Solana (HSDT) Q1 2026 Earnings Transcript

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DATE

Friday, May 15, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Choon Wee Chee
• Director and General Partner, Pantera Capital — Cosmo Jiang
• Chief Financial Officer, Treasurer, Secretary, and Chief Operating Officer — Madelene Gani

TAKEAWAYS

• Revenue -- $3.6 million, driven by $3.4 million in staking revenue and $0.2 million in other revenues, compared to $49,000 in the prior year's first quarter.
• Gross Profit -- $3.4 million, versus a gross loss of $72,000 for the first quarter of 2025.
• Cost of Revenue -- $180,000, reflecting higher staking-related costs aligned with increased staking activity.
• General and Administrative Expenses -- $5.2 million, up from $3.9 million, attributed to operational expansion under the digital asset treasury strategy.
• Operating Expenses -- $103.1 million, including noncash unrealized digital asset loss of $89.2 million, a $7 million realized capital and digital asset loss, and $1.7 million unrealized loss on a digital asset fund investment.
• Net Loss -- $99.8 million, or $1.30 per share, compared to a net loss of $3.8 million, or $382.29 per share, in the same quarter last year.
• Staking Yield -- 6.9% average net staking yield, outperforming the system-wide average of 6.0% by 90 basis points.
• Staking Rewards -- 32,500 Solana tokens earned, lower than 34,000 tokens generated in the previous quarter.
• Solana Holdings -- 2.37 million SOL tokens held as of May 12, 2026.
• Cash and Equivalents -- $4.4 million on the balance sheet at quarter end.
• Total Assets -- $200.7 million, comprising $4.4 million in cash, $21 million in current digital assets, and $172.8 million in longer-term digital asset positions.
• Share Repurchases -- $3.5 million during the quarter and $5.0 million year-to-date, financed by strategic SOL sales executed at prices below NAV per share.
• Capital Raise -- $8 million in late April through an equity offering priced at $2.60 per share, or approximately 1.1x mNAV, representing the highest multiple of NAV capital raise by a Solana digital asset treasury since early 2025.
• Diluted Share Count -- 82.5 million shares as of March 31, 2026, increasing to 86.0 million as of May 12, 2026, inclusive of common shares and in-the-money warrants.
• Divestiture -- Full exit from the PoNS medical device business, with financial benefits to be recognized in the second quarter.
• APAC Digital Asset Strategy -- Multi-line revenue approach combining advisory services, infrastructure ("Pacific Backbone"), and an AI-powered compliance platform, specifically targeting institutional adoption and stablecoin payment use cases in Asia-Pacific.
• New Partnerships -- Announced a strategic partnership with Jito in May to enhance validator yield optimization.
• Management Expansion -- Madelene Gani appointed as Chief Financial Officer, Treasurer, and Secretary in April.

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RISKS

• Unrealized digital asset losses totaling $89.2 million for the period, tied to a 33% decline in Solana's price during the quarter.
• Realized loss of $7 million on digital assets from strategic SOL sales as part of capital allocation efforts.
• Operating expenses of $103.1 million driven by market volatility, compared to $3.9 million previously, signaling significant exposure to digital asset repricing events.

SUMMARY

Solana Company (NASDAQ:HSDT) recorded an exponential increase in quarterly revenue primarily from staking activities, while reporting a substantial net loss due to the sharp decline in Solana token value. The firm closed an $8 million equity raise at the highest NAV multiple in its peer group, signaling institutional investor confidence in its Asia-Pacific digital asset strategy. Management emphasized a tripartite operating model—advisory, compliant infrastructure, and AI-integrated platform—to tap institutional demand for blockchain services, further supported by new partnerships and targeted operational investments.

• The company confirmed the completion of the PoNS medical device business divestiture, with recurring cost reductions expected in future quarters.
• Operationally, Solana Company maintained its approach of capitalizing on accretive share repurchases when the share price was below NAV and raising capital when above, seeking to optimize SOL per share and shareholder value.
• CEO Choon Wee Chee stated, "we are in the process of signing some contracts, which represent relatively significant revenues to us even for this year," regarding advisory line traction.
• Expected expansion of validator infrastructure ("Pacific Backbone") remains on track with new nodes scheduled to be operational by late June and verbal commitments from potential clients.
• Management pledged a disciplined cost structure for scaling advisory and infrastructure operations, stating headcount growth will be tied directly to new revenue rather than speculative expansion.

INDUSTRY GLOSSARY

• mNAV (Multiple of Net Asset Value): Ratio expressing a company's equity valuation relative to the underlying value of its assets, widely used in digital asset treasury benchmarking.
• PoNS (Portable Neuromodulation Stimulator): Divested medical device business unit focused on non-invasive brain stimulation technologies.
• MEV (Maximal Extractable Value): Profits captured by validators through the strategic reordering of blockchain transactions to maximize staking yield.
• APAC: Asia-Pacific region, a key target market for digital asset and blockchain adoption in this company's strategy.

Full Conference Call Transcript

Choon Wee Chee: Thank you, Sarina. Good afternoon, everyone, and welcome to Solana Company's First Quarter 2026 Earnings Call. I'm pleased to report on another quarter of significant progress as we continue to build out our multifaceted digital asset treasury platform and execute our Solana treasury strategy. Before diving into our strategic initiatives, I would like to highlight key additions to the Solana Company in early April. We welcome Madelene Gani as our Chief Operating Officer and Deputy Chief Financial Officer; and today announced that she will serve as our Chief Financial Officer, Treasurer and Secretary. Madelene is joining us on this earnings call for the first time, and she will be presenting our financial results later in the call.

In late April, we closed the strategic capital raise as disclosed in our public filings. The incremental offering led by global institution investor, Mirae, we participation by HashKey marks an inflection point demonstrating both deep commitment from leading APAC institutional investors and the market premium for our Solana strategy. Now turning to the first quarter of 2026. In a quarter of crypto market volatility and headwinds, I'm proud of our first quarter's performance and how we stayed focused on execution with strategic use of capital markets, on-chain opportunities and operational discipline enabled the company to maximize our SOL per shares during the first quarter. Our first quarter revenue increased exponentially from the prior year.

Notwithstanding the volatility of Solara price, we remain resilient and continued our execution of generating consistent staking reward of 32,500 Solara tokens in the first quarter of 2026 compared to 34,000 Solara tokens in the fourth quarter 2025. At Solara Company, we are building a diversified revenue engine, architected to target institutional demand in what we believe to be one of the fastest-growing digital asset region in the world. We support the growth of on-chain ecosystem through 3 integrated revenue-generating service lines. Advisory services, we provide bespoke advisory to traditional financial institutions and corporates, enabling them to unlock tangible business value through blockchain adoption. Second, validated infrastructure.

We offer what we call Pacific Backbone, a compliant high-performance infrastructure necessary for regulated institutions to scale staking and validation activities in Solana. Platform business is the third piece. We bring an AI-powered end-to-end compliance stack. This serves as the critical foundation for long-term collaborative digital asset operations, seamlessly connecting our global business partners. With these initiatives, represent a multiyear trajectory, we expect the operational impact to be felt within this fiscal year. We are not simply participating in APAC growth trend, but aim to be positioned to drive meaningful impact through accelerated Solana adoption through our digital advisory services, Pacific Backbone, compliant and high-performance infrastructure and orchestration through our platform business.

To illustrate how this unlock in recurring revenue, we view them as a self-reinforcing flywheel. First, our bespoke advisory services provide a strategic road map and implementation services for major financial institutions and corporates to transition on chain and unlock tangible business outcomes. By focusing on high-impact use cases, specifically stablecoin payments and real-world asset tokenization, we lower the barrier to entry, moving our partners from concept to execution with speed and regulatory confidence. Next, the Pacific Backbone serves as the foundation of our flywheel. The infrastructure provides the enterprise-grade throughput, security, compliance operation that institutional clients demand.

By offering what we believe to be a trusted high-performance environment, we enable our partners to scale their on-chain operation with a reliability unique to our specialized APAC footprint. In early May, we announced a strategic partnership with Jito to advance yield optimization capabilities to our validator operation. The broader digital assets -- the Pacific -- the platform business is our AI-powered orchestration foundation, offering an end-to-end compliance and operations stack. It acts as a conservative -- connective tissue for collaborative digital asset operations. It continuously brings and connect business partners, serving as an essential layer to foster digital asset operations and business partnerships.

Asia-Pacific represent the majority of the world's crypto users and a substantial share of global cross-border payments and trading activity, yet it remains significantly underserved by Solana's existing network infrastructure. We believe our integrated approach, advisory infrastructure and platform position us to serve this market and potentially capture meaningful recurring revenue streams if and as adoption accelerates.

With that, before I turn it over to Cosmo to elaborate on our treasury management and capital markets results, I would also like to mention that as you were able to see in our even subsequent section of our 10-Q, we have completed the divestiture of our cash burning PoNS business, the medical device business and completed a series of rationalization steps in Q2. The positive financial results will be felt in Q2. Let me pass the podium back to Cosmo.

Cosmo Jiang: Hey, everyone. I'm Cosmo Jiang, Director at Solana Company and General Partner at Pantera Capital. Pantera Capital is the asset manager for Solana Company's digital asset treasury since the close of the PIPE transaction in September 2025, and I am pleased to report on another quarter of disciplined execution. As we discussed last quarter, the digital asset treasury market has moved on from its genesis phase and is solidly in its execution and consolidation phase. The first quarter of 2026 continues to validate this. We saw further differentiation among that with operators that have institutional-grade infrastructure, transparent reporting and disciplined capital management beginning to outperform.

The broader digital asset market experienced significant volatility during the quarter with Solana declining approximately 33% in price from December 31, 2025, through the end of the first quarter. Despite this headwind, we remain focused on our core strategy, which is growing our Solana per share through accretive capital allocation, generating consistent staking yield and building out the revenue-generating business that is designed to drive long-term value creation. Staking remains one of the most important and differentiated aspects of our business. For the quarter of 2026 -- for the first quarter of 2026, our average net staking yield was 6.9%. This compares to the system-wide average of approximately 6.0% over the same period, representing outperformance of 90 basis points.

This yield is generated through careful validator selection, active MEV capture and continuous rebalancing, the same institutional approach that Pantera applies across its broader digital asset portfolio. Staking rewards are also automatically restaked to compound returns, resulting in consistent daily on-chain revenue. Turning to capital markets. We remain committed to capital allocation strategies that are accretive on a SOL per share basis regardless of market conditions. When our stock traded at a discount to net NAV during periods of broader market weakness, we executed approximately $3.5 million in share repurchases during the first quarter and $5.0 million in share repurchases year-to-date under our previously announced repurchase program as reflected in our treasury stock position.

These repurchases were funded through strategic SOL sales at prices that were at a discount to our NAV per share at the time of repurchase, making them accretive to our NAV per share. At the end of April, we successfully completed a strategic capital raise of $8 million through a structured equity offering, a portion of which we deployed into SOL purchases at favorable entry points. This capital raise was at a price of $2.60 per share, which at the time was roughly 1.1x mNAV or multiple of NAV and a result, immediately accretive to our SOL per share.

This is the highest multiple of NAV capital raise of any Solana digital asset treasury that we know has completed since the beginning of the downturn in 2025. We believe this is -- our ability to do so is indicative of both industry factors, namely that the digital assets market has shown some signs of bottoming as well as factors idiosyncratic to capital market participants recognizing and appreciating our relative execution. We believe the ability to operate opportunistically on both sides of the capital structure, issuing our stock at a premium and buying back and trading at a discount is a powerful mechanism for creating shareholder value across different market environments.

As of March 31, 2026, Solana Company held approximately $193.8 million of Solana across all categories, including liquid holdings, stake positions and receivables and $4.4 million of cash and cash equivalents. The company's diluted share count, including common shares and in-the-money warrants, was 82.5 million shares as of March 31, 2026. As of May 12, 2026, Solana Company held 2.37 million SOL tokens. The company's diluted share count, including common shares and in-the-money warrants, was 86.0 million shares. I will now turn the call over to Madelene Gani, our Chief Operating Officer and Deputy CFO, for the detailed financial results.

Madelene Gani: Thank you, Cosmo, and thank you, Joe, for the introduction. I'm thrilled to be joining Solana Company is such an extraordinary inflection point, and I'm honored to present our financial results for the first quarter of 2026. Our first quarter revenue was $3.6 million, consisting primarily of $3.4 million in staking revenue and $0.2 million in other revenue. This represents significant growth from the $49,000 in revenue recorded in the first quarter of 2025, which did not include contributions from our staking revenue attributable to our treasury strategy. Cost of revenue for the first quarter was $180,000, resulting in a gross profit of $3.4 million compared to a gross loss of $72,000 in the prior year period.

Cost of revenue increased primarily due to the increase in staking revenue-related costs. General and administrative expenses for the first quarter of 2026 were $5.2 million compared to $3.9 million in the first quarter of 2025. The increase reflects the expansion of operations associated with the company's digital asset treasury strategy. During the quarter, we recorded an unrealized loss on digital assets and digital assets receivable of approximately $89.2 million, reflecting the approximately 33% in SOL prices during the quarter.

We also recorded a realized loss on capital and digital assets of $7 million related to strategic sales executed as part of our capital allocation program and an unrealized loss on our digital assets fund investment of $1.7 million due to the decline in the value of SOL. Total operating expenses for the first quarter were $103.1 million compared to $3.9 million in prior year.

Operating expenses included noncash charges of $89.2 million for unrealized loss on digital assets and digital asset receivables, $7 million for realized loss on digital assets related strategic sales executed as part of the company's capital allocation program and $1.7 million for unrealized loss on digital assets fund investment due to the decline in value of SOL. The resulting loss from operations was $99.6 million compared to a loss of $4 million for the prior year period.

Nonoperating expense for the quarter was $0.2 million, primarily attributable to dividend income earned on investments of excess cash in money market funds, offset by foreign exchange loss due to fluctuations in the Canadian to U.S. dollar exchange rate as compared to $0.2 million nonoperating income for the prior year period. We reported a net loss for the first quarter of 2026 of $99.8 million or a loss of $1.3 per basic and diluted common share based on weighted average shares outstanding of 76.6 million. This compared to a net loss of $3.8 million or $382.29 per basic and diluted common share based on weighted average shares outstanding of 10,000 in the prior year period.

As of March 31, 2026, we had total assets of $200.7 million, including $4.4 million in cash and cash equivalents, $21 million in current digital assets and $172.8 million in long-term digital assets across various categories, including stake positions, restricted assets, receivables and fund investments. During the quarter, we executed approximately $3.5 million in share repurchases during our previous authorized stock repurchase program, which are reflected in treasury stocks on our balance sheet. With that, I now hand it over to Joseph for closing remarks.

Choon Wee Chee: Thank you, Mady. Well, Again, thank you all for joining the Solana First Quarter 2026 operating results update. We look forward to updating you on our progress again in the coming quarters. Operator, please open the call for questions.

Operator: [Operator Instructions] Our first question comes from the line of Matthew Galinko from Maxim Group.

Matthew Galinko: Maybe if we could talk about the flywheel that you discussed in the prepared remarks, and particularly around the advisory. Maybe touch on what sort of traction you have there, what level of engagement you have? And is there a revenue model there? Or is it primarily just sort of engaging counterparties into the Solana ecosystem?

Choon Wee Chee: Thank you, Matthew. I guess since I talked about that, I'll address your question here. And the answer directly, yes, it's supposed to be a revenue-generating business line. And this advisory business actually work very closely with Solana Foundation in targeting some of the major financial institutions and some tech corporates in the region. And we are in the process of signing some contracts, which represent relatively significant revenues to us even for this year, and we expect to do that over time.

The -- a lot of financial institutions in this -- in APAC are sort of coming from behind, -- this whole trend of major banks, asset managers, different institutions in the U.S. either getting on the asset cash management products on chain and different kind of products as well and also somebody getting on to stablecoin-based payments with the U.S. leading the way, now there are a lot of institutions that haven't done much in the past now have landed from the top to get this thing done as soon as possible.

And a lot of them have not spent a lot of time understanding how to get that done and they have some basic understanding when it comes to execution, project managing the whole thing based on the time coming from the top, they need some help. And I think with us and the foundation in this part of the world, we are like the first start from the ask questions. And I think that's a good time that we to suggest that we can help them manage this and then charge them for managing the project.

Matthew Galinko: All right. That's very helpful. And maybe just as my follow-up, I think currently, you operate with a pretty lean structure. And so I'm wondering how you deliver those advisory services. And to the extent that you're generating material revenue there, how do you think about the allocation of any cash flow you might begin to generate from those sorts of activities.

Choon Wee Chee: Good question, Matthew. We are doing this very carefully. We do not want to -- we're not going to let cost lead the revenue per se, right? With the current team of 2.5 people, we have hired a head of business development and advisory from Boston Consulting Group and a couple of juniors to get going. And we believe that with the revenue that we're generating from the contracts, we covered the cost that we just incurred on the human resources side. And the additional revenue net of cost or cash flow net of cost will be used for to execute our strategy. The core one is still to purchase SOL.

And obviously, some of that will be used to reinvest in some of the infrastructure that we need to build to provide more services to the clients or partners that we bring on board to generate more revenues on a recurring basis to Solana company.

Operator: And our next question comes from the line of Fedor Shabalin from B. Riley.

Fedor Shabalin: I have a first one on the Pacific Backbone infrastructure. Can you tell us where we are with that infrastructure today versus where we were at the quarter end? And specifically, how much SOL is currently delegated to the -- if any? And what's the stake ramp trajectory you're targeting over the next 2, maybe or 3 quarters? Just how should we think about the economic uplift from the integration on MEV capture relative to the standard staking yield you're currently realizing?

Choon Wee Chee: Yes. Fedor, thank you for your question. Since we announced this a couple of months ago, we have also mandated the same team, which the advisory business to build this -- the infrastructure for the validation business. We have put together a detailed execution plan, and we are tracking quite well. The nodes that we are building at the moment, we are starting with 3 nodes, will be operational according to the plan in late June. On your question of how much SOL, especially third-party SOL that we will bring on board, we are still in the process of pitching and we already have some verbal commitments. But at this stage, I probably cannot provide you with a projected number.

But we -- based on what we could see, it will be a fairly significant number that would add good revenues to our platform over time. It is something that we want to build not only to serve the clients that we would attract on our advisory services platform. For many of the larger players that have SOL at the moment, they're probably staking that SOL with some players, which are not structured the way we are structured.

At the moment, we are structuring this as the highest and top quality institutional-grade infrastructure, and we would have hired a certification engineer to make sure that the whole process front and back will be properly certified and will meet the requirements of the most demanding finance institution across APAC. We believe that we can move some of the SOLs from some of the players, which stake that SOL with other less smaller or less institutional grade players. So that we have high hope, but I guess I will probably can only give you a more, I guess, higher confidence guidance in the next quarter.

Fedor Shabalin: That's super helpful. And another one is on how should we think about the buyback cadence going forward and overall Solana accumulation, like anything -- should we expect something beyond stake in revenue or in Solana tokens, I mean, or at least at current mNAV level, you will like stick with staking only and will not pursue any external purchases of extra tokens?

Choon Wee Chee: Thank you. That's a good question. It's something we debate all the time. I think the right person to answer this question is Cosmo. Why don't I pass it on to Cosmo.

Cosmo Jiang: Fedor, thanks for the question. As you can appreciate, we're constantly monitoring -- we're constantly having dialogues with capital providers to see where we can potentially raise capital in an accretive way, which we were really excited to do this past quarter with major strategic investors in Asia. And we're also evaluating when our stock trades below NAV, we do what with -- what we do in that case. And we're pretty proud of the fact that we are trading well above most of our peers and certainly the average of our peers in terms of mNAV.

That does mean that buybacks are less accretive for us than they are for some of our peers at this point because our mNAV multiples held up. But that does mean -- in which case, it means like the capital markets window opens up a little bit more on the accumulation front as opposed to the buyback front. And so it will -- I'm sure there will be volatility in our multiple as well as volatility in Solana, and we'll just try to make the best decision as we go forward. But I would expect that at these levels that we're looking to raise capital accretively as opposed to buying back aggressively.

Fedor Shabalin: And I promise my last one, it will be quick. It's on SG&A run rate going forward. So obviously, you build infrastructure of the operating business you described in Asia. And how should we think about this line item run rate from here? Is the 1Q a reasonable jumping off point? Or maybe are there step-ups we should model in 2Q and 3Q as you scale the business? Maybe headcount will grow from 2.5 to 3.5 or 4.5.

Choon Wee Chee: Fedor, we don't have a set of Board approved numbers that we could disclose on this call to guide you on that. But we could probably give you the thinking process behind it, so it might be helpful to you on building out your model. What we're building here, including develop infrastructure. And first of all, we are building this in Asia, the kind of IT talent that you could hire for your money is zero versus the Western world is night and day. And then in terms of the third-party consultants that we can hire to build out certain part of our infrastructure, they also come at a very low cost.

I don't think you should expect very large CapEx going into this is all at a very, very low level. You're probably not going to notice it in the overall financial results. And I mentioned at the end of my presentation that we have divested in the second quarter this year, the medical device business PoNS. And that will slow down after all the onetime and everything else, and that's a serious step that we took to rationalize our cost base, but that's all happening in the second quarter. And you would expect some pretty significant positive impact of that on our operation on a recurring basis going forward.

We can only talk about that in the second Q -- when the second Q results are available and we do the next call. So I think all in all in a way that I don't think you should be expecting an uptick in your cost and then 2.5% to 3.5% to 4.5%, that will rely on the additional revenue, i.e., the contract we sign rather than we're going to let the cost front run the revenue.

So I think that's the principle that how we agreed to build out this business because you still want the investors investing in us getting access to Solana exposure and they would not be piled on by additional costs that will skew their calculation.

Operator: Ladies and gentlemen, for your participation in today's question-and-answer session. This does conclude the question-and-answer session. I'd like to hand the program back to Joseph Chee for any further remarks.

Choon Wee Chee: Well, I guess thank you for that. And again, thank you for joining us today on the call. And we look forward to updating you on our progress in the coming quarters. And for some of you, if they have call set up separately, happy to provide more colors in what's going on and what's going to happen. Thank you very much.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

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