Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CoinShares International Ltd (CNSRF, Financial) reported strong investor interest in Spot Bitcoin ETPs, with Q2 inflows reaching USD2.75 billion.
- The company successfully completed the sale of its FTX claim, yielding a recovery rate of 116% net of broker fees, resulting in exceptional revenue.
- CoinShares Physical posted one of its strongest quarters on record, with management fees inclusive of staking fees reaching GBP3.7 million.
- The company's asset management platform showed strong top-line performance and solid margins, with total management fees for the quarter at GBP22.4 million.
- CoinShares International Ltd (CNSRF) declared an exceptional dividend following the successful sale of its FTX claim, rewarding shareholders.
Negative Points
- CoinShares International Ltd (CNSRF) faced a significant challenge with the full impairment of its holding in FlowBank, impacting overall group performance.
- The company experienced a net outflow of approximately $131 million in its XBT provider platform during the quarter.
- Despite positive inflows, the CoinShares Physical product suite saw a decrease in AUM by around 12% due to price declines.
- The UK and Italian markets remain closed to retail investors for certain ETP products, limiting potential market adoption.
- Administrative expenses increased due to larger bonus accruals and costs following the acquisition of Valkyrie, impacting overall cost structure.
Q & A Highlights
Q: What is CoinShares' plan regarding its principal investment portfolio? Will the focus be on existing holdings or expanding the portfolio?
A: Richard Nash, CFO, stated that the focus will be more on existing holdings rather than expanding the portfolio. The company has seen a reduction in the portfolio size due to the impairment of FlowBank and the sale of Three IQ. They are not actively looking at new opportunities but will assess them as they arise.
Q: Do you see any indication that larger European markets, such as the UK or Italy, could introduce products for retail investors in the foreseeable future?
A: Jean-Marie Mognetti, CEO, mentioned that the UK market is currently open for institutional investors, but adoption has been insignificant. Until the market opens for retail, significant adoption is unlikely. Italy has a dynamic private banking sector, but no immediate changes are expected.
Q: How do market movements impact CoinShares' trading activities?
A: Jean-Marie Mognetti explained that CoinShares does not take directional risks, and their systems are fully operational, allowing them to weather market fluctuations effectively. There are no midterm issues or potential issues reported.
Q: What are CoinShares' plans for product development in the U.S. market, and how will new funds be differentiated?
A: Jean-Marie Mognetti stated that CoinShares aims to capture a portion of the U.S. market by offering differentiated products. They are focusing on pricing and unique offerings like their Bitcoin mining ETF, WGMI. They plan to introduce innovative products from Europe to the U.S. market.
Q: Why did CoinShares choose to distribute dividends from the FTX recovery instead of using the funds for business expansion?
A: Jean-Marie Mognetti explained that distributing dividends rewards loyal shareholders and reduces the balance sheet's bloating. CoinShares has other means to fund acquisitions and expansions, such as debt and private lending.
Q: How is CoinShares planning to unify the CoinShares and Valkyrie brands?
A: Jean-Marie Mognetti mentioned that a unified branding strategy is in progress, with a new website being deployed to harmonize the CoinShares brand across Europe and the U.S. by the end of the year.
Q: What happened with FlowBank, and is there any chance of recovering the investment?
A: Jean-Marie Mognetti explained that FlowBank faced regulatory challenges in Switzerland, leading to its acquisition. While the chance of recovering the investment is uncertain, CoinShares is exploring possibilities for appropriate investments.
Q: Can you provide more details on the MATRIX platform and its expected benefits?
A: Jean-Marie Mognetti described MATRIX as an advanced algorithmic platform designed to enhance trading efficiency and risk management. It will provide better visibility and fine-tuning of operations, cash management, and margin management.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
