Sol Strategies Q2 2026 Earnings Call - Building a Solana Infrastructure Stack

Beau, Conference Call Moderator: Good afternoon, everyone. Welcome to today’s Sol Strategies’ fiscal 2nd quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s prepared remarks, we will conduct a question-and-answer session. On the call with us today is Mr. Michael Hubbard, Chief Executive Officer, Mr. Doug Harris, Chief Financial Officer, and Mr. Steve Ehrlich, Chief Strategy Officer. At this time, I’d like to turn the conference over to Mr. John Ragozzino with ICR. Please go ahead, sir.

John Ragozzino, Investor Relations, ICR: Thanks, Bo. Good afternoon, everyone, 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 SEDAR+ filings for a detailed risk factor 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. 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 Strategies’ CEO.

Michael Hubbard, Chief Executive Officer, Sol Strategies: Thanks, John. Good afternoon, everyone, and thank you for joining us. The first half of our fiscal year 2026 covered October through March. 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, STKESOL. We acquired the Zyga Zero-Knowledge technology through the Darklake transaction and signed a definitive agreement to acquire Houdini Swap. We’re going to walk through all of it. On the board and leadership side, we added crypto industry veteran Laszlo Borsai and public company veteran Dennis Logan as directors. Most recently named Jon Matonis as chairman. Jon 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 StakeSol, 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 2 days to unstake, 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 in DeFi applications, or deployed for additional yield, all while the underlying SOL keeps earning. What’s unique about STKESOL is that it allocates SOL across validators using our own Wiz Score methodology from stakewiz.com, which we own and operate. The Wiz Score 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, STKESOL had approximately 768,000 SOL deposited into the protocol, equivalent to roughly $61 million or CAD 83 million 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 Sol Strategies managed validator. On the technology side, we acquired the assets of Darklake Labs in April 2026, including the intellectual property behind Zyga, a zero-knowledge proof engine built natively for Solana. The team has joined us as well. Vitor Py 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. Zyga 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. 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 its trailing twelve-month transaction volume touched Solana. We expect to close by the end of May. What we’ve 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 STKESOL, we moved up into user-facing products, inserting ourselves between end users and validators and creating deeper touchpoints across DeFi. With the Zyga technology, we stepped further up into product and technology development, adding privacy-preserving execution capability that we believe has broad applications.

With Houdini Swap, 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.

Steve Ehrlich, Chief Strategy Officer, Sol Strategies: 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, Solana. The product categories keep expanding from equities, options, and futures to prediction markets and perpetual futures. Volume keeps growing, 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 this dominant financial infrastructure layer and what’s driving our acquisition strategy. The Darklake 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.

Doug Harris, Chief Financial Officer, Sol Strategies: Thanks, Steve. Good afternoon, everyone. I’m going to start with a quick picture of our balance sheet. As of March 31, 2026, we had approximately CAD 60.6 million of cryptocurrencies, CAD 22 million of intangible assets, and about CAD 350,000 of cash on our balance sheet. During the period, we also reduced our liabilities by approximately CAD 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 CAD 22 million loss, and for the three months ended March 31, 2026, it was a CAD 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-party validators for the six-month period was approximately CAD 3.3 million, and for the three-month period, approximately CAD 1.2 million.

On the income statement, our six-month numbers include some significant non-cash expenses totaling approximately CAD 77 million, which consist of a CAD 12.1 million write-down of our validators, CAD 4.7 million of amortization expense on the validators, CAD 2.2 million of share-based compensation expenses, CAD 1.7 million of interest expense, mostly paid in stock, and a CAD 56.5 million revaluation loss on digital assets. The latter reflecting the decline in price of Solana from approximately $208 U.S. at the beginning of October 2025 to approximately $83 U.S. at March 31, 2026. Analyzing our existing operating business shows that at lower Solana prices, our six-month operating loss on the business is approximately CAD 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 believe 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.

Michael Hubbard, Chief Executive Officer, Sol Strategies: 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.

Beau, Conference Call Moderator: Thank you, Mr. Hubbard. Ladies and gentlemen, at this time, if you do have any questions or comments, please press star 1. If your question has been addressed, you may remove yourself from the queue by pressing star 2. Once again, that’s star 1 for questions, and we’ll pause 1 moment to allow everyone a chance to respond. We’ll go first this afternoon to Gareth Gacetta at Cantor Fitzgerald. Gareth, please go ahead.

Gareth Gacetta, Analyst, Cantor Fitzgerald: Hi, guys. Thanks for taking the question. I wanted to touch on the kind of products and timelines for Darklake and Houdini. Could you maybe dive a little deeper on where you see kind of the greatest opportunity from a product perspective in the near term and also which of those products you might see the greatest monetization opportunity from?

Michael Hubbard, Chief Executive Officer, Sol Strategies: Yeah, absolutely. Thanks, Gareth, for your question. Darklake is really exciting for their Zyga privacy engine and that unlocks multiple different use cases. When we look at Houdini, there are essentially 2 or 3 core products under the hood. They have the routing infrastructure across 100+ blockchain networks and over 1 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 Zyga 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. 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.

Gareth Gacetta, Analyst, Cantor Fitzgerald: Great. That’s super helpful. 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?

Michael Hubbard, Chief Executive Officer, Sol Strategies: Absolutely. That’s a great question as well. I don’t want to get too technical here, but essentially at the moment, we’re sitting at effectively 2 layers here. With the validators, we’re sitting at the core of the Solana network, which means that we are processing transactions, not just our own, but of the entire network whenever we have leader slots. About 1% of the network, we’re processing blocks. That gives us first look at those transactions, right, and those blocks and the ability to include transactions there. 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’re providing users access to yield through the Solana blockchain staking layer.

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 Houdini 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.

Gareth Gacetta, Analyst, Cantor Fitzgerald: Great. That’s super helpful. Thanks for taking my questions.

Beau, Conference Call Moderator: Thank you. Just a quick reminder, star 1, please, for questions today. We’ll go next now to John Roy with Water Tower Research.

John Roy, Analyst, Water Tower Research: Yeah. These 2 acquisitions are pretty significant. You’re really changing the company to more of an infrastructure middleware company. Am I reading that right? Is that where you guys are headed?

Michael Hubbard, Chief Executive Officer, Sol Strategies: Yeah. Thanks, John. That’s exactly right. We started with the 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. 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 of swapping between over 1 million supported tokens, swapping within the same blockchain, swapping between different blockchains, and then adding onto that the privacy products, which are important both to end users but also to institutions. For us really, we’re seeing this as a vertical expansion and integration of all these layers.

John Roy, Analyst, Water Tower Research: Yeah. Okay, excellent. You’re looking to do this without, you know, too much of a significant investment? I mean, is this gonna be positive to the P&L within not too long a time?

Michael Hubbard, Chief Executive Officer, Sol Strategies: That.

Steve Ehrlich, Chief Strategy Officer, Sol Strategies: I’ll take that one, John.

Michael Hubbard, Chief Executive Officer, Sol Strategies: Do you wanna speak to that, Jim?

Steve Ehrlich, Chief Strategy Officer, Sol Strategies: I’ll take that one. John, yeah, these, you know, the idea when we executed this transaction, and again, you know, set to close by the end of the month, is to add significant revenue to our business and the profits to go with that. The transaction details as set out were CAD 18 million, with CAD 4 million of stock and set up in multiple payments over time, with revenue that we expect on this business to be CAD 12 million-CAD 13 million a year. We set up an earn-out on this business too, where the earn-out, the floor of the earn-out is CAD 2.5 million a year. We definitely believe that this business is going to be profitable and revenue generating for the business.

Another piece that, you know, I wanna touch on, in addition to what, CAD two and a half million of EBITDA, let me clarify that. Another piece I wanna, you know, just add on to some of these synergies Michael said is the existing Houdini Pay business and the Zyga technology to combine with the privacy aspect of sending money between wallets is an important aspect of this too. We see a tremendous opportunity to expand the Houdini Pay business as well.

John Roy, Analyst, Water Tower Research: Great. Thanks so much for the answers, gentlemen.

Beau, Conference Call Moderator: Thank you. Ladies and gentlemen, just a final reminder, star one, please, for any further questions this afternoon, and we’ll pause for just 1 moment. Gentlemen, it appears we have no further questions today. Mr. Hubbard, I’d like to turn things back to you, sir, for any closing comments.

Michael Hubbard, Chief Executive Officer, Sol Strategies: 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.

Beau, Conference Call Moderator: Thank you, Mr. Hubbard. Again, ladies and gentlemen, thank you for joining the Sol Strategies’ fiscal second quarter earnings call. Again, thanks so much for joining us. We wish you all a great afternoon. Goodbye