kong 2,770 1,679 British Virgin Islands 1,998 3,926 Seychelles 1,454 2,331 Saint Vincent and Grenadines (1) 796 453 Other (2) 1,659 254 Total $ 12,393 $ 12,998 Solana Republic of the Marshall Islands $ 1,496 $ 1,919 Hong Kong 935 1,225 British Virgin Islands 2,374 1,563 Seychelles 803 1,567 Saint Vincent and Grenadines (1) 286 298 Other (2) 4 6 Total $ 5,898 $ 6,578 USDC Republic of the Marshall Islands $ 1,400 $ 861 Hong Kong 1,335 733 British Virgin Islands 952 1,044 Seychelles 818 960 Saint Vincent and Grenadines (1) 372 176 Other (2) 510 65 Total $ 5,387 $ 3,839 Other Digital Assets Republic of the Marshall Islands $ 10,459 $ 5,784 Hong Kong 14,107 6,383 British Virgin Islands 8,678 8,256 Seychelles 5,896 6,054 Saint Vincent and Grenadines (1) 4,091 2,158 Other (2) 523 369 Total $ 43,754 $ 29,004 All Digital Assets Republic of the Marshall Islands $ 31,394 $ 34,609 Hong Kong 26,929 24,740 British Virgin Islands 22,188 21,727 Seychelles 13,841 19,944 Saint Vincent and Grenadines (1) 12,725 5,098 Other (2) 3,628 983 Total $ 110,705 $ 107,101 (1) Saint Vincent and Grenadines did not have over 10% of revenue during the fiscal year 2024, prior year balances provided for comparability purposes. (2) No other individual jurisdiction accounted for more than 10% of exchange aggregation revenue in each respective period. For more information regarding the characteristics of digital assets, see “Item 1. Business – Our Industry.” These digital assets are generally available in all jurisdictions in which the Exodus Platform is available. See “Note 3 - Revenue Recognition” to our consolidated financial statements included in this report. 50 Table of contents Business-to-Busines s Partnerships XO Swap We contract with third parties to provide them with a connection to our Exchange Aggregator and, in turn, receive both transaction-based and subscription-based fees in accordance with our agreement with the applicable API Provider. For purposes of our API agreements, the API Provider does not make a distinction between the source of the user, meaning we earn transaction-based or subscription-based revenue, as applicable, from our API Providers in connection with both Exodus users and users sourced through XO Swap. For example, in September 2024, we announced our second XO Swap partnership with Ledger to introduce XO Swap to Ledger Live™. This partnership allows Ledger users to access our Exchange Aggregator directly from their Ledger self-custody wallets. As a result of this integration, Ledger users have access to all services offered and performed by our API Providers for over 30,000 digital assets, with any swapped digital assets delivered directly to the user’s Ledger wallet. Like transactions involving Exodus users, XO Swap transactions occur as on-chain transactions that are transparent and secure. Passkeys In July 2024, Exodus announced the launch of Passkeys Wallet. The Passkeys Wallet is a self-custody multi-chain wallet that allows developers to embed a digital asset wallet into their dApp or platform. Passkeys allows users to create and fund their embedded wallet directly within the application they are using, without the need for cumbersome seed phrases, browser extensions, or email verifications and is designed to provide a frictionless and secure user experience to further accelerate Web3 onboarding and dApp integration. This integration is designed to simplify the process and elevate security for users, while providing a seamless multi-chain experience that supports Bitcoin, Polygon, Solana, Ethereum, Arbitrum One, Avalanche C-Chain, Base, BNB Chain, Mantle, and Optimism. When a user creates a Passkeys Wallet, a private key for the wallet is generated and encrypted with an encryption key. This encryption key is required to decrypt the private key and access the wallet. The encryption key is stored by the service used by the user in what is referred to as a “passkey.” Exodus does not store or have access to the passkey. For example, if a user has an Apple device, Apple storage infrastructure will store the user’s passkey whereas a user with a Google device will have its passkey stored using Google’s storage infrastructure. The passkey is secured with the same authentication method (Face ID, Touch ID, PIN, or password) that the user uses to unlock their device. Whenever a user wants to access their Passkeys Wallet, the user can access the Passkeys Wallet by using the same authentication method the user uses to unlock their device. This means users can create, connect, and access a digital asset wallet directly from a platform like a dApp without downloading and installing anything, without an account, without email or SMS verification, and without needing to remember or write down their private keys or 12-word secret recovery phrase. 2025 Highlights During 2025 , we made progress around our main growth initiatives, which are Exodus Platform User Growth and Marketing, Partnership Strategy, and Acquisitions. Exodus Pay On December 9, 2025, Exodus announced the planned launch of Exodus Pay, a self-custodial platform integrated directly into the Exodus app. Exodus Pay connects users directly with industry-leading third-party service providers to allow users to spend digital assets through a virtual card or Apple Pay, send digital dollars or stablecoins to peers, and earn rewards, all while maintaining control of their assets. This launch, anticipated for early 2026, is the first step in Exodus’ evolution from a self-custodial digital asset wallet into a single app for holding, spending, and transferring digital dollars, without compromising self-custody. Tokenization of Class A Shares On October 20, 2025, the Company announced its shareholders may choose to hold their Exodus Class A shares with common stock tokens on the Solana blockchain, enabled through co-transfer agent Superstate. 51 Table of contents Gratitud Interna Ltd. On November 10, 2025, we acquired substantially all of the assets of Gratitud Interna Ltd., a Latin American crypto payments platform. This asset purchase expanded our payments capabilities by adding technology in development, an assembled workforce, and a trade name supporting crypto-based merchant transactions in the Latin America market. Master Digital Currency Loan Agreement On November 17, 2025, the Company incurred indebtedness in the principal amount of $60.0 million ("November 2025 Loan") pursuant to a loan term sheet executed under its Master Digital Currency Loan Agreement with Galaxy Digital LLC. As of December 31, 2025, the November 2025 Loan has been fully repaid. Stock Purchase Agreement On November 24, 2025, the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with W3C Corp. (the “Target”) and Garth Howat (“Seller”), pursuant to which the Company agreed to acquire from Seller all of the issued and outstanding shares of capital stock of the Target. The Target and its subsidiaries include Monavate Holdings Ltd. and its subsidiaries (collectively, “Monavate”) and Baanx.com Ltd. and Baanx US Corp (collectively, “Baanx”). Monavate is a global leader in payment solutions for FinTech, Web3 and global enterprises, and Baanx is a leading provider of non-custodial cards and Business-to-Business-to-Consumer digital asset services. Pursuant to the Purchase Agreement, the Company will acquire the Target for aggregate cash consideration of approximately $175 million, subject to customary adjustments for indebtedness, cash, working capital and transaction expenses. If completed, the acquisition is expected to enhance our payments infrastructure and support the continued development of regulated fiat and crypto financial services. Partnership Strategy We collectively refer to our XO Swap and Passkeys product offerings as business-to-business partnerships. XO Swap – delivers our Exchange Aggregator technology to partner companies. Revenues generated from our business-to- business partnerships increased from 9% of total revenue in fiscal year 2024 to 16% of total re venue in fiscal year 2025 . We have built our Exchange Aggregator over the past decade, and we believe these results have validated the value that it can provide partners as well. Over the next few years, we intend to develop more products to offer, leveraging the experience and technology we have built for our own platform to add value to the digital asset and broader FinTech communities. Passkeys Technology - We are actively building out our Passkeys Wallet technology. While we are still evaluating potential use cases for this technology, we believe that its frictionless onboarding capability provides Exodus with newfound integration potential in viral products and trends – even viral Web2 applications and trends. We plan to continue investing in this technology and expect future increases to our development costs as a result. Acquisitions A dditionally, we have identified a pipeline of additional targets. While there can be no guarantees that we will be able to acquire any of the potential targets on acceptable terms or at all, we believe we are well positioned to successfully execute on our acquisition strategy by leveraging our scale, access to capital markets, and overall liquidity position. To that end, we have incurred transaction-related expenses during 2025 and expect that trend to continue in the near term. Known Trends and Uncertainties Stablecoins - We expect stablecoin adoption will increase globally as cryptocurrencies become more widely used in the future. User adoption of cryptocurrency networks for payments, or lack thereof, as well as worldwide government regulation, both friendly and adversarial, have and will continue to influence global stablecoin usage. Stablecoins will not function without a digital asset wallet. The Company’s wallet supports a wide variety of stablecoins, including the largest coins such as Tether’s USDT and Circle’s USDC. Additionally, by supporting over 40 different networks, including large networks like Ethereum, Solana, and Tron, we believe Exodus is positioned to natively support stablecoins wherever current and future use cases emerge. Furthermore, Exodus’ XO Swap product already provides the Company’s partners a solution for swapping between stablecoins and between blockchains. 52 Table of contents Cloud based infrastructure expense – Cloud infrastructure expenses were $7.8 million , an increase of $0.1 million for the year ended December 31, 2025 , compared to the prior year. We anticipate increased cloud infrastructure expenses as the platform continues to grow due to increased database capacity and new users . Investment in human capital - Costs related to investment in human capital (including recruiting costs, salary, incentive and compensation costs) were $55.6 million , an increase of $10.4 million for the year ended December 31, 2025 , compared to the prior year. 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. Marketing expenses – Marketing-related costs were $11.0 million , an increase of $6.2 million for the year ended December 31, 2025 , compared to the prior year. In the year ended December 31, 2025 , 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. 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 U.S. which did not have a material impact on the Company’s effective tax rate during the year ended December 31, 2025 . Growth Initiative and Transaction-Related Expenses During the year ended December 31, 2025 , the Company incurred $8.3 million i n expenses associated with the evaluation and negotiation of, and travel due to, prospective business acquisitions. The Company expects to continue evaluating potential acquisition opportunities during 2026, which may result in additional transaction-related expenses. These expenses primarily include legal and advisory costs and are recorded within general and administrative expenses in the accompanying consolidated statements of operations and comprehensive (loss) income. There were no growth initiative expenses in the year ended December 31, 2024. In addition, the Company incurred $16.6 million and $5.7 million in revenue sharing expenses related to its business-to- business partnerships for the years ended December 31, 2025 and 2024 , 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 are included within technology, development, and user support expenses in the consolidated statements of operations and comprehensive (loss) income. Monthly Active Users To measure user activity, we primarily rely on the number of Monthly Active Users ("MAUs") of our Exodus Platform. We define an MAU as any user with activity history in any month. A user has “activity history” if, in the applicable calendar month, the user performed any activity within the application such as opening their application to check digital asset prices, reading news, or accessing the services of our API Providers. MAUs provide a measurement of user engagement, allowing management to compare engagement over time. MAUs consist of both funded wallets and unfunded wallets. Because Exodus users do not have accounts, users do not close an account. Therefore, users may be inactive one month and active the next as they re-engage with the platform. A growing MAUs measurement over time indicates that interest in the Exodus Platform is increasing. Management views increasing interest in the Exodus Platform over time as a key indicator of increasing revenue, especially for MAUs outside of the United States as the likelihood of revenue generating transactions increases as user interest increases. 53 Table of contents MAUs were 1.5 million and 2.3 million as of December 31, 2025 and 2024 , respectively, reflecting a year over year decrease of 0.8 million , or 35% . We believe this decrease in MAUs was primarily attributable to a declining consumer- related sentiment and a lower cryptocurrency market cap compared to the prior year, leading to decreased trading activity, as well as a nonrecurring, one-time Passkeys Wallet promotional campaign that took place near the close of 2024. Our strategic focus remains on expanding our active user base, improving app features, and expanding our business-to-business partnerships. We believe that over the long term, consumer interest in digital assets and digital asset markets will again increase. However, during any given period, we cannot be certain that our MAU growth efforts will be effective or that interest in digital assets will remain at current reduced levels, decline or increase. Quarterly Funded Users In addition to MAUs, we utilize Quarterly Funded Users ("QFUs") to assess user trends and market sentiment. QFUs are defined as unique users with an Exodus wallet that was funded at any point prior to or during the fiscal quarter and during which the user remained active, i.e. opening the app during the period. A wallet is considered “funded” if it holds a non- zero balance of any supported digital asset, QFUs offer a longer-term view of engagement by capturing users who have already funded their wallets. QFUs totaled 1.7 million and 1.9 million as of December 31, 2025 and 2024 , respectively, reflecting a decrease of 0.2 million , or 11% . This decrease reflects a reduction in user engagement as the cryptocurrency market cap has decreased from the end of 2024. Of our two user metrics, 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. We consider both MAUs and QFUs to be Key Performance Indicators that provide insight into user activity and platform engagement. While MAUs may fluctuate more significantly due to changes in app usage patterns and broader market conditions, QFUs offer a longer-term view of engagement by capturing users with actively funded wallets. Management uses these metrics to monitor platform health, inform product and marketing strategies, and assess user trends over time. Results of Operations The following table presents our consolidated results of operations for December 31, 2025 and 2024 : (in thousands, except percentages) December 31, 2025 December 31, 2024 $ Change % Change REVENUES $ 121,551 $ 116,272 $ 5,279 4.5% EXPENSES (INCOME) Technology, development and user support 62,930 46,033 16,897 36.7% General and administrative 66,283 39,506 26,777 67.8% Loss (gain) on digital assets, net 18,892 (96,111) 115,003 (119.7)% Gain on sale of future token interests (2,000) — (2,000) * Impairment on other assets 179 336 (157) (46.7)% Staking and other income (271) (1,244) 973 (78.2)% Other loss, net 512 209 303 145.0% Interest income (4,892) (3,315) (1,577) 47.6% Interest expense 570 — 570 * (Loss) income before income taxes (20,652) 130,858 (151,510) (115.8)% INCOME TAX EXPENSE 9,299 (17,900) 27,199 (151.9)% NET (LOSS) INCOME $ (11,353) $ 112,958 $ (124,311) (110.1)% OTHER COMPREHENSIVE (LOSS) INCOME Foreign currency translation adjustment (1,372) 725 (2,097) (289.2)% COMPREHENSIVE (LOSS) INCOME $ (12,725) $ 113,683 $ (126,408) (111.2)% * Percentage variances not considered meaningful. Revenues increased $5.3 million , or 4.5% , for the year ended December 31, 2025 , compared to the year ended December 31, 2024 . The increase was primarily driven by exchange aggregation revenue, which increased $3.6 million , or 3.4% , for the year ended December 31, 2025 , compared to the year ended December 31, 2024 , which was primarily attributable to volume exchange growth related to our business-to-business partner efforts . Non-exchange aggregation (i.e., 54 Table of contents fiat onboarding, staking, consulting, and other) revenue increased $1.7 million , or 18.3% , for the year ended December 31, 2025 , compared to the year ended December 31, 2024 , primarily driven by higher staking revenue and new reward mechanisms. For the year ended December 31, 2025 , five API Providers each accounted for more than 10% of our revenues and collectively generated 69.1% of revenue. For the year ended December 31, 2024 , five API providers each accounted for more than 10% each of revenues and collectively generated 77.4% of revenue. The following table summarizes the revenue by users of the platform and the business-to-business partnerships for the years ended December 31, 2025 and 2024 : (Amounts in thousands, except percentages) December 31, 2025 December 31, 2024 Amount % of Revenues Amount % of Revenues Exchange aggregation - users $ 92,480 76.2 % $ 99,386 85.5 % Exchange aggregation - partnerships 18,225 15.0 7,715 6.6 Fiat onboarding - users 5,033 4.1 3,926 3.4 Fiat onboarding - partnerships 13 - 15 - Staking - users 4,350 3.6 2,284 2.0 Consulting - users 25 - 19 - Consulting - partnerships 885 0.7 1,288 1.1 Other - users 527 0.4 136 0.1 Other - partnerships 13 - 1,503 1.3 Total $ 121,551 100.0 % $ 116,272 100.0 % Technology, development and user support expenses increased $16.9 million , or 36.7% , for the year ended December 31, 2025 , compared to the year ended December 31, 2024 . The increase was primarily due to a $11.0 million increase in partner fee expense related to our new business-to-business partnerships, a $5.4 million increase in team member compensation and benefit expense as a result of increased salary for newly hired management positions, a $1.4 million decrease in capitalized labor and a $0.3 million increase in consulting costs as a result of the continued expansion of our platform and addition of new users, offset by a $1.7 million decrease in depreciation and amortization expense General and administrative expenses increased $26.8 million , or 67.8% , for the year ended December 31, 2025 , compared to the year ended December 31, 2024 . This increase was primarily due to a $6.4 million increase in legal and consulting expenses, a $6.2 million increase in marketing expenses, a $5.0 million increase in team member compensation and benefit expenses, a $5.0 million increase in meeting and travel expenses, a $2.5 million increase in regulatory expenses, a $2.0 million increase in expense associated with the issuance of warrants, a $1.6 million increase in political contributions and a $0.9 million increase in subscription expense, partially offset by a decrease of $3.0 million in foreign currency expenses. During the year ended December 31, 2025 , the Company recognized net realized losses from exchange of digital assets of $2.1 million and net unrealized losses from remeasurement of digital assets of $16.8 million . For the year ended December 31, 2024 , the Company recognized net realized gains from exchange of digital assets of $7.7 million and net unrealized gains from remeasurement of digital assets of $88.4 million . Income tax benefit was $9.3 million for the year ended December 31, 2025 , compared to an income tax expense of $17.9 million for the year ended December 31, 2024 . In 2025 and 2024, state and local income taxes in California and Nebraska comprise the majority of the domestic state and local income taxes, net of federal tax. The effective tax rate during 2025 was 45.0% compared to 13.6% in 2024 . For the year ended December 31, 2025 , 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 year ended December 31, 2024 , 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, and U.S. Foreign Derived Intangible Income partially offset by change in valuation allowance. 55 Table of contents Liquidity and Capital Resources Overview 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, 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. From time to time, we may also enter into financing arrangements. For example, on November 17, 2025, we entered into a Loan Term Sheet under its Amended and Restated Master Digital Currency Loan Agreement with Galaxy Digital LLC, pursuant to which the Company borrowed $ 60.0 million (the “Galaxy Loan”). As of December 31, 2025 , the Galaxy Loan was paid in full. We expect that increased market acceptance of digital assets and blockchain technology, combined with our expected continued growth of the Exodus Platform, market acceptance of our services and ability to attract and retain users on our platform, should support our ability to generate sufficient cash to meet our requirements and plans for cash. Cash Flows The following table summarizes our cash flows for the periods indicated: (in thousands) December 31, 2025 December 31, 2024 $ Change Net cash used in operating activities $ (25,561) $ (12,042) $ (13,519) Net cash provided by investing activities $ 7,657 $ 43,887 $ (36,230) Net cash used in financing activities $ (15,041) $ (5,338) $ (9,703) Net (decrease) increase in cash and cash equivalents $ (32,945) $ 26,507 $ (59,452) Net Cash Used In Operating Activities Net cash used in operating activities increased by $13.5 million for the year ended December 31, 2025 , as compared with the year ended December 31, 2024 . The primary drivers of the increase were a change in losses on digital assets of $115.0 million , a decrease of $13.3 million in operating activities settled in digital assets and USDC, an increase of $7.0 million to share-based compensation, an increase of $2.0 million in expense associated with the issuance of warrants, partially offset by a change in net loss of $124.3 million and deferred tax benefit of $27.7 million . The primary drivers of the decrease in operating activities settled in digital assets and USDC included an increase in revenues of $11.3 million and a decrease in currency translation adjustments of $2.1 million , offset by a $20.7 million increase in expenses and a decrease in accounts receivable and other current assets of $6.8 million . Net Cash Provided By Investing Activities Net cash provided by investing activities decreased by $36.2 million for the year ended December 31, 2025 , as compared with the year ended December 31, 2024 . The decrease was primarily related to an $80.0 million increase to loans receivable, an increase of $28.1 million in net disposals of digital assets and an increase of $16.0 million of net change in treasury bills investments and redemptions. Net Cash Used In Financing Activities Net cash used in financing activities increased by $9.7 million for the year ended December 31, 2025 , as compared with the year ended December 31, 2024 . This was primarily driven by cash used for the repurchase of shares of our common stock to pay employee withholding taxes. Total Digital Assets and Liquid Assets 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. 56 Table of contents The digital asset holdings as of December 31, 2025 and 2024 were: (in thousands, except units) December 31, 2025 Units Cost Basis Fair Value Bitcoin 1,704 $ 53,449 $ 149,164 Ether 1,898 3,476 5,633 Solana 12,473 2,385 1,552 Other 172,189,617 102 98 Digital assets $ 59,412 $ 156,447 (in thousands, except units) December 31, 2024 Units Cost Basis Fair value Bitcoin 1,941 $ 69,707 $ 181,238 Ether 2,655 4,967 8,847 Solana 24,472 2,241 4,628 Other 10,011,770 5,641 1,646 Digital assets $ 82,556 $ 196,359 The liquid asset holdings as of December 31, 2025 and 2024 were: (in thousands) Carrying Value Quoted Prices Level 1 Significant Other Observable Inputs Level 2 Unobservable Inputs Level 3 As of December 31, 2025 Cash and cash equivalents $ 4,938 $ 4,938 $ — $ — USDC 222 222 — — Total liquid assets $ 5,160 As of December 31, 2024 Cash and cash equivalents $ 37,883 $ 37,883 $ — $ — USDC 12 12 — — Treasury bills 30,490 30,490 — — Total liquid assets $ 68,385 Material Capital Commitments Exodus currently has no material commitments for capital expenditures. At this time, we currently believe that our cash on hand, as well as the sources of liquidity described above, will be sufficient to fund our operations through the next twelve months and thereafter for the foreseeable future. Critical Accounting Estimates Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The preparation of the consolidated financial statements requires management to make estimates and judgments that affect the reported amounts in our consolidated financial statements and accompanying notes. Certain of our accounting policies, as discussed below, involve a higher degree of judgment and complexity in their application and, therefore, represent the critical accounting estimates used in the preparation of our consolidated financial statements. If different assumptions or conditions were to prevail, the results could be materially different from our reported results. For additional discussion of our critical accounting estimates, as well as our significant accounting policies , see “Note 2 - Summary of Significant Accounting Policies” to our consolidated financial statements in this report. 57 Table of contents Income Taxes We determined that income taxes involve critical estimates based on management’s significant judgments to determine our provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets, including, for example, compliance with the 2017 United States Tax Cuts and Jobs Act. 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 research and development 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 U.S., which did not have a material impact on the Company’s effective tax rate for the year ended December 31, 2025. To the extent that our estimates and assumptions materially change, or if actual circumstances differ materially from those in the assumptions, our financial statements could be materially impacted. We utilize the asset and liability method for computing our income tax provision. Deferred tax assets and liabilities reflect the expected future consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as operating loss, capital loss and tax credit carryforwards, using enacted tax rates. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we establish a valuation allowance. Assessing the need for a valuation allowance requires a great deal of judgment and we consider all available evidence to determine whether it is more likely than not that our deferred tax assets are recoverable. We evaluate all available evidence including, history of earnings and losses, taxable income forecasts and whether the evidence is objective. See "Note 11 - Income Taxes" to our consolidated financial statements in this report. We recognize the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be maintained by the examination of taxing authorities. The tax benefits recognized from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. Interest and penalties related to unrecognized tax benefits are recognized within the provision for income taxes. See “Note 11 - Income Taxes” to our consolidated financial statements in this report. For U.S. federal tax purposes, digital asset transactions are accounted for by recognizing a gain or loss when digital assets are exchanged, in the amount of the difference between the fair market value of the property received and the tax basis of the exchanged digital assets. Receipts of digital assets in exchange for goods or services are included in taxable income at the fair market value on the date of receipt.