ETHZilla Corp (ETHZ) 2025 Q3 法說會逐字稿

Hello and welcome to ETHZilla Corporation's third-quarter 2025 earnings conference call. (Operator Instructions) This call is being recorded on November 14, 2025, and a replay will be made available on the Investor Relations page of ETHZilla's website at Ezilla.com later today.

I will now turn the call over to John Kristoff, Senior Vice President Corporate Communications and Investor Relations.

Thank you, Megan. Hello, and thank you for joining ETHZilla's third-quarter 2025 financial results conference call.

Joining me on the call today are McAndrew Rudisill, Chairman and Chief Executive Officer; and John Saunders, Chief Financial Officer. We hope you've had an opportunity to review our third quarter 2025 financial results press release that we issued earlier this morning. We've also posted an earnings presentation on the IR page of our website.

As a reminder, some of the matters we'll be discussing on this morning's call are forward-looking in nature. Please keep in mind that actual results could differ materially from what is expressed in these forward-looking statements.

ETHZilla's assumes no obligation to update the information, and we encourage you to refer to our more recent filings with the SEC for a discussion of factors that could cause actual results to differ materially from these statements.

During our call, we may also reference certain non-GAAP financial measures which we believe provide useful information for investors. A reconciliation of these non-GAAP measures to the corresponding GAAP measure can be found in our press release file today and on the presentation on our website.

With that, I'll turn the call over to McAndrew.

Thank you, John, and good morning. Thank you for joining us today for each ETHZilla's third quarter financial results call. This marks our first call as ETHZilla's, and I'm proud to share our initial results and outline how we're building a strong foundation for long-term value creation.

ETHZilla' is a technology company connecting traditional finance with decentralized finance through the Ethereum network. We hold and deploy ETH on our balance sheet to generate on-chain yield and support the development of tokenized real-world assets.

Our platform strategy combines ETH accumulation and superior yield generation through restaking protocols with regulated infrastructure for trading tokenized assets, allowing institutional capital to participate in Defi under public company compliance and oversight. This model is what makes ETHZilla unique. We are not a digital asset treasury company. This was a transformational quarter as we underwent our strategic rebrand, officially becoming East Zillah and divesting our legacy biotech assets.

During the quarter, we strengthened our balance sheet, completed three financings, deepened our partnerships across D5, and began deploying ETH to generate yield.

We raised approximately $931 million through a $425 million private placement, a $156 million convertible note, and a subsequent $360 million convertible note. The funding moves us from concept to execution by supporting e-purchases, deployments, and the infrastructure behind tokenized assets and on-chain yield generation.

Supporting the first pillar of our growth strategy, we purchased approximately 102,000 ETH at a cost of approximately $415 million and we quickly put our ETH to work. We initiated the second pillar of our strategy to generate superior yield on our ETH holdings. Through our partnership with Electric Capital, they deployed our ETH with Ether FY and Puper Finance.

Beginning in mid-August, we deployed over $300 million across leading restaging protocols and generated $4.1 million in the second half of the quarter from these layer two deployments. These initiatives establish our foundation for recurring on-chain cash flow, demonstrating how we can use our balance sheet to generate incremental returns that support ETHZilla's long-term growth.

By directly deploying corporate capital into Ethereum-based yield protocols with institutional oversight. We're leading by example and demonstrating how a public company can bridge traditional finance and decentralized finance responsibly and profitably.

It is important to partner with these L2 protocols in order to enable the 3rd and most important component of our strategy. Creating a regulated exchange infrastructure for tokenized assets.

Our strategic investment and partnership with liquidity.io marked a foundational milestone. Liquidity.io is one of the first regulated marketplaces licensed to issue and trade tokenized private assets.

We believe that our 15% stake in the parent company of liquidity.io and exclusive right to list Ethereum L2 tokens on liquidity exchange positions EL at the forefront of the movement to bring private credit, real estate, and other yield generating assets on chain.

Simultaneously, Liquidity.io's partnership with RF Lafferty will make it one of the largest pre-IPO equity marketplaces in the world. This strategic partnership provides us with the infrastructure, compliance framework, and distribution network to bring real-world assets directly into decentralized markets.

It is important to note, we have a right of first refusal to continue to increase our equity position in liquidity.io as more capital is raised. We believe the migration of assets to the Ethereum network is no longer speculative. It has become inevitable based on the structural advantages the Ethereum network provides.

Advantages such as global accessibility, programmable settlement, transparent ownership, and composability allowing assets and liquidity to move seamlessly between applications. These along with improved US regulatory clarity like the Genius Act and growing institutional adoption from some of the largest financial institutions in the world, give us confidence in the future of tokenized real-world assets as a core component of global markets. Our focus now turns to execution and realizing the potential growth and recurring cash flow from these strategic initiatives.

In the coming weeks, we expect to begin listing the first Zilla managed tokenized real-world assets on liquidity.io. This is a culmination of all our hard work in building out the right foundational operating model. We believe it demonstrates our full flywheel in action from acquisition and token creation to yield distribution. We expect to replicate this process across multiple asset classes, establishing a recurring and scalable model for on-chain income and direct cash flow to ETHZilla.

Since September 1, we repurchased about 2.1 million shares of our common stock at a material discount to NAV. We are aware of the value of the assets on our balance sheet, and we are also conscious of our recurring and growing cash flow stream. The best way to normalize this is through the prudent and op opportunistic use of share repurchases.

As we scale deployment, risk management remains central. Our deployments are executed by Electric Capital, one of the industry's most experienced digital asset managers and among our largest shareholders. Electric capital provides rigorous due diligence, diversification, and ongoing monitoring across resting and D5 protocols, giving us the confidence to deploy capital productively while maintaining institutional grade standards of control, compliance, and transparency. This structure ensures both professional management and full alignment of interest between ETHZilla and our investors.

While the tokenization of global assets is still in its early stages, we believe ETHZilla is uniquely positioned to lead this charge and that we have the right foundation and partnerships in place to allow us to be the first movers in this space. We believe the market is at an inflection point and that there's going to be a significant differentiation in business models across this entire space.

We stand at the forefront of this change as we embark on bringing the first real-world assets on chain. We remain extremely focused on building recurring cash flow. It is an exciting time to be in this space, and I'm excited to speak more about what we have planned in the coming weeks.

Before turning the call over to John, I want to take a moment to recognize and congratulate him on his promotion to Chief Financial Officer. John is a talented strategic financial leader with decades of experience in finance, accounting, treasury, capital, strategy, and operational transformation. The Board and I have the highest confidence in John's ability to play a key role in scaling ETHZilla as a recognized leader in bridging traditional finance and Defi platforms.

And with that, I'll turn it over to John.

Thank you, McAndrew, and good morning everyone. I'll take a few minutes to walk through our financial performance for the quarter, review key balance sheet metrics, discuss cash flow and capital allocation, and close with our outlook for the remainder of the year.

Looking at our results for the third quarter, ETHZilla generated revenue of $4.1 million from staking yields on our Ethereum holdings and incentive tokens earned through liquid staking activities. For many periods prior to our transaction, 180 Life Sciences generated no revenue. This is the first quarter of yield generation following our strategic pivot into digital asset management earlier this year.

It is important to note that native staking activity only commenced in late August and liquid staking activity did not commence until mid-September. Even so, our average yield rate on staked ETH during the quarter was approximately 7% annualized, showcasing the company's strategy to deploy ETH on chain for higher risk adjusted returns.

The Q3 yield is significantly higher than typical native staking yields. We are in discussions with several additional protocols for potential collaboration similar to Puffer, where ETHZilla would serve as a staking capacity and growth partner in exchange for token-based incentive structures. This remains a key part of the company's strategy to acquire additional ETH units and deploy them on chain to generate higher yields and significant free cash flow in the business.

The company also recorded approximately $940,000 of interest income and dividend income from the USD Treasury. Selling general and administrative expenses for the quarter were $224.6 million, reflecting several large non-recurring and non-cash items associated with our corporate transformation.

The largest items include approximately $209 million in stock-based compensation, primarily tied to the initial issuance of warrants and associated with our rebranding and finance transactions and professional fees and underwriting expenses of $8.6 million in connection with the convertible note sales.

Approximately $174 million of the stock-based compensation incurred in the quarter arose from the strategic advisor warrants issued in the pipe financing transaction. These warrants are currently out of the money. The GAAP stock-based comp expense for these warrants issued for services is determined by using a Black Shoals model that is heavily driven by the grant date share price. And as the company's stock price had experienced a substantial run up in price prior to the grant date, the stock-based compensation is distorted by the grant date share price.

Other income for the quarter was approximately $11.8 million, consisting of $7.5 million realized and unrealized gains on digital assets, $3.7 million of change in fair value of convertible debt, as well as $940,000 of interest income and dividends from our cash and cash equivalents.

Net loss from continuing operations for the quarter was $208.7 million compared to a net loss of less than $1 million in the same period last year, reflecting the impact of these one-time non-cash expenses. Net loss from discontinued operations was $8 million. The company has taken an impairment charge to write off the value of the prior company's assets.

The company recorded $8.5 million in adjusted EBITDA, representing a significant increase in year-over-year adjusted EBITDA compared with Q3 2024 adjusted EBITDA loss of $1.35 million. We define adjusted EBITDA as an EBITA plus non-cash stock based compensation, expense related to integration costs for completed acquisitions and potential targets, one-time costs for professional fees related to the preparation for potential offerings that have been expensed in the quarter, and non-recurring or one-time charges such as impairment or restructuring costs.

As of September 30, 2025, Eilla reported total assets of $1.01 billion, a dramatic increase from $12.8 million at year end 2024. Following our conversion into an Ethereum-based financial technology company, We held $1880.9 million in digital assets including raw ETH, native staked ETH, and incentive tokens earned from ETH Validation Capacity Services.

We also recorded staking receivables of $257.6 million, which fact each deployed on-chain and liquid staking activities. We ended the quarter with $558.9 million in cash and cash equivalents, providing substantial flexibility to execute on our growth and capital return strategy.

The USD Treasury is expected to earn yields of approximately 4.25% annually and approximately 2.25% net of interest expense and will contribute significantly to our free cash flow. Total liabilities were $564 million driven by the convertible debt of $496 million a net of fair value and approximately $50 million of collateralized loans. Subsequent to the quarter end, we repaid approximately 50% of the collateralized loan balance.

Our net asset value stood at approximately $445 million or roughly $27.79 per share on September 30, 2025. During the first nine months of 2025, net cash increased by $554 million, primarily driven by $825 million in net cash provided by financing activities, including the issuance of convertible instruments and equity raises tied to our ETHZilla restructuring.

We repurchased approximately 2.1 million shares since September 1, totalling $46.3 million as part of our previously announced repurchase program, reflecting management's confidence in the long-term value of our stock.

Turning to our capital allocation strategy, our priorities remain the same acquiring ETH and maintaining a strong liquidity position, scaling ETH yield operations, preparing for asset tokenization, and optimizing our capital structure for robust growth. We believe strategic repurchases of the company's stock will drive the company's long-term net asset value growth.

Looking ahead to the fourth quarter, we anticipate a Q4 yield run rate in the 3.5% to 4.5% range consistent with current necro economics. In the coming weeks we will also commence tokenization of select digital and real world assets under our EZilla platform which we believe will eventually generate returns well in excess of our ease staking yields.

As these initiatives ramp to the end of the year, we expect to have better visibility into the tokenization businesses run rate and growth trajectory exiting Q4. Accordingly, we will not be providing a formal 2026 outlook until our Q4 2025 earnings call, at which point we expect to offer a more comprehensive view of our consolidated revenue model and profitability targets.

To summarize, Q3 marked a transformative quarter for each ETHZilla from a traditional biotech entity to a fully capitalized digital asset platform with over $1 billion dollars in total assets and in excess of $4 million in third quarter revenue. We are executing from a position of strength with a clear strategy to create value by diversifying across on-chain protocols to optimize yield and mitigating counterparty and smart contract risks.

We remain focused on accumulating e, generating significantly higher yields than native staking activities, tokenizing real world assets, and executing a disciplined capital strategy. We have a growing pipeline of opportunities to utilize the Ethereum blockchain to generate yields and disrupt traditional finance processes. Thank you.

And with that, I'll turn it back to McAndrew for a further discussion of our expansion plans.

Thank you, John.

We set out to reimagine how a public company could connect institutional capital with decentralized finance through Ethereum. In our inaugural quarter as ETHZilla, we successfully navigated this strategic operational shift, raising the capital we needed, putting ETH to work on chain, and securing a regulated path to tokenize and list real world assets on chain.

Our advantage is structural. We hold and deploy ETH as a productive balance sheet asset. We operate with a best in class governance structure, and we partner with and invest in regulated market infrastructure so institutions can participate with confidence.

As tokenization expands, we intend to originate, tokenize, distribute, and service assets at scale. We believe this shift will accelerate over time because the economics and transparency are better for both asset owners and investors. Our plan is simple scale deployments with discipline, launch tokenized assets, and repeat across categories with recurring distributions.

And maintain alignment through rigorous risk management and prudent capital allocation, including continued willingness to repurchase stock when it is accretive.

I want to thank our team, our partners, our shareholders, and the board. Your support allows us to execute with the necessary speed as this market rapidly evolves. We're confident in the strategy we've built and believe ETHZilla is primed to be a leader in this space. We look forward to continuing the conversation and thank you all again for joining us today.

Operator will now open up the call for questions.

(Operator Instructions)

Spencer Anson, Susquehanna.

Great, thanks guys, and congrats on the promotion, John. I guess if I could just step back and ask, what types of assets is he planning on tokenizing and when can we expect to see that happen?

Yeah, it's a great question. We have. A pretty large queue of assets, that we put in place to tokenize, and we've been actively working on it, over the last year. So I have a pretty lengthy background in aerospace. There's a very, High amount of return that you can generate on aerospace assets. So, and these are all securitized assets already, so that that's one place that we're going to go very early.

The second area that we're focusing on is, consumer credit receivables. These are also already, securitized in very large packages on Wall Street. So, we have two different platforms that we're working on, for these consumer credit receivables. All these generate, high single-digit to low double-digit yields and are pretty high credit quality.

And then we've been working on real estate, for quite a while, so I think you'll you'll see that come onto the platform. And then there's multiple different private equity, platforms that we're looking to partner with to bring their funds onto the platform.

Okay, great, and as a follow-up, the tokenization is really a fascinating topic. Can you just walk through the business model, how do you expect to generate, how do you expect to scale the business. And what kind of capital is required to get the tokenization business off the ground?

Okay, a lot of good questions. So, first of all, the. The TAM and all these markets that we're working on is Enormous, it's li.

Trillions of dollars collectively all around the world. And what's interesting about it is Wall Street is already doing a lot of this business, but it's only accessible to institutional investors at extremely large scale. A lot of these securitizations occur at a minimum of $200 million to $500 million. And so what we're doing is we're taking packages of these same assets, and we're going to be able to tokenize them in in pools of, $25 million to $100 million. Dollars and and what type of capital is required is we will have to on balance sheet, some percentage of the initial seeding of these tokens, but then once the tokens are opened up on liquidity, it will then allow institutional investors and accredited investors to then invest in the tokens, and from that point forward they they can effectively scale into.

Really any amount of capital they want as as long as we continue to provide the conduits to put the assets into the tokens. And then in terms of how do we make money doing this, there there's quite a few ways. Number 1, we make money holding the assets that generate the yield in these tokens. 2, we make money from managing the tokens, and then 3, there's a carry structure similar to the private equity model or incremental capital that's deployed in each of the tokens. We take a percentage of the yield that's generated from the assets inside the token, so, that, that's what's asymmetrically scales the cash flow of the business as the token model expands.

All right, great. Andrew, John, thanks so much, and it's exciting stuff. Looking forward to watching how the company progresses through the coming quarters. Thanks.

Brian Dobson, ClearStreet.

Hey, good morning. As you're looking out over the competitive landscape, but what do you think differentiates ETHZilla when you're looking at your competition, and then I guess as a follow-up to that, the treasury space is becoming a little bit more crowded, how do you view that? Do you think it's better for the industry or how are you thinking about call it increased competition in the space?

Yeah, hey Brian, first of all, I'd say I, we just don't consider ourselves a treasury at all. We have Ethereum and we have a stake with, partners for, strategic reasons, particularly because there's going to need to be some, collateralization associated with the tokens that we created on liquidity.io, but we really view our competition as a figure and securitize.

I mean, we are in the, Tokenization business and liquidity is the focus of what we're doing and most of the cash flow and revenue that we're going to generate going forward is going to be generated from the creation of these Ethereum L2 tokens, based on real world assets. So we will opportunistically continue to acquire it, when the, if the opportunity presents, but I mean the way for us to make, the most money in the future is to bring billions of dollars of assets, onto the lie platform.

Thanks, and then just as a quick follow-up, do you think your initial focus will be more in publicly traded companies or in private companies looking to tokenize certain securities?

We've been working with both. So some of the largest public companies in a variety of different spaces are pretty interested in working with us, and I think there's opportunity on the private side too. I mean, the beauty of this business model is that you can, within a certain scale size, you can tokenize anything down to a $10 million asset up to a billion dollar asset. So we just have to be selective about the quality of assets that we bring onto the exchange. And we're and we're being really focused on just High yield generation assets relative to the risk profile.

Mark Palmer, Benchmark.

Yes, good morning and thanks for taking my questions.

Mark, are you with us? Your line is muted.

Yes.

How do you think about the interoperability between ETHZilla's tokenization platform and various existing Dfi protocols, especially insofar as that the company is effectively creating a link between Tradfi and Defi for.

Institutional investors. Mark, that's a great question. It's a complicated question, and we're working through that right now. So. Defi has done a tremendous job creating lending protocols for various digital assets all around the world, and what the bridge that's going to get created, which is where I think Wall Street is going as a whole, is that tokenized real world assets that live on digital asset exchanges. Are going to have the same liquidity profile as digital assets on exchanges like Coinbase or or Binance today. And so what we're going to have to do is set up relationships like we've already done with Ether FY and Puffer ETH and other L2 staking protocols, so that the tokenized real world assets.

Ultimately get a collateralization benefit in the Defi world. And so to simplify it, what I'd say is like it similar to having a portfolio margin line on your stock account, if you own a tokenized real world asset, you're going to be able to get some collateral release on that to make other investments, and you also may be able to release it into ETH and And generate incremental yield by holding that E in addition to the investment that you have in the tokenized real world asset.

And if you think about that, it's extremely powerful because it basically allows you to amplify the capital you have at work on chain by owning real world assets that are cash flowing.

Thank you. That's very helpful. And I just one follow-up question.

You posted an annualized yield of 7% on your staked ether, as was mentioned, this is just the early going in terms of that deployment. How do you think about what is feasible in terms of the yield that you could be earning on the ether that you do stake, do you think about a maximum bound there that's possible?

Okay.

So like everything in. The world, this is a risk re reward question. And we took a lower risk strategy initially on our eth staking, and so, To get a higher yield on our ET, we need, number one, we would need to deploy new ETH to generate the high single-digit yield like we did this quarter, because we received token incentives from our partners to generate that yield, and so.

I think the stabilized yield, like we said in our release, is kind of 3.5% to 4.5%, which is above the normal native staking yield by partnering with the current L2 incentives. But if we invest in new L2 partners like John mentioned in during the call, then we can generate 7.5% to 11% on ETH, but it does require us to buy more ETH to get that higher yield, and given where the stock is trading, it's more creative for us to buy the stock than it is for us to buy ETH right now, and that, that's the delta on, where the yield on ETH will be in the future for us, but we have the capacity to make pretty substantial returns on ET, and I think strategically we are thinking about which L2 partners we want to be partnered with.

Which circulates back to the tokenization protocols on liquidity because we need partners that can help us on the exchange side.

That makes sense. Thanks very much.

Yes.

(Operator Instructions)

There are no more questions at this time. I would now like to turn the call over to John Kristoff for closing remarks.

Thank you, and thank you all for joining our call this morning. As always, if you have additional questions, please feel free to reach out to me directly at IR.Ezilla.com.

Thank you so much.