SOL Strategies (STKE) Q2 2026 earnings call transcript

Thanks, Bo. Good afternoon, everyone, and thank you for joining Sol Strategies' Fiscal Second Quarter 2026 Earnings Conference Call. Before we begin, I want to remind everyone that certain statements on this call contain forward-looking statements subject to risks and uncertainties. Actual results may differ materially from these statements. We refer you to our latest press release, MD&A, and CEDAR Plus filings for a detailed risk factors description and all assumptions.

All dollar amounts are in Canadian dollars unless otherwise noted. The company assumes no significant events occur outside our normal course of business and that our current trends in digital assets continue. However, listeners should note that crypto markets are volatile and that our business metrics can fluctuate significantly.

With that, let me turn it over to Michael Hubbard, Sol Strategy's CEO.

Thanks, John. Good afternoon, everyone, and thank you for joining us. The first half of our fiscal year, 2026, covered October through March, and a lot has happened during this period and in the weeks since. We cleaned up our capital structure, strengthened the board, and launched our liquid staking token, Stakesol. We acquired the Zika Zero Knowledge technology through the Dark Lake transaction and signed a definitive agreement to acquire HoudiniSwap. We're going to walk through all of it.

On the board and leadership side, we added crypto industry veteran Les Borsai and public company veteran Dennis Logan as directors, and most recently named John Matonis as chairman. John has been in the blockchain industry since the early 2010s and brings deep experience and relationships to the role. I'm also glad to have the interim title behind me. The board appointed me permanent CEO on March 31st, and I'm focused on building from here.

Alongside that, we formalized Steve Ehrlich as Chief Strategy Officer. Steve has been a meaningful contributor to our capital market strategy for some time, and having him in a full-time leadership role is a real asset.

Now, let me talk through what we've actually been building. In January of this year, we launched Stakesall, our liquid staking token on the Solana blockchain. Here's the problem it solves. Native staking on Solana requires users to lock up their Sol, wait up to two days to un-stake, and they have to choose between earning yield and deploying capital elsewhere.

Stakesol changes that. When Sol holders stake through our protocol, they receive Stakesol, a receipt token representing their staked position that continues to earn accruing staking rewards. That token can be held, traded, used as collateral and DeFi applications, or deployed for additional yield, all while the underlying SOLE keeps earning. What's unique about Stakesole is that it allocates SOLE across validators using our own WizScore methodology from stakewiz. com, which we own and operate. The WizScore intelligently ranks validators based on performance, security, and decentralization metrics. There are up to 75 validators in our current set.

At launch, we had integrations with Kamino, Orca, LoopScale, Squads, and Sanctum. By the end of March, Stakes Oil had approximately 768,000 sold deposited into the protocol, equivalent to roughly 61 million USD, or 83 million Canadian dollars at the time. The company receives 5% of all staking rewards accrued to the pool. This is a new revenue line sitting alongside our treasury stake and delegated stake.

Our broader validator network continues to perform well. We estimate that just over 5% of all the staking wallets on Solana are delegating to a sole strategies-managed validator.

On the technology side, we acquired the assets of Dark Lake Labs in April 2026, including the intellectual property behind Ziga, a zero-knowledge proof engine built natively for Solana. The team has joined us as well. Vito Pai Braga, who brings experience from Meta and IBM, joins us as director of engineering and takes over technical leadership. Amber Hales joins with strong compliance and operations background.

Together, they add real depth. Ziga is designed for privacy-preserving execution with dynamic inputs. On top of the engine, the team has built an application specifically for dynamic slippage protection that executes trades privately. We see significant potential here, and we'll share more as the work develops. That technology connects directly to our next transaction. Earlier this month, we announced a definitive agreement to acquire Houdini swap for $18 million USD. Houdini swap is a non-custodial privacy enabled cross-chain swap aggregator operating across more than 100 blockchains and more than 30 exchanges both centralized and decentralized More than half of it is sorry more than half of its trailing 12 transaction volume touched Solana We expect to close by the end of May What we really been doing over the past year is building up the stack.

Validators are the foundation, the infrastructure layer that the Solana network runs on. We established a significant foothold there early. With Stakesol, we moved up into user-facing products, inserting ourselves between end users and validators, and creating deeper touch points across DeFi. With the Ziga technology, we stepped further up into product and technology development, adding privacy-preserving execution capability that we believe has broad applications. And with HoudiniSwap, we will move up again, adding a cross-chain routing business with proven revenue, real distribution, and significant Solana exposure.

Each layer connects to the ones below it. That's deliberate. What I'd say at a high level is this. The Solana blockchain is growing. Transaction volume is growing. The financial applications being built on Solana, trading, stablecoins, prediction markets, perpetuals, are growing. We've spent the last year building infrastructure that sits across multiple layers of that stack. We believe we're well positioned for what comes next.

With the Clarity Act advancing through U. S. legislation, we anticipate greater certainty around key regulatory questions, and that's something we greatly look forward to. Healthy regulation that provides clarity, end-user protection, and protects innovation is essential for this industry to reach its full potential.

With that, I'll pass it to Steve.

Thanks, Michael. Good afternoon, everyone. Over 30 years in financial services, I've watched infrastructure reshape markets completely. On the trading side, we went from calling your broker to orders being electronically routed to the exchange floor to a 24-7 market running on the most efficient, scalable blockchain in existence, Delana. And the product categories keep expanding from equities, options, and futures to prediction markets and perpetual futures.

Volume keeps growing, and so does the reliance on Solana. The same pattern is playing out in money movement and banking, from bank tellers to ATMs to stablecoin transfers. Where is that volume going? The Solana blockchain. That conviction in Solana is the dominant financial infrastructure layer in what's driving our acquisition strategy. The Dark Lake transaction and the pending Houdini swap acquisition are the start of a deliberate build-out of assets that improve and enhance what we've already built.

On Houdini Swap specifically, as Michael mentioned, more than 50% of the transactions touch Solana. What we see is the opportunity to own a cross-chain, API-based, compliant transaction network with significant existing distribution across core wallets. The team has done a strong work building that distribution layer. We see real opportunity to expand the product suite into new traded markets and to connect it with our existing validator network and liquid staking products.

Looking further out, Vaults, real-world asset tokenization, stablecoin infrastructure, and RPC technology all remain interesting to us. The goal is a suite of easily accessible APIs across the Solana economy, infrastructure that lets any wallet or institution participate while benefiting from a relationship with a trusted, compliant partner. I've been part of several businesses that grew significantly and genuinely excited about where we're headed.

Closing Houdini swap by the end of the month is the next milestone. With that, I'll turn it over to Doug.

Thanks, Steve, and good afternoon, everyone. I'm going to start with a quick picture of our balance sheet. As of March 31, 2026, we had approximately $60.6 million of cryptocurrencies, $22 million of intangible assets, and about $350,000 of cash on our balance sheet. During the period, we also reduced our liabilities by approximately $9 million as we paid off significant debt to our former chairman, which is part of our corporate initiative to make the company more capital efficient. On the income statement, the six-month numbers included a loss on the disposition of cryptocurrencies, which is for the most part an exchange of Solana for other cryptocurrency tokens, mainly Solana liquid staking tokens, to enhance yield rather than a pure sale of Solana for cash.

Under IFRS accounting rules, the exchange must be accounted for as a gain or loss based on the carrying costs at the time of the conversion. For the six months ended March 31, 2026, it was approximately a $22 million loss, and for the three months ended March 31, 2026, it was a $15 million loss. The majority of this amount is related to the launch of our liquid staking token in January 2026.

If you exclude these amounts from our results, revenue from our own stake and third validators for the six period was approximately million and for the three period approximately million Also on the income statement our six numbers include some significant non-cash expenses totaling approximately $77 million, which consists of a $12.1 million write-down of our validators, $4.7 million of amortization expense on the validators, $2.2 million of share-based compensation expenses, $1.7 million of interest expense, mostly paid in stock, and a $56.5 million revaluation loss on digital assets.

The latter reflecting the decline in price of Solana from approximately $208 U. S. at the Analyzing our existing operating business shows that at lower Solana prices, our six-month operating loss on the business is approximately $2.6 million.

We continue to take steps to reduce our operating expenses, including some one-time legal costs incurred during the six-month period, to ensure we can get closer to breakeven on our validator business in the current environment. We are excited about the Houdini swap transaction and believes that upon closing, it will add significant revenue and profits to our business and materially change our future financial statements.

With that, I will hand it back to Michael.

Thank you, Doug and Steve. And thank you all for joining us today. We're excited about the pending Houdini closing at the end of the month and the long-term value it brings to our business. The future of Sol Strategies is very exciting, and we look forward to sharing the results next quarter. We are thrilled to be positioned to capture the growth of the Solana and digital asset economies, to be ready to service institutions and traders who need access, priority, privacy, and execution quality.

With that, we open it up to any questions listeners may have.

Yeah, absolutely. Thanks, Gareth, for your question. So Dark Lake is really exciting for their Ziga privacy engine, and that unlocks multiple different use cases. And when we look at Houdini, there are essentially two or three core products under the hood. So they have the routing infrastructure across 100-plus blockchain networks and over a million supported tokens, which is available both for public and private swaps. Then they have the private swap optionality, and then they have the API product, which allows third-party integrations into this infrastructure. The real opportunity that we see is when we start combining these things where we can use some of the Ziga zero-knowledge technology to potentially offer enhanced private swap opportunities on the Houdini APIs and provide value-added services to those swap users.

and essentially building out those B2B APIs for third-party partners that are using the Houdini APIs currently and who might be using them in the future and giving them a more controlled environment for that private swap experience. So the specifics there aren't something we can speak to in too much detail just yet, but there's definitely a lot of opportunity for integration between those technologies, and we think there's a lot of potential, particularly on the Solana blockchain.

Great. That's super helpful. And then maybe could you just touch on the potential synergies that might exist between your existing validator business and these two new acquisitions? How might you think of a potential uplift to maybe block level fee capture or staking yields after the integration? yeah absolutely that's a great question as well um i don't want to get too technical here but essentially at the moment we're sitting at um effectively two layers here with the validators we're sitting at the core of the solada network which means that we are processing transactions not just our own but of the entire network um whenever we have leader slots so about one percent of the network we're processing blocks and that gives us a first look at those transactions right and those blocks and the ability to include transactions there.

And with that comes the ability to provide priority to transaction inclusion and transaction landing The second is that through our staking services both native and liquid we providing users access to yield through the Solana blockchain staking layer So the opportunities there with Houdini are really in how we can bring in more users into that staking ecosystem and offer them access to our staking products, as well as potentially combining some of those products to give them better opportunities for swapping on hoodie and cross-selling or loyalty systems. Those are things we haven't fully developed just yet, but there's a few different opportunities that we're thinking about.

Great. That's super helpful. Thanks for taking my questions. Thank you.

Yeah, thanks, John. That's exactly right. Essentially, the way we're looking at it is we're working our way up the stack. So we started with a validated infrastructure, which is really the scaffold or the foundation that the entire blockchain network operates on. That gets us into the transaction execution layer of the blockchain. With the liquid staking token, we're stepping up more into the user-facing side where we're offering a more enhanced staking product to users where they have the ability to use it as collateral, to use it in DeFi, to maintain liquidity.

And with Houdini, we're taking that step further where we're now looking at cross-chain, and the importance there is the ability for liquidity to move between blockchain ecosystems. That's a very, very important aspect of the blockchain economies. And also offering those additional services or swapping between over a million supported tokens, swapping within the same blockchain, swapping between different blockchains, and then adding on to that the privacy products, which are important both to end users, but also to institutions.

So for us, really, we're seeing this as a vertical expansion and integration of all these layers. Okay, excellent. And you're looking to do this without, you know, too much of a significant investment? I mean, is this going to be positive to the P&L in not too long a time?

I'll take that one, John. Do you want to speak to that, yeah? Yeah, I'll take that one. And, John, yeah, the idea when we executed this transaction and, again, set to close by the end of the month is to add significant revenue to our business and the profits to go with that. And so the transaction details as set out were $18 million with $4 million of stock and set up in multiple payments over time with revenue that we expect on this business to be $12, $13 million a year. And we set up an earn out on this business, too, where the floor of the earn out is $2.5 million a year. So we definitely believe that this business is going to be profitable and revenue-generating for the business.

And another piece that I want to touch on in addition to what $2.5 million of EBITDA, let me clarify that. Another piece I want to just add on to some of these synergies, Michael said, is the existing Houdini Pay business and the Zika technology to combine with the privacy aspect of sending money between wallets is an important aspect of this, too. So we see a tremendous opportunity to expand the Houdini Pay business as well.

Great. Thanks so much for the answers, gentlemen. Thank you.

Thank you, Beau. Thank you, everyone, for dialing in. We're very excited about what's to come for this company and the upcoming closing of the Houdini transaction.

We're incredibly excited about the potential for this company going forward and look forward to providing a further update for our next quarterly earnings. Thank you.