Summary CoinShares PLC delivered strong FY25 results, reporting $197.6M revenue and 90% gross margin, with 68–70% adjusted EBITDA margin sustained by lean fixed costs. CSHR's Asset Management segment is the primary earnings driver, expanding to 63.9% of group revenue, fueled by Valkyrie acquisition and institutional inflows into physically backed ETPs. At ~$6/share, CSHR trades at ~2.5x EV/EBITDA and ~2.1x EV/Sales, deeply discounted versus peers like Galaxy Digital and WisdomTree. CoinShares operating leverage is strong, with $40M fixed costs supporting scalable EBITDA as AuM grows, but revenue remains highly correlated to volatile crypto asset prices. CoinShares PLC ( CSHR ) released FY25 earnings about two weeks ago (April 30), and that earnings release provided the first full look into the company as a U.S. listed company with results reported under U.S. GAAP for the first time. CoinShares should be a familiar company for investors who track crypto ETPs. They produce and release some of the highest quality (in my view) research reports with granular data points to track and monitor capital flows in crypto assets. I have used their reports countless times for my own independent personal research and for articles I write here on Seeking Alpha. While they may be known to the broader crypto investment audience as an ETP issuer, CoinShares history dates back to 2015 when they released the first regulated Bitcoin ( BTC-USD ) nearly a decade before spot Bitcoin ETFs were approved by regulators in the U.S. CoinShares’ business operations can be grouped in three distinct business lines from an operational view, which are Asset Management, Capital Markets, and Hedge Fund Solutions business lines, but in its financial reports the results are reported in two operating segments, Asset Management and Capital Markets, likely reason being similar revenue model classification of the Hedge Fund Solutions business, as it is an alpha-focused product suite intended to complement the ETP business. The Asset Management division spans four product platforms which includes a benchmark index: CoinShares Physical (the newer European crypto ETPs), CoinShares XBT Provider (legacy European ETPs), CoinShares Valkyrie (US ETFs platform), and The Block Global Equity Index. Both segments are directly exposed to and scale with the assets under management [AuM] on a revenue basis, though the Asset Management segment is more directly tied to AuM as its revenue is basically how much management fees is made from AuM. while the Capital Markets segment generates revenue through trading income, market making spreads, staking yields, asset lending, and unrealized and realized treasury gains on digital asset holdings and all these revenue streams are also contingent on the underlying scale and growth of CoinShares' AuM. CoinShares FY25 presentation The Asset Management segment has been growing faster thanks to multiple catalysts like the acquisition of Valkyrie in 2024 with its U.S. spot Bitcoin ETF the Valkyrie Bitcoin Fund, which was subsequently rebranded to the CoinShares Bitcoin ETF ( BRRR ), and continued inflows into CoinShares Physical products which has attracted more institutional capital as products in this platform are physically backed 1:1 by their underlying assets, and has also benefited from investor migration away from legacy XBT products which were structured as unsecured exchange-traded notes which carried issuer credit risk rather than the fully physically backed ETPs investors favor today. These details are important to take note of early on, as down the line in this piece, they'll help paint a better picture of how CoinShares business has evolved, and where the operating leverage currently lies. CoinShares FY25 - First Look at Financials Under GAAP Reporting Lens The latest results provide a candid look into CoinShares' financial trend in the past three fiscal years. The headline figures for FY25 are strong. CoinShares total revenue and gains from operations for FY25 was $197.6 million. The stricter GAAP revenue which excludes certain Capital Markets gains, like unrealized and realized treasury gains on digital asset holdings, came in at $165.7 million. The top line grew around 44% CAGR in the past three fiscal years. CoinShares FY25 presentation Along with the consistent growth, CoinShares saw 90% gross margin in FY25 and has also maintained an adjusted EBITDA margin around 68% to 70% in the last three years. Adjusted EBITDA on the $197.6 million total revenue and gains from operations for FY25 was $135.7 million. Adjusted EBITDA has grown at ~45% CAGR in the last three fiscal years. This margin profile has been sustained due to a lean fixed cost (around $40 million fixed cost) which has remained stable even as AuM and revenue scaled, giving CoinShares exceptional operating leverage. Analyzing financial performance by the two reporting business segments, Asset Management revenue (made up primarily of management fees on the total AuM) hit a record $126.4 million in FY25, up from $111.7 million in FY24 and $53.7 million in FY23. The Asset Management segment is increasingly becoming the earnings engine for CoinShares. As a share of net group revenue, Asset Management has expanded from 56.5% in FY23 to 62.5% in FY24 to 63.9% in FY25. Capital Markets gross revenue declined from $82.7 million in FY24 to $73.1 million in FY25. The difference is almost entirely the ETP/XBT pricing differential, a non-cash unrealized gain from pricing spreads between ETP trading prices and their underlying digital asset exposure. That differential was $15.8 million in FY24 (see the preceding snapshot) and normalized to $1.6 million in FY25. If we account for the pricing differentials in FY24 and FY25 (subtracting them from the Capital Markets gross revenue for both fiscal years) we find that net revenue was $71.5 million in FY25 versus $66.9 million in FY24, which would be a gain of $4.6 million, or ~6.8% in organic growth. CoinShares FY25 presentation Capital Markets' share of group revenue declined from 37.5% in FY24 to 36.1% in FY25, but that was due to a shift in revenue mix, driven by faster Asset Management growth, not necessarily because of Capital Markets weakness. The Capital Markets yield on AuM compressed modestly from 1% in FY24 to 0.9% in FY25, which is also consistent with a maturing trading operation that is generating stable, repeatable returns rather than outsized mark-to-market gains and a sign that CoinShares is moving away from the volatile profile of the early years into a more stable and predictable capital markets franchise model, compared to FY23 and FY24 where the Capital Markets yields dropped 30 bps (from 1.3% in FY23 to 1% in FY24). CoinShares FY25 presentation On liquidity, CoinShares ended FY25 with total debt of just $29 million against a capital position of $481 million. Net available capital going into FY26 was $452 million. The fixed cost overhead of $40 million means immense operating leverage for CoinShares and implies a business with a secure runway ahead. At FY25 end’s 132.3 million shares outstanding, $452 million net cash implies a net cash value per share of $3.36. At the current share price around $6, the market is basically paying around $2.64 per CSHR share for the operating business backing $7.4 billion AuM and an extensive portfolio of product suites across Europe and the U.S. CoinShares FY25 presentation Also notice, in the image above, how the fixed overhead for CoinShares remained (and will likely remain within this range for the foreseeable future) around $40 million across all AuM levels reached in FY25, meaning incremental revenue generated from higher AuM would increasingly fall through to EBITDA. At FY25 year end AuM of $7.4 billion, run-rate revenue implied (modeled in the illustration above) was $203 million. The illustration in the image above is a snapshot of revenue and EBITDA sensitivity to AuM, as seen in the FY25 presentation released by CoinShares alongside the FY25 results. I have done checks on the numbers to avoid a mere lazy word-for-word and figure-for-figure re-quote of management’s projections here. And from my backtesting of the different AuM scenarios presented, the projections and figures check out. Using the $11 billion AuM levels (also illustrated in the above snapshot) which CoinShares reached last year October when the crypto market peaked with Bitcoin reaching all time high price of $126k, I verified the implied Asset Management revenue to be $178.2 million ($11.0 billion AuM x 1.62% blended yield). While Capital Markets Revenue at $11 billion AuM to be $101.2 million ($11 billion x 0.92% market-making yield); these bring total revenue at that AuM to ~$279 million. Then deducting the $40 million fixed cost I verified the implied run-rate EBITDA figures in the preceding table against the FY25 actual EBITDA by subtracting the FY25 EBITDA from FY25 revenue, which gives an aggregate of both fixed and variable costs (let's call it total operating costs). Then stripping the $40 million fixed cost from it, and calculating the remainder as a percentage of revenue. For FY25 actual results the math would be $197.6 million minus $135.7 million (gives ~$62 million total operating cost), then deducting $40 million and isolating the ~$22 million variable cost; when $22 million variable cost is expressed as percentage of revenue ($22 million / $197.6 million) it will be ~11% variable cost ratio. I verified that this margin of variable cost checks out throughout the different AuM scenarios in the preceding snapshot. When I plug in the exact same methodology into the $12 billion AuM scenario presented by management in the preceding snapshot, I get broadly consistent results with management’s. Though based on my ~11% variable cost ratio, EBITDA becomes $231.5 million at $12 billion AuM, while management projects $234 million EBITDA at that AuM. That difference is also not out of place, and it makes sense for management to project some economies of scale because as AuM grows variable costs as a percentage of revenue are bound to adjust lower because for an asset light financial company like CoinShares, OpEx like the cost of custody, exchange connectivity, and settlement infrastructure does not grow in a linear 1:1 fashion with the dollar value of the assets being processed. This also supercharges the incremental margin on new inflows, and allows the variable cost ratio to compress as the platform scales, making management’s projections even more justifiable. CoinShares Valuation I earlier noted that CoinShares' net cash position of $452 million alone accounts for around 57% of the company's current market valuation at the ~$6 share price. Beyond liquidity, CoinShares’ AuM strength, as well as the sales and EBITDA growth trend gives ample data points to gauge valuation from more meaningful frameworks than just by comparing share price to liquidity. At the current stock price and shares outstanding of 132.26 million, CSHR's market cap is around $794 million (~$6 x 132.26 million). The cash Adjusted EV for CSHR based on the reported $481.3 million in available capital and $29 million in total debt would be around $341 million ($794 million Market Cap + $29M Debt - $481.3 million Capital). That EV implies that as of year-end FY25's $197.6 million revenue and gains from operations and $135.7 million adjusted EBITDA, CSHR is trading at ~2.5x EV/adjusted EBITDA, and ~2.1x EV/Sales at the current stock price (I have used the stricter GAAP FY25 sales figure of $165.7 million for the EV/Sales calculation). In a peer comp, two peers that model similar business segments as CoinShares are Galaxy Digital ( GLXY ), and WisdomTree ( WT ). It is worth mentioning that GLXY reports its GAAP revenue as gross revenue with cumulative gain (or losses) from operations which include principal investments, trading, and digital asset activities; thus its revenue figure is typically distorted and an outlier in a peer analysis. And an adjustment to its gross profit (which Galaxy Digital itself reports as Adjusted Gross Profit) is a more appropriate proxy for revenue if it will be used in a meaningful peer comparison against peers. For FY25, GLXY reported $426 million as adjusted gross profit (our proxy for revenue in this context), while WT reported $493.8 million as revenue. Both companies reported $34 million and $180.7 million as adjusted EBITDA for FY25, respectively. Galaxy Digital’s adjusted EBITDA came out at such a low figure because, though its Digital Assets segment generated $247 million in adjusted EBITDA, the Treasury & Corporate segment saw adjusted EBITDA of negative $216 million due to unrealized losses on digital assets and investment positions. GLXY commands an EV around $10 billion at current valuation, while WT currently has ~$3.3 billion EV, implying GLXY is trading around 23.5x EV/FY25 Sales, and WT is trading around 6.7x EV/FY25 Sales. While on adjusted EBITDA, GLXY’s true EV/adjusted EBITDA is somewhere around 294x, while WT trades around 18.3x EV/adjusted EBITDA. It is worth mentioning that GLXY’s low adjusted EBITDA for FY25 is not a clean recurring earnings figure due to the $216 million in unrealized losses absorbed by the Treasury & Corporate segment, thus the 294x EV/adjusted EBITDA can be rightly considered an outlier. If we strip the one-time items and look at GLXY’s Digital Assets segment alone, which is also the operational business most analogous to CoinShares, the multiple becomes $10 billion / $247 million adjusted EBITDA ≈ 40.5x EV/Adjusted EBITDA. Even at that conservative measure, CSHR at 2.5x adjusted EBITDA is far cheaper than GLXY’s 40.5x or WT’s 18.3x. Another distinctive factor that strengthens CSHR’s case for a rerating is the fact that its business earns more from management fees and other fee-based capital market income and less from crypto assets held directly on balance sheet, which makes CSHR less susceptible to highly volatile one time swings like in GLXY’s case. Risks and Takeaway The biggest risk to CoinShares remains the cyclicality of the broader crypto market itself. CoinShares’ revenue base is heavily tied to AuM, and AuM is in turn highly correlated to digital asset prices and investor inflows. Crypto asset prices typically influence the broader crypto sentiment and inflows into the crypto-linked ETPs which are the backbone of CoinShares AuM. This creates direct pressure to the Asset Management segment revenue. Capital Markets segment isn't spared from that pressure in a bear market either because lower crypto prices could mean weaker market participation which results in reduced trading activity and compressed spreads, weakened staking and lending demand, and overall reduction in capital markets activities across the digital asset ecosystem. And since we already established that fixed cost remains the same, a prolonged bear market that results in several quarters of declining revenue would mean an erosion of the operating leverage CoinShares currently sees, and the attractive EBITDA margin would likely also compress. One caveat to the crypto bear market risks worth noting is that CoinShares Capital Markets segment still has some shield against revenue weakness in short term crypto price downturns. Short term high volatility price drawdowns could also mean spikes in trading volume, hedging activities and wider spreads, which bodes well for that segment’s revenue. From the first GAAP look provided by the FY25 results, CoinShares has proven to be a cleaner business model with less crypto-linked volatility profile than a peer like Galaxy Digital. At current market valuation and sales and EBITDA multiples, I believe CoinShares remains cheap, for a company with an over 30% digital assets ETP market share in Europe and growing presence in the U.S.