SUI Group Holdings Limited (SUIG) Earnings Call Transcript & Summary

Thank you. Good afternoon, everyone, and thank you for participating in today's conference call to discuss SWE Group's financial and operating results for the second quarter ended June 30, 2026. Joining us today are SUI Group's Chairman of the Board, Marius Burnett, Chief Executive Officer, Douglas Balinski, and Chief Financial Officer, Joseph Jirasi. By now, everyone should have access to the company's second quarter 2026 earnings press release. which was issued this afternoon at approximately 4.05 Eastern Time. The release is available in the Investor Relations section of the company's website at www.suig.io. This call will also be available for webcast replay on the company's website. Following management remarks, we'll open the call up for questions. Please be advised this conference will contain statements that are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. forward-looking statements can often be identified by the use of words such as believe, expect, intend, continue, will, may, should, estimate, potential, or similar expressions. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC, such as the inherent volatility and risk associated with investing in SUI, Do not place undue reliance on any forward-looking statements which are being made only as of the date of this call. Except as required by law, the company undertakes no... obligation to publicly update or revise any forward-looking statements. For important risks and assumptions associated with such forward-looking statements, please refer to the company's SEC filings. During this call, we will also reference certain non-GAAP financial measures, Reconciliations of these measures to the most directly comparable GAAP financial measures are included in today's earnings press release and are also available on the investor relations section of our website. www.suig.io. I will now turn the call over to the company's Chairman of the Board, Marius Burnett.

Thank you and good afternoon everyone. Digital asset markets remain volatile during the second quarter, but the institutional development of the sector continue to advance. Across custody, staking, stablecoins, tokenization, and market infrastructure, the distinction between traditional and on-chain finance is becoming less pronounced. Established financial institutions are increasingly evaluating where blockchain can improve the movement, settlement, and ownership of financial assets. That progression is particularly relevant to the SUI network. We believe the network is moving beyond a period defined principally by technical differentiation and into one where that architecture is supporting increasingly substantive financial activity. For example, the network sustained 297,000 transactions per second finality at 300 milliseconds, underscoring its horizontal scalability. Sui Developer Count has grown to 1,400 and ranks 10th amongst all chains by GitHub activity, reflecting the continued growth of its builder ecosystem. During the quarter, institutional access to Suin tokens continued to expand. Coinbase introduced direct staking, giving eligible users and institutions a more established access point for participating in the network's proof of stake economics. We also saw further evidence of SUI's relevance to tokenized financial markets through the availability of a tokenized private market strategy from Mubadala Capital on the network. We believe developments like this demonstrate that institutional asset managers are not using the SUI network merely as a simple trading venue, but as infrastructure for delivering financial products on-chain. Dewey has also been developing infrastructure to unlock the productive use of Bitcoin's more than $1 trillion in dormant capital. Especially, SUI's native primitive for this purpose lets Bitcoin be used as a verifiable collateral for lending and other financial products, while it remains securely on its native chain. During the quarter, Cumberland, Fluid, SwissBorg joined the growing coalition of partners building on Hashi ahead of its global testnet launch this month. bringing the coalition to more than 20 marquee participants, including BitGo, Woolish, FalconX, and Ledger. the evidence of institutional demand for verifiable on-chain infrastructure that can put Bitcoin's capital to productive use. Network activity continued to scale as well. SUI surpassed 4.5 billion cumulative transactions, reflecting the breadth of applications and user activity developing across the ecosystem. SUI also introduced protocol-level gasless stablecoin transfers, allowing supported stablecoins to move without requiring users to maintain a separate SUI balance for transaction fees. Between May the 10th and June the 10th, the network processed approximately 65 billion of stablecoin transfer volume, which we believe provides an early indication of the demand for low friction payment infrastructure. This is an important improvement for payments and other high frequency use cases because it reduces friction at the point of transaction. A combination of these developments shows the ecosystem advancing across dimensions at once. Institutional access, tokenized assets, payments, infrastructure, and underlying network usage. We believe this reinforces the long-term rationale for aligning SUI Group with the SUI ecosystem. SUI's parallel execution model, object-centric architecture, and low-latency settlement were designed for applications that require high transaction volumes, predictable execution, and composability across financial products. These attributes become increasingly important as blockchain infrastructure is adopted for payments, trading, tokenized assets, and autonomous financial systems. In our view, institutional adoption will ultimately concentrate around networks capable of supporting those use cases reliably and at scale. Turning to our treasury, as of the 3rd of August 2026, we have approximately 109 million SUI tokens. A significant majority of our holdings are staked, generating an estimated annual yield of approximately 1.7% and approximately 5,300 SUI per day. Based on the closing prices of SUI G common stock and SUI on August 3rd, we are trading at an approximate MNAV of 0.72 times. A full MNAV calculation is included in the back of our Q2 2026 earnings PR release before the call. Native staking is an important component of the Treasury, but it is only one component. We are also evaluating opportunities to enhance balance sheet productivity by lending capital to our ecosystem and strategic partners on a risk-adjusted basis. I expanded relationship with Blufin reflects that approach. Blufin has developed a broad financial platform on series networks spanning perpetual and spot trading, lending, liquidity, and vault infrastructure. During the quarter, we lent an additional 4 million SUI tokens to Bluefin, bringing our total commitment to 6 million SUI tokens. In exchange, our participation in certain Bluefin revenues increased from 5% to 11%, payable in SUI. Thank you. The amended agreement has an initial term extending through September 2028. We view the infrastructure as more than a lending arrangement. It gives SUI Group economic exposure to the development of what we believe to be a core financial venue within the ecosystem and creates a return profile that is distinct from passive staking. It also demonstrates the role we believe SUI Group can occupy over time, a source of strategic capital for businesses building meaningful financial infrastructure on the SUI network, where the terms provide an appropriate balance of return, risk, and alignment. Active treasury management also requires a willingness to reduce exposure when conditions change. During Q2, following a reassessment of the risks associated with certain DeFi activities, we unwound those positions and recovered all amounts deployed. We do not regard capital deployments as permanent simply because of the position has been established. Counterparty, protocol, liquidity and operational risks must be evaluated continuously, particularly in markets that are developing rapidly. Separately, as of June 30th, 2026, we have approximately 10 million SUI USD. Stablecoins are essential component of on-chain financial markets because they provide the monetary base for payments, trading, lending and settlement. Our participation in SUI USD is currently strategic rather than a material source of near-term revenue. It is intended to support liquidity and adoption within the SUI-ECAO system while positioning SUI Group alongside infrastructure that could become more economically significant as the network develops. We also continue to selectively allocate capital into high conviction themes at the intersection of digital assets, financial technology and artificial intelligence, where we believe some of the most consequential developments in the GenTech finance are beginning to take shape. One early example is Walrus, a decentralized storage network built on CIVI that allows AI agents to persist and retrieve memory on-chain. Its Walrus memory product recorded its first full month of agentic use in June with more than 3,500 unique agent owners and over 80,000 memory registered by agents. This emerging activity reinforces our view that autonomous systems will increasingly require specialized intelligence and infrastructure designed to support complex financial decision making. Acting on our conviction in the GenTech finance, we invested $3 million through a safe in NL1, an artificial intelligence research company developing frontier artificial intelligence models specifically for financial markets. This Alpha Arena platform was designed as a live benchmark to evaluate whether leading AI models could generate returns using real capital and autonomous trading decisions. The initial results demonstrated the limitations of general purpose models in financial markets and reinforced N of 1's thesis that effective AI-driven trading will require specialized training, infrastructure, and execution capability. NF1 is now developing its own models with expanded reasoning, research, and multi-step execution capabilities. Over time, we intend to evaluate whether those models can be used to support treasury yield and not return generation subject to appropriate testing, oversight and risk controls. We also invested $3 million in recursive superintelligence as part of its $650 million financing round, which valued the company at more than $4 billion. Cursive is developing open-ended algorithms and artificial intelligence systems designed to improve their own capabilities over time. Its work is focused on creating systems that can support continuous self-directed scientific discovery rather than operating within a fixed set of predefined tasks. The company's team includes researchers and entrepreneurs with experience across Open AI, DeepMind, Google Brain, and Meta. We believe that combination of technical depth and long-duration research ambition provides SUI Group with exposure to foundational capabilities that could influence how advanced autonomous systems operate across finance and other industries. N of 1 and recursive address different parts of the opportunity. N of 1 is focused on the near-term application of specialized agentic artificial intelligence to financial markets, while recursive is pursuing underlying capabilities that could define the next generation of artificial intelligence. Together these investments reflect our view that agentic finance will be shaped by both sides of that equation. increasingly capable autonomous systems and programmable financial infrastructure through which those systems can transact. As our activities expand, we are also focused on strengthening the institutional capabilities required to support the next phase of our development. This includes deepening our leadership bench, enhancing financial oversight, and ensuring that our governance and operating structure continue to evolve with the scale and complexity of the platform. The recent appointment of Christina Campbell as an independent director and chair of SUI Group's audit committee is an important example of that effort. Christina brings more than two decades of experience across digital assets, fintech payments and high growth technology companies. She currently serves as chief financial officer of Ratbook and previously served as chief financial officer of Ripple Labs and Pay Near Me. Experience building finance organizations, navigating evolving accounting and regulatory requirements, and overseeing digital assets-related financial governance will be directly relevant as we continue to scale. More broadly, the board is continuing to assess the leadership, governance and organizational capabilities required to support SUI Group's long-term strategy. to ensure that our business has the depth of talent financial discipline and operating infrastructure necessary to evaluate opportunities effectively and manage the balance sheet responsibly Over the past year, SUI Group has progressed from establishing a treasury position to actively enhancing balance sheet productivity through risk-adjusted lending to our ecosystem and strategic partners and selectively allocating capital to technologies that we believe could shape the future of digital finance. Looking ahead, we remain focused on increasing series per share and improving the productivity of our balance sheet to generate attractive long-term returns. We believe these initiatives, coupled with our prudent approach to capital allocation, will enable us to deliver durable value to our shareholders. With that, I'll turn the call over to Doug Polinski, our Chief Executive Officer, to provide an update on our speciality finance operations.

Thank you, Marius, and thank you everyone for joining today's call. I'll provide a brief update on our legacy specialty finance business, where our focus is on actively managing the existing portfolio and protecting the value of the remaining investments. As we have discussed in prior periods, that business was built around providing short-term, non-bank financing solutions and generating returns through interest income, transaction fees, and related investments. While the portfolio is now substantially smaller than it was historically, we continue to apply the same disciplined approach. to underwriting, credit oversight, and portfolio management. During the first half of the year, we received approximately $900,000 of repayments and redemptions from legacy investments. As of June 30th, 2026, our remaining traditional lending portfolio consisted primarily of approximately $2.2 million of non-bank loans measured at fair value. We're continuing to monitor borrower performance, evaluate collateral and available sources of repayment, and work through individual positions to maximize recoveries. Certain borrowers continue to face credit and refinancing challenges, and we are addressing those situations on a loan-by-loan basis while considering the full range of contractual remedies available to us. Given the size and current composition of the portfolio, we do not expect our lending business to be a significant driver of new originations in the near term. We will remain selective, however, and would consider an opportunity where we have appropriate collateral protection, clear visibility into repayment, and a return profile that is appropriate that adequately compensates us for the risk. Although we continue to see selective opportunities in specialty finance, our resources and long-term priorities are increasingly concentrated on maximizing the value of SUI Group through scalable, transparent, and long-term value creation strategies. that, I'd like to turn the call over to our Chief Financial Officer, Joseph Geraci, to take you through our financial results. Joe?.

THANK YOU, DOUG. A QUICK REMINDER AS WE REVIEW OUR SECOND QUARTER FINANCIAL RESULTS, ALL COMPARISONS AND VARIANCE COMMENTARY REFER TO THE PRIOR YEAR QUARTER UNLESS OTHERWISE SPECIFIED. DUE TO THE CONSTANT CONSTANT CONSTANT CONSTANT CONSTANT Due to our strategic shift on July 31, 2025, from our specialty finance business toward blockchain native treasury management, our historical financial condition and results of operations for the period presented may not be comparable. The total revenue and other income for the second quarter of 2026 was $1.2 million compared to $948,000 in quarter two 2025. The increase was primarily driven by the generation of SUI staking revenue and digital lending interest income from our SUI taxing. digital asset treasury strategy. Our second quarter, 2026 results include approximately $16.6 million of non-cash losses on digital assets and receivables, consisting of 18.9 million in realized losses, partially offset by an approximately $2.3 million unrealized gain. The realized loss includes a $14 million loss recognized in connection with the additional SUI loan to Bluefin and a $2.4 million loss related to the return of SUI tokens from Galaxy Digital in its capacity as our asset manager. Realized gains and losses were primarily driven by mark-to-market adjustments due to the change in the price of SUI during the period. These U.S. GAAP required accounting treatments reflect changes in estimated fair value and strategic deployment of digital assets and do not represent an actual cash flow. outflow or impact our liquidity. As a result, total operating expenses, including the aforementioned non-cash losses on digital assets and receivables in quarter two, 2026, were $20.1 million compared to approximately $2,000 in quarter two, 2025. EXCLUDING THE NONCASH LOSSES ON DIGITAL ASSETS AND RECEIVABLES, OPERATING EXPENSES FOR THE SECOND QUARTER OF 2026 WERE $3.4 MILLION. NET LOSS FOR THE SECOND QUARTER OF 2026 WAS $18.9 MILLION OR 23 CENTS PER DILUTED SHARE COMPARED TO NET INCOME OF $1.4 MILLION. OF APPROXIMATELY $677,000 OR 11 CENTS OF APPROXIMATELY $677,000 OR 11 CENTS PER DELUDED SHARE IN QUARTER PER DELUDED SHARE IN QUARTER TWO, 2025. As of June 30th, 2026, cash and cash equivalents were $3.1 million compared to $21.9 million as of December 31, 2025. This concludes our prepared remarks. We will now open it up for questions from those participating in the call.

back to you. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Brian Kingslinger with Alliance Global Partners. Please go ahead.

Hi, this is Kevin for Bryan. Thank you for taking our questions. First question is, while the price of suey is being pressured, what are management's top two or three priorities?.

Hey Kevin, Marius. Yes, I mean look obviously our priority for a long time has been looking at risk. across the whole business. And I think we've taken a very disciplined approach to risk. You know, we maintain a lot, quite a lot of cash on our balance sheet so that we're not under pressure to have to sell suey or to sell, you know, sell shares in the market to fund the business. Uh, And then, you know, we haven't taken any debt on the business, so we're in a very comfortable position from an operating perspective. I think the second thing is looking at yield return. We continue to look at... restricted ways to get significant return on the balance sheet. Obviously, as you know, we removed all three tokens from DeFi in the last quarter, the previous quarter. where we expanded the partnership with Blufin. That loan is yielding approximately 5% to 6%, but has a lot of embedded optionality in it if DeFi returns to the level that it was, and that's on a bilateral basis that we did that. We're also looking at different lens to market makers and institutional lenders to.

continue to enhance return. Got it. Thanks. And then I guess on the on the bluefin partnership, um, that you just spoke about. What drove the decision to increase the loan to 6 million SUI and raise your revenue share to 11%? And then what milestones or growth on the Bluefin platform would drive more material contribution to the company?.

Yes, so the Bluefin platform bought the biggest lending business on the Sui ecosystem called SuiLend. It was part of an acquisition. So the extra lend was part of us actually financing them to actually buy SuiLend, which is the biggest lending platform. and increased the size of their business quite dramatically. It wasn't just a single transaction. So, you know, it was on a risk-adjusted basis. They were increasing revenues within their business. And we think that consolidation in these markets generally across the board is happening more and more. every day. So that actually, you know, they can be much bigger businesses in the longer term as they add product sets. And we felt it was a very good acquisition how they negotiated it.

Got it. Makes sense. And then you mentioned earlier that you're a You talked about it a little bit prior, but with the crypto prices and particularly the pressure on SUI, what is the demand like for similar partnerships to that Bluefin deal that can result in outsized yield? And then has that pressure on SUI resulted in the pipeline shrinking, or are there any delays in that?.

There are opportunities around, but the key for us is as you say, risk. We need to be certain that we've got the right structures in place and that the company has the right balance sheet you know we don't look at this as a lend in any form as an equity investment we expect at the end of the term if we want our sweet tokens back that we will receive them back and that's why we take a deep deep approach to looking at risk now obviously with the sui price being down and general defy across all different blockchains being dramatically reduced in the ecosystem number one because pricing's down and then number two from q1 you know there were quite a lot of hacks in the market that definitely seems to be getting under control slowly as we go along the the hacks i mean there are still one or two that have happened in the last quarter but certainly you know a lot of the these protocols are tightened up and are using, you know, there are a lot more good people in the world than bad people. So, you know, the same way AI is used on a negative basis for security, you know, it's being used on a positive basis to enhance security as well. So, you know, we do see the opportunities, but they, I suppose, because of our risk-adjusted approach of how we look at this and how we look at risk, a lot of them don't meet the criteria to do that. And that's why we look at what we call more like an institutional lending basis, where we develop relationships with market makers and institutional business. that have better balance sheets to take on that risk. It may mean slightly less yield versus going into default markets, but from a risk perspective, we believe it makes more sense.

Got it. That makes sense. And then last question. As of some June reports, the Sui blockchain was failing considerably on some of the competing smart contract blockchains like Ethereum and Solana. What do you think can be done to improve the churn in users on chain? And then would that be Something like building more DApps, greater adoption of stablecoins, or something else.

Look, I think it's just that SUBI's got an extremely focused team and business. There are approximately 1400 developers on the chain at the moment and it's in the top 10 blockchains. I think the team's been, you know, Danny put out a great blog post and the team's been key areas that they've been focusing on. You know, stablecoin volumes hit all time highs, you know, in the last month um you know the speed of the blockchain they're able to maintain 297 000 transactions per second um There's a lot of work that's being put into privacy, transactions on chain. And so I think there's some very exciting projects. And I think the key longer term is the outlier here, which can really move the crypto markets, in my view, is, you know, GenTech commerce and GenTech finance. And for, you know, it's a, like we've always said, those sectors are primed to use blockchains and payments and wallets and rails to operate. You know, in my view, it's a question of not if, but when that breakout app or, you know, a company will use it. Got it. Makes sense. Thanks a lot for answering. I think that needs one of the major AR companies to demonstrate it as a proof case.

Got it. Thank you very much. Our next question is from Gareth Isida with Kantor. Please proceed with your question.