Executive Summary / Key Takeaways

• Exodus Movement (EXOD) is positioning itself as a leader in self-custodial digital asset management, leveraging proprietary technology like XO Swap and PassKeys to simplify crypto interaction and drive growth through B2B partnerships.
• The company delivered strong Q1 2025 revenue growth of 24% year-over-year, primarily fueled by its exchange aggregation business and increasing contributions from the XO Swap B2B product, demonstrating successful strategic execution despite broader market headwinds.
• Key technological differentiators, including the frictionless PassKeys wallet onboarding and the efficient multichain XO Swap aggregator, provide a competitive edge against both custodial exchanges and other wallet providers, forming a core part of Exodus's long-term moat.
• While profitability in Q1 2025 was impacted by digital asset price fluctuations and increased investments in growth initiatives (M&A evaluation, partnerships, marketing), the company maintains a strong balance sheet with significant digital and liquid assets, including over 2,000 Bitcoin.
• Management is optimistic about future growth driven by expanding partnerships, potential strategic acquisitions, and the secular trend towards stablecoins and self-custody, although market volatility and the need to remediate internal control weaknesses remain key factors to monitor.

The Self-Custody Imperative in a Volatile Digital Landscape

Exodus Movement, Inc. operates at the intersection of financial technology and the burgeoning blockchain industry, focused on empowering individuals through self-custodial digital asset management. Since its founding in 2015, the company has been committed to creating user-friendly software that allows individuals to control their private keys and digital assets, a mission underscored by the inherent risks highlighted by hacks on centralized exchanges. This foundational principle of self-custody forms the bedrock of the Exodus Platform, providing a secure, un-hosted wallet that supports a wide array of digital assets across multiple blockchains.

The digital asset market is characterized by significant volatility, influenced by macroeconomic factors, regulatory developments, and evolving consumer sentiment. Despite these fluctuations, the long-term trend points towards increasing mainstream adoption and institutional participation. Within this dynamic environment, Exodus has strategically evolved its business model beyond direct-to-consumer wallet services to include business-to-business solutions, leveraging its core technology to capture a broader share of the market. This strategic pivot, alongside a focus on simplifying the user experience, positions Exodus to capitalize on the growing demand for secure and accessible digital asset interactions.

Technological Foundation: Building the Moat with PassKeys and XO Swap

Exodus's competitive differentiation is deeply rooted in its proprietary technology, designed to address the complexity and security concerns often associated with digital assets. Central to this is the PassKeys wallet technology, which aims to revolutionize user onboarding by eliminating the need for traditional 12-word secret phrases. This frictionless approach allows consumers to create and access a self-custodial wallet seamlessly using biometric authentication like Face ID or Touch ID, or a PIN, significantly simplifying the path to digital asset ownership. The Echo demo product, built on this technology, has already resulted in the creation of over 1.2 million PassKeys wallets, demonstrating the potential for rapid user adoption by removing a major barrier to entry. While Echo is not expected to be a material revenue driver in 2025, the lessons learned from this experiment in gamification and simplified user experience are slated for incorporation into future products on the company's roadmap.

Another critical technological asset is XO Swap, Exodus's multichain exchange aggregator technology. This sophisticated back-end system aggregates liquidity from various third-party API providers, enabling users and partners to execute digital asset swaps across different blockchains efficiently and at competitive rates. XO Swap is now being white-labeled and offered as a B2B2C solution to other wallets and industry projects. This strategic move allows Exodus to extend the reach of its technology and monetize its expertise by enabling partners to offer seamless swap capabilities to their existing user bases, creating a "win-win-win" scenario for Exodus, its partners, and their consumers. As of the first quarter of 2025, XO Swap contributed approximately 30% of the company's total swap volume and 17% of its revenue, up from 19% of volume and 12% of revenue in the prior quarter, highlighting its accelerating momentum and strategic importance.

These technological advancements provide Exodus with tangible competitive advantages. The simplified onboarding via PassKeys directly addresses a major pain point for new crypto users, potentially leading to higher conversion rates and user retention compared to competitors with more cumbersome setup processes. The XO Swap technology, refined over a decade, offers a best-in-class solution for multichain swaps, a capability increasingly in demand as the digital asset ecosystem expands across numerous networks. This aggregation capability is difficult for individual wallets or dApps to replicate effectively, creating a technical moat. Furthermore, by offering XO Swap and the emerging XO Pay (fiat on/off-ramp) as API-driven B2B solutions, Exodus can leverage the scale of its partners' user bases, potentially accelerating revenue growth without incurring the direct marketing costs associated with acquiring those users itself. This contrasts with larger, more diversified competitors like Coinbase (COIN) or Robinhood (HOOD), whose scale is built on direct user acquisition, but whose core offerings may not match Exodus's specialized self-custody and multichain swap expertise.

Strategic Expansion and Recent Performance

Exodus's strategy is centered on three pillars: growing and diversifying its core wallet services, expanding its network of partnerships, and pursuing selective additive acquisitions. The company's recent performance reflects progress on these fronts. In the first quarter of 2025, Exodus reported total revenues of $36.0 million, a 24% increase compared to $29.1 million in the same period last year. This marked the company's second-best revenue quarter ever and its highest first-quarter revenue on record. The growth was primarily driven by the strength of the exchange aggregation business, which saw revenue increase by 26% year-over-year to $33.8 million. This increase was directly linked to user growth and volume exchange growth, particularly from business-to-business partner efforts leveraging the XO Swap technology.

While exchange aggregation remains dominant, contributing 94% of Q1 2025 revenue, other revenue streams showed mixed results. Non-exchange aggregation revenue, including fiat onboarding, staking, consulting, and other services, decreased by 5% year-over-year. This decline was mainly attributable to a loss in staking revenue due to lower total staked assets and a significant decrease in NFT revenue (down $0.6 million) reflecting reduced demand in that specific market segment. However, fiat onboarding revenue saw a modest increase of $0.1 million, and consulting revenue experienced substantial growth, increasing by $0.3 million year-over-year, partially offsetting the declines in other areas.

The company's operational expenses increased significantly in Q1 2025. Technology, development, and user support expenses rose by 39% to $14.9 million, largely driven by a $4.0 million increase in partner fee expense directly correlated with the growth in business-to-business partnership revenue. General and administrative expenses saw an even larger increase, surging by 78% to $14.3 million. This was primarily due to approximately $1.8 million in transaction-related expenses incurred while evaluating prospective business acquisitions, a $2.2 million increase in team member compensation and benefits reflecting increased headcount and stock-based compensation, and higher costs for legal, consulting, travel, marketing, and political contributions. These expense increases, particularly the M&A-related costs and partner fees tied to revenue growth, highlight the company's active investment in future expansion initiatives.

Financial Health and Digital Asset Treasury

Exodus maintains a strong balance sheet, ending March 31, 2025, with $238 million in digital and liquid assets and no outstanding debt. This includes cash and cash equivalents, U.S. dollar coin (USDC), treasury bills, and digital asset holdings. The company's digital asset treasury is a notable aspect of its financial strategy, holding 2,011 Bitcoin as of March 31, 2025, an increase from 1,941 Bitcoin at the end of 2024. Exodus is an early adopter of ASU 2023-08, recording its digital assets at fair value, which means the reported value fluctuates with market prices. The $238 million figure as of March 31, 2025, was measured at the lower prices seen at the end of the quarter; management noted that at prices as of the earnings call date (May 12, 2025), this value would be closer to $280 million. This Bitcoin treasury strategy, in place since 2015, aligns with the company's deep conviction in digital assets and provides a unique reflection of its success, particularly as it pays 100% of salaries in Bitcoin.

Despite strong revenue growth, the company reported a net loss of $12.9 million in Q1 2025, compared to net income of $54.8 million in Q1 2024. This shift was primarily driven by an unfavorable fluctuation in the market price of digital assets held, resulting in net unrealized losses of $33.9 million in Q1 2025, compared to net unrealized gains of $52.8 million in the prior year period. The increase in operating expenses, particularly G&A and partner fees, also contributed to the change in profitability. Net cash used in operating activities increased to $6.2 million in Q1 2025, largely due to the impact of digital asset fluctuations and changes in working capital, partially offset by the change in net income. However, net cash provided by investing activities increased significantly to $33.7 million, driven by changes in treasury bill investments and digital asset transactions. The company believes its existing liquid and digital assets, combined with cash generated from operations, will be sufficient to fund its operations and anticipated growth for the foreseeable future.

Competitive Dynamics and Strategic Positioning

The competitive landscape for Exodus is multifaceted, encompassing other self-custodial wallet providers, centralized exchanges offering wallet services, and integrated financial platforms with crypto capabilities. While precise, directly comparable market share figures for all niche competitors are challenging to ascertain, Exodus competes with major players like Coinbase, Robinhood, and Block (SQ). Unlike custodial platforms such as Coinbase and Robinhood, which hold users' private keys, Exodus's core value proposition is self-custody, appealing to users prioritizing security and control. This distinction is particularly relevant in the wake of high-profile hacks on centralized platforms.

Exodus's technological advancements, particularly PassKeys and XO Swap, provide key competitive advantages. PassKeys offers a significantly more user-friendly onboarding experience compared to traditional methods, potentially attracting users who are intimidated by crypto complexity. The multichain capability and aggregation efficiency of XO Swap differentiate Exodus from single-chain wallets like MetaMask or Bitcoin-only wallets like Electrum, and offer a compelling B2B solution that other platforms may find more efficient than building their own. While larger competitors like Coinbase and Block benefit from immense scale, brand recognition, and diversified revenue streams (including institutional services and payment processing), Exodus focuses on excelling in the core areas of self-custody, asset management, and seamless exchange within the wallet environment. The strategic shift towards B2B partnerships via XO Swap allows Exodus to leverage the user bases of these larger or specialized platforms, effectively turning potential competitors into partners and expanding its reach without direct user acquisition costs.

The company's recent uplisting to the NYSE American Exchange is a strategic move aimed at enhancing visibility, improving liquidity, and providing better access to capital markets, potentially strengthening its competitive position against other publicly traded crypto-native companies. Furthermore, Exodus's proactive engagement with policymakers and its long-standing Bitcoin treasury strategy signal a deep commitment to the industry and its future, potentially resonating with a specific segment of the market. While larger competitors may have greater financial resources for marketing and development, Exodus's focus on innovation in user experience and core wallet functionality, coupled with its partnership strategy, allows it to carve out a distinct and growing niche.

Outlook and Risks

Exodus management expresses optimism regarding the company's future growth prospects, driven by the continued expansion of its core wallet, the increasing momentum of its partnership pipeline, and the potential for strategic acquisitions. They anticipate that regulatory clarity in the United States will accelerate mainstream digital asset adoption, creating a more favorable market environment. The growth of stablecoins is viewed as a significant multitrillion-dollar market opportunity that will necessitate wallet solutions, positioning Exodus favorably with its multichain support and easy wallet creation technology. The company also expects industry consolidation over the next 12 to 18 months and believes its strong balance sheet positions it well to participate in such activity.

Near-term, management anticipates increased expenses related to cloud infrastructure as the platform scales and higher human capital costs due to planned headcount increases for growth and compliance. Expenses associated with evaluating potential business acquisitions are also expected to continue throughout 2025. Revenue sharing expenses related to B2B partnerships are projected to increase in correlation with the growth of these partnerships and the volume they generate. While monthly active users (MAUs) may fluctuate with market sentiment, quarterly funded users (QFUs), a metric reflecting active users with funded wallets, showed a healthy 13% year-over-year increase in Q1 2025, indicating a more stable base of engaged users. Preliminary Q2 2025 data shows strong transaction volumes, with $444 million through April 30th and May starting solid, suggesting continued momentum.

However, the investment thesis is not without risks. The company's profitability remains susceptible to the inherent volatility of digital asset prices, which can significantly impact the fair value of its treasury holdings and the volume of revenue-generating transactions. While the company aims to leverage volatility, sharp downturns can negatively affect financial results. The reliance on third-party API providers for a majority of revenue introduces counterparty risk. Furthermore, the company has identified and is working to remediate material weaknesses in its internal control over financial reporting, which, until fully resolved and tested, pose a risk to financial reporting accuracy. While the risk related to proposed digital asset broker tax reporting has been mitigated by recent legislative action, the broader regulatory environment for digital assets remains complex and subject to change, which could impact operations and strategy.

Conclusion

Exodus Movement is carving out a significant role in the digital asset ecosystem by championing self-custody and developing innovative technologies that simplify the user experience and enable seamless multichain interactions. The company's strategic pivot towards B2B partnerships, leveraging its robust XO Swap technology, is demonstrating tangible results, contributing meaningfully to revenue growth and expanding its market reach by tapping into the user bases of other platforms. Despite the inherent volatility of the crypto market and increased investments impacting near-term profitability, Exodus maintains a strong financial position, underscored by its substantial digital asset treasury and debt-free balance sheet.

The investment narrative for Exodus is centered on its ability to execute on its growth strategy, driven by technological differentiation, expanding partnerships, and capitalizing on the secular trend towards self-custody and stablecoin adoption. While challenges remain, including market price risk and the need to fully remediate internal control weaknesses, the company's focus on innovation, strategic expansion, and engagement with the evolving regulatory landscape positions it to potentially capture significant value in the growing digital economy. Investors should weigh the company's proven ability to grow revenue and build a robust technological foundation against the backdrop of market volatility and execution risks, recognizing Exodus's potential as a specialized player in the competitive digital asset wallet and infrastructure space.