Summary Exodus Movement, Inc. was up-listed to the NYSE and offers a non-custodial cryptocurrency wallet supporting 50 blockchains, unlike centralized exchanges like Coinbase. Despite solid revenue growth and a healthy balance sheet, Exodus relies heavily on exchange aggregation and faces stiff competition in the crypto wallet space. The company's valuation appears stretched at $1 billion, with shares priced at 11x trailing revenue and 21x trailing earnings, making it difficult to justify buying now. High DEX volumes indicate positive on-chain usage last quarter, but I recommend waiting for another quarter of performance data before considering a position in EXOD. On December 18, 2024, Exodus Movement, Inc. ( EXOD ) was up-listed from OTC to the New York Stock Exchange. This digital-asset 'pure play' has been on a bit of a wild ride since NYSE-listing last month. In this article, we'll look at what Exodus Movement does, the company's recent financials, and assess whether EXOD is the right stock for investors who want exposure to digital asset businesses through a traditional market equity. Exodus Wallet Exodus The flagship product for Exodus Movement is the Exodus cryptocurrency wallet. Unlike Coinbase ( COIN ), which is a centralized exchange that practices KYC/AML protocols, Exodus is a permission-less piece of software that can be downloaded by anyone and used to facilitate transactions on 50 different blockchains. Investors can think of crypto wallets like Exodus, similar to how they'd think of web browsers. For instance, one can interact with the internet roughly the same whether they're using Mozilla, Edge, Chrome, or Brave and have a relatively similar experience. Most importantly, the internet is still the same, regardless of which browser the individual user chooses. The same is essentially true for crypto-wallets. But in this case, wallet key holders are using the front-end 'wallet' application to interact with whatever blockchains are supported by the developers of the application. In the case of Exodus, that's Bitcoin ( BTC-USD ), Ethereum ( ETH-USD ) and a few dozen other blockchains. The important thing to remember here is Exodus Wallet does not actually take custody of user assets as an exchange like Coinbase would. Rather, Exodus just provides software that allows users to easily move assets around on-chain. Wallet Users (Exodus) While down from the high of 2024 in Q1, the 1.6 million MAUs in Q3-24 was a 40% year-over-year gain from the MAU figure during Q3-23. The Exodus Wallet does have a few different ways it can monetize users. The app's primary revenue driver is exchange aggregation, but it can also generate income through a fiat-to-crypto on-ramps and through staking UI that is available within the app. Financials Data by YCharts From a raw financial standpoint, Exodus Movement has enjoyed solid growth over the last year. Top line revenue was up about 40% year over year from $12 million to over $20.1 million. This revenue growth is very much in-line with year over year usage growth: Q3 Revenue Breakout (Exodus Movement) Dis-aggregating the top line revenue shows a very high reliance on exchange aggregation revenue. That said, the reliance on that revenue category has come down from 94% in 2023 to a little over 90% through the first three quarters of 2024. The largest driver of operating income in 2024 has been digital asset revaluation: Q3 Operating Income (Exodus Movement) Take away the $39.2 million in unrealized gains from the company's digital asset holdings, and Exodus Movement has only done $13.1 million in operating income in 2024 through the first three quarters. Data by YCharts Exodus has a healthy balance sheet with enough cash and equivalents to cover all liabilities. Furthermore, at the end of September, Exodus reported holding 1,800 BTC - worth $162 million at current Bitcoin prices. Bitcoin makes up over 90% of Exodus Movement's digital asset treasure trove. Equity History: A Valuable Signal? The company's equity has a very interesting history. Exodus Movement initially issued shares through a tokenized security strategy. Prior to listing on a more traditional stock market exchange, investors could get exposure to Exodus Movement equity through platforms like Securitize and tZERO. In Q3 2024, the company's equity ceased trading on each of those platforms and began trading via OTC in January 2024. I think this is a very interesting signal, and I'm not actually sure it's long term bullish for the digital asset space. Digital asset investments have often benefited from a specific 'narrative' to drive gains. More recently, we've seen the RWA, or real-world asset, narrative enjoy a resurgence in the market. So far, the most success we've seen in RWA is probably through products like tokenized T-bills. Tokenized equity is something that many advocates of digital assets have been looking forward to, myself included. From where I sit, it's perhaps not a great indication of a strong tokenization trend if a digital asset company - one that benefits primarily from on-chain activity - has 'gone backwards' from tokenized equity to the NYSE. Additional Considerations The company's valuation is a bit stretched from where I sit. At a $1 billion market capitalization, EXOD shares are priced at 11x trailing revenue and 21x trailing earnings. Exodus Movement is indeed a growth stage company, but I want to see an additional quarter of performance before I'd consider jumping into EXOD stock. 2024 showed explosive growth in digital assets held and managed by traditional financial institutions. In theory, crypto 'adoption' through traditional products would figure to come at the expense of on-chain usage - the latter of which benefits Exodus Movement more as a business. There are positive signs though. DEX Swap Volume (Artemis) The chart above shows quarterly DEX volume from roughly 20 Blockchain networks. Q4-24 was a massive quarter, with just under $1 trillion in DEX volume combined from the selected networks. While Exodus Wallet is not actually a DEX, high DEX volumes are indicative of on-chain usage growth. This is good for companies like Exodus Movement. But, again, I'd want to see another quarter of data before considering a position in EXOD. I see increasing competition for on-chain wallet applications going forward under an administration that is more favorable to digital assets. While I can personally speak to Exodus Wallet being a quality application, it's certainly not the only one that offers a solid UE. Closing Thoughts As a wallet application, I give Exodus high marks. It's a good app both on desktop and mobile. The biggest holdup that I have currently with investing in Exodus Movement equity is it's very difficult to have a moat in the crypto wallet space. Since these applications generally don't collect KYC/AML data and are instead simple third-party clients that can be used to engage with the blockchain, the switching cost to the user is minimal and the barrier to entry to developers is also low. Essentially, it's hard for me to find a real moat for Exodus. When factoring in a company stock that is a bit overvalued relative to its financial performance, it's very difficult for me to justify buying at nearly $40 per share.
