Digital Asset Firm CoinShares Reports Solid Q2 Results

CoinShares says it has built on the performance seen at the start of the year, “delivering Q2 results that represent the Group’s strongest quarter since the start of 2022.”

CoinShares has shared some results:

  • Revenue for Q2 2023: £10.7 million (Q2 2022: £13.9 million)
  • Gains and Other Income for Q2 2023: £9.7 million (Q2 2022: £6.3 million)
  • Total comprehensive income for Q2 2023: £5.3 million (Q2 2022: loss of £0.6 million)
  • Adjusted EBITDA for Q2 2023: £12.8 million (Q2 2022: negative £8.8 million)

Alternative Performance Measures (APMs)

  • Combined Revenue, Gains and Other Income for the quarter of £20.3 million (Q2 2022: £14.9 million);
  • Asset Management fees from the Group’s ETPs and Index for Q2 of £10.6 million (Q2 2022: £14.2 million)
  • Capital Markets activities resulted in net gains/income of £10.0 million (Q2 2022: £5.9 million);
  • Principal Investments generated a net loss in Q2 of £0.2 million (Q2 2022: £5.1 million loss);
  • Adjusted EBITDA for Q2 totalled £12.8 million (Q2 2022: negative £8.8 million), being a solid start to the year following the turbulence of 2022; and
  • Adjusted EPS (basic) for Q2 of £0.08 (Q2 2022: £0.01); Adjusted EPS (diluted) for Q2 of £0.07(Q2 2022: £0.01).

In 2023, XBT Provider continued “to display its strength in the Nordic markets, the number of active clients rising month on month.” In Sweden alone, they are “welcoming an average of 3,500 additional new allocators to the XBT Provider brand every month.” This is a testament to the platform’s resonance “with these particular demographics.” However, they have also witnessed “a contrasting trend of redemptions from professional investors in the US and Europe, an area we are closely monitoring.”

Concurrently, CoinShares Digital Securities (CSDS) has seen “a surge across Europe, achieving a noteworthy $40 million in net inflows year-to-date.” Additionally, CSDS has fortified its offerings for European professional investors, “now boasting some of the best-in-market products.” One of these exciting new developments is the introduction of our zero management fees Staked Index Products, “which positions CSDS as an even more attractive proposition for professionals looking to diversify their portfolios with digital assets.”

Following the successful introduction of two new indices in Q1, their Q2 focus “pivoted towards the marketing and distribution strategy of CoinShares Physical and XBT Provider.” Their marketing efforts “included hosting a series of dedicated events in Germany and Switzerland, aiming to educate investors about the evolving world of cryptocurrencies and Exchange-Traded Products (ETPs).”

At the same time, CoinShares launched “a comprehensive Digital Assets roadshow across Italy, aimed at connecting with institutional investors and brokerage platforms.” In short, we are making significant efforts “to ensure that all sophisticated European investors know about CoinShares and its products.”

To enhance their outreach and educational efforts, they have “launched a new website devoted to our ETP platforms.” This new website centralizes “all educational content for investors and facilitates the effective monitoring and tracking of user activities, enabling us to accurately measure the success of our campaigns.”

Throughout the quarter, the CoinShares Blockchain Global Equity Index “experienced sustained robust performance, predominantly within the technology sector, specifically the Bitcoin mining subsector.” This surge was “fueled by an increase in fee rewards coupled with a stronger market value for cryptocurrencies.” Meanwhile, there was “a shift of interest towards the AI theme during this period.”

This resulted in “a diversion of assets from blockchain ETFs, notably the Invesco CoinShares Global Blockchain UCITS ETF, which experienced outflows amounting to $14 million.”

Nevertheless, despite this shift, the year-to-date (YTD) flows “have managed to remain in the positive territory, recording a net inflow of $8.6 million.” Importantly, they “have maintained our position as the market leader in terms of YTD inflows.”

The firm added:

“Overall, our passive asset management business generated £10.6 million in revenues during the quarter (Q2 2022 £14.2 million).”

They also mentioned:

“In the Capital Markets segment, we have continued to drive profitability through our CME futures trading strategies, offering an appealing risk-reward ratio. These strategies enable us to harness potential returns while maintaining the capability to operate at an institutional scale in a regulated market environment. This has been amplified by the introduction of new contracts, such as the Coinbase Bitcoin and Coinbase Ether futures contracts traded on the CME and we are closely monitoring CBOE progress.”

The firm concluded:

“Overall, our Capital Markets business delivered gains and other income of £10.0 million in Q2, thanks to the successful execution of our strategic initiatives and continuing operational excellence. In closing, I would like to reiterate the exciting journey that our industry is on towards the mainstream financial sector and broad-based institutional acceptance and participation, a journey that wholly validates our initial strategic hypothesis and the investment we have made in our regulatory and compliance infrastructure. As we navigate these dynamic changes, my optimism for our future remains undeterred. Our foresight, I am confident, will not go unnoticed by the industry and should be reflected in the valuation of our stock, as we become ever better known for our strategic positioning and our commitment to growth.”

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