Q3 2022 Voyager Digital Ltd Earnings Call
Yeah.
[music].
Good day and welcome to the Voyager digital fiscal year third quarter 2022 earnings conference call. At this time all participants are in a listen only mode. After the prepared remarks, we will conduct a question and answer session in order to ask a question or make a comment please press <unk>.
Starkey followed by the one you touched on phone at any time.
Questions will be taken in the order they are received.
At this time I would like to turn the call over to Kevin Rodriguez Investor Relations at Voyager. Please go ahead Sir.
Thank you operator.
I'd like to welcome everyone to the voyage Digigirl Ltd earnings call.
Today, we will be discussing our fiscal year 2022 third quarter results, which we announced prior to the market open this morning.
On the call today are Steve <unk>, our Chief Executive Officer.
Europolis Chief Financial Officer.
I would like to take a moment to direct investors to the Investor Relations section of our website at <unk> Dot com.
Well, we have posted our investor presentation and upcoming event schedule.
Before we get started I want to remind everyone that certain statements discussed on this call are based on information as of today may 16th.
And may contain forward looking statements, which are subject to risks and uncertainties.
And given our limited operating history market volatility and unprecedented industry.
Trends can materially deviate from today's level.
Actual results could differ materially from our forward looking statements if any of our key assumptions and today's earnings press release.
And the comments made during this conference call.
Or in our latest reports and Peter filings each of which can be found on our website www dot <unk> dot com or under a profile that WD.
Www Dot Com alright, correct.
The company has made assumptions that no significant events occur outside of the company's normal course of business and.
And that current trends in adoption of crypto assets continue.
Listeners are cautioned that assets on platform revenue and trading volumes fluctuate and May increase.
And decrease from time to time and that such fluctuations on beyond the Companys control.
We do not undertake any duty to update any forward looking statements.
Except where required by law.
Todays release also includes references to non <unk> financial measures.
You should refer to the information contained in the disclosures found in today's release, including.
The financial information and reconciliations of historical non <unk> measures.
The comparable <unk> financial measures.
This call ill touch on some guidance provided in our earnings press release issued today.
I would encourage each of you to review the forward looking statement risk factor disclosure and similar disclosures in today's press release.
Please note that dollar amounts referenced are in U S dollars unless otherwise noted.
With that let me turn over the call over to Steve <unk> <unk> co founder and CEO .
Thanks, Kevin and thanks to everyone for joining this morning.
This morning, we announced that Voyager has obtained subscription agreement for a private placement gross proceeds of approximately $60 million led by Alameda Research, which was a follow on investment from their strategic investment in October .
We are excited to have them you need this round with additional investment from strategic investors and partners, including Galaxy Digital block gaming and digital currency group.
These purchase Pittsburgh deep industry players, we partnered with Voyager as we pursue our goal is to deliver quality execution.
Custody staking lending and borrowing in men with <unk> and our expansion into NFC and web three.
This investment shows the dedication to empower in the Voyager model and how much these partners value the Voyager relationship.
The funds raised through a pipe offering to our existing net liquidity position to give voyage or position of over $225 million of available capital.
Closing of this fund raise remains subject to customary closing conditions, including approval of the Toronto stock exchange.
Voyage has strengthened liquidity position allows us to continue to grow our business and together with the changes we continue to make in our cost structure puts the company in a strong industry position to weather any protracted market slowdowns going forward.
On our last call I noted that we were aggressively working to turn a rewards program from a marketing cost to a profit center.
Im happy to report that changes underway as we adjusted the program on May one.
With significantly improved profitability for the June quarter and moving forward.
As the marketing landscape continues to change we are using our collective years of experience to continue to develop cost effective programs and intend to make additional changes to maximize capital efficiency and continually optimize our cost per account acquisition.
The company has also begun a strategic review of all expenses and is committed to reducing expenses to keep the business streamlined and efficient in both expanding and contracting crypto markets.
We think these changes will deliver profitable quarters, even as we faced market headwinds.
The past week has been one of extreme volatility.
Before I discuss our metrics and give an update on the business I want to address a few specific related to recent events in the crypto market.
First we never listed the USG point as we were never comfortable with the algorithmic stable point.
We're going to be listed on our platform. It goes to an intensive legal business and operational review process.
And not listening Ust, we protected many customers.
Not all stable coins are created equal.
We operate using the USB C for customers, which in my view is the only true stable point as it is backed by a full reserve of U S dollars in short term U S treasuries.
With a monthly attestation performed by grant Thornton one of the leading public accounting firms.
We also spoke to all of our Counterparties on lending and verify that there were no issues.
In the past we've had questions from investors about one counterparty and as of today, we have no exposure to that counterparty.
All of which are customers.
All boys or customer U S. Dollar balances are held by our banking partner Metropolitan commercial bank and already are FBI insured up to $250000.
We are a customer focused business and therefore concentrate on the safety and security of customer assets.
Lastly over the past week, we've seen a significant increase in trading volume and account growth.
Now for our industry as a whole the march quarter kicked off a challenging macroeconomic environment and lower trading volumes with Voyager continued to deliver customer account and net deposit growth.
To build on our revenue diversification strategy and expand our coin and product offerings.
Despite the challenging operating conditions in the quarter customer engagement on the Voyager platform remains healthy we had over 1 million unique users engage with the voyage dropped during the quarter, representing almost 30% of our $3 5 million registered users.
And while we saw an overall decrease in trading volumes, 25% of our nearly $1 2 million funded accounts executed the trade in the quarter all through our award winning mobile App as we added another 28 points, reaching over 100 coins available for trading.
These key metrics, it's something I get very excited about as they are strong indicators of the level of engagement that Voyager customers have with our platform.
We also saw a significant growth in our U S. D C balances and we believe many of these customers hold USB C. While they wait for trading opportunities.
For a similar pattern in 2001, and the online brokerage industry as consumer sold their equity position held the balances of $1.
We then redeployed those dollars later to Reengage in the next bull market run.
Pattern, you see right now with the significant expansion of USD being held by customers.
I'll start it's an internet bubble burst in 2001 and I saw it start again this past week.
Back in the September quarter, I discuss voyages commitment to stay tuned.
Which is at the forefront of our diversification model.
We're now taking 12 points through our partners with plans to add more this quarter.
As we continue to grow the staking program, our average revenue per account or ARPA will continue to grow.
The monthly <unk> for the quarter was approximately $24 per account and the lower transactional volume market, which annualized to $288 delivering a return on our marketing dollars of approximately 10 months demonstrating the effectiveness of our marketing program.
Our app consistently ranked high among crypto first apps and what we believe is the most competitive category in the App store and.
And we recently won some significant awards, including top 10, most innovative personal financial Finance company for 2022 from SaaS Company and top 100, SaaS is growing online brands in the U S from similar web.
We believe our success in growth in engagement stems from our commitment to disciplined and data driven marketing spend.
We think the best way to engage new users and to grow the crypto ecosystem with thoughtful marketing it engages and educates new customers.
With that in mind, we recently launched our crypto for all campaign.
That brings more humanity and accessibility to the world of crypto as it appeal to a mass audience.
The campaign featured voyage or customers from a variety of backgrounds sharing their thoughts and experiences with crypto and Voyager highlighting transparency inclusivity.
Adam and opportunity.
We've seen great results, so far and are very pleased with the level of engagement.
Calendar year 2022 is all about product delivery.
Already this year, we have launched our popular moon mode and have onboarding customers to the beta programs for both our debit card and our desktop app.
The debit card beta program is going well, we are seeing high engagement and learning more about user behavior.
Based on the success of this data program. We are pleased to announce that our issuing bank partner Metropolitan commercial Bank and our program manager UCL I've agreed to move to full widespread launch.
As we onboard the wait list of approximately 200000 users through the remainder of this quarter.
We will obtain significant data that we can then utilize to deliver an even deeper and more robust voyage or loyalty program based on the very popular vgs Tokyo.
The net upgrade to the Voyager loyalty program is in development and we have pre announced that the base participation level. We will begin with only 50, <unk> tokens held and will allow customers to advance a new level by using the app and Voyager ecosystem.
In addition to the delivery of debit cards, we anticipate a widely expanded deployment of the desktop.
Desktop app as well in the current quarter.
The addition of the desktop combined with more coins added to the platform underscores our commitment to delivering more value to our customers.
We're recently the first platform to launch eight points, which helped drive both trading and customer acquisition.
Our payments business has started to get some significant traction as we have added three payments service systems in the quarter and we have added some major merchants to the system as well as launching our business platform, which has added a significant number of accounts in the quarter growing 28% over the December quarter.
This is all on top of the quantify system being core to international expansion coming over the summer.
Another area of activity I want to provide an update on his voyages venture investments.
We strongly believe investing in the digital asset ecosystem over.
Over the last 12 months, we have made a number of equity investments in private companies.
Obviously disclosed investments include fund Strat Voyager partners with our digital asset research led by Tom Lee coin Ledger, who voyage of partners with our tax preparation and townhouse a cutting edge trading platform we use.
We have also made some investments in companies that supply via some of the infrastructure needed to support the business such as so cure or <unk> and know your customer provider.
<unk>, our hgh provider in debit card program manager and block gaming our node provider.
The investments have grown in value since all initial investments we're excited about the future.
We believe participating in the financing rounds of select blockchain associated companies and infrastructure providers, it's not only potentially lucrative investment activity, but also an effective way to stay fully current in a rapidly evolving crypto environment.
Focus on venture investment activities I am happy to announce we recently formed a new subsidiary called Voyager Digital ventures LLC.
The subsidiary formation is only part of our ongoing efforts to further centralizing hone our investment activities.
As you know we spent calendar 2021 investing to create a truly scalable and more mature platform.
The investments, we've made and continue to make allow us to successfully build out our operations and strengthen our foundational core through automation and tooling and scalability improvements and continually improve our customer service.
A truly im extremely grateful to be surrounded by such an amazing team and it's extremely gratifying to see the progress we've made.
I'd like to provide an update on the regulatory front.
As we have shared in press releases, we have been in ongoing dialogues with regulators are.
Our business has remained largely unaffected to date.
<unk> ongoing communications with the state with these state regulators are geared to better understand the terms of their respective orders and clarify certain statements reorders that voyage believes are inaccurate.
As voyagers goal that communications will result in a collaborative and constructive dialogue on an acceptable path forward.
Voyagers discussions to date with the regulators demonstrate a willingness to work with Voyager to pursue a mutually acceptable regulatory framework.
The company believes this provides an opportunity to contribute to the evolution of the regulatory framework for crypto, which is needed more than ever due to the unprecedented growth in the adoption of American consumers.
Before we close I want to I would like to take this time to thank Mike leg for all the work he has done and our Investor relations role.
Mike is moving on to pursue other endeavors and Kevin Rodriguez will fill his role on an interim basis.
Also I am pleased to announce that <unk> will be moving into a chief commercial role Chief commercial officer role to help us build out our revenue diversification as well as partnering with our new CFO and creating cost efficiencies.
And I am pleased to announce that Ashwin first of all is our new Chief Financial Officer.
Ash comes with years of experience, including being a former CFO of Galaxy digital and we are excited to have him on board as his first day as today.
Okay.
In closing we strongly believe that we are in the early stages of global crypto adoption and there is an outstanding opportunity for Voyager to grow users and revenue as we execute our game plan.
As part of this growth we have a goal of returning to positive operating income after adding back stock based compensation in early calendar 2023.
Voyager is at the forefront of displacing traditional banks and brokerages through use of digital assets and I couldnt be more excited about our future.
With that I will turn the call over to Evan to review the quarterly financial results in more detail.
Thank you, Steve and thank you all for joining us today.
As a reminder, all figures discussed on today's call are in U S dollars under IRS.
I will speak to our fiscal 2022 third quarter ended March 31 2022.
As Steve highlighted our third quarter transaction revenue was impacted by significantly lower trading volumes.
Consistent with the rest of the industry.
Our total revenue of 103 million is in line with our previously announced guidance of $100 million to $105 million.
Despite overall lower trading volumes, we continue to add new accounts to the platform with an increase of nearly 115000 funded accounts in the quarter.
So a total of $1 2 million funded accounts.
Overall assets on platform decreased slightly from 6 billion to $5 8 billion in the quarter.
Due to overall lower crypto prices and offset by net new deposits of $574 million for the quarter.
With respect to transaction revenue.
In addition to overall lower volume declining.
Our overall average spread excluding scalable points decrease from 110 basis points from the December quarter to 92 basis points for the March quarter.
In periods of lower volume and lower volatility, we see a heavier concentration of our transactions in bitcoin and ethereum.
These major coin accounted for 37% of our non stable coin value.
Fair to just 25% in the prior quarter.
Overall U S D C customer balances grew $260 million or 45% in the quarter.
In periods of lower volatility.
See our customers moving more into USB C.
<unk> yield increase of trading which is a testament to the stickiness of our platform and retaining customer assets, despite lower trading levels.
Our combined lending safety revenue totaled $45 million as we continued to make progress in maximizing yields with taking protocols.
We continue to expect this taking business to outpace the lending portion of the revenue line items in.
And expect to increase taking either utilization of <unk> going forward.
It is important to note.
With recent news related to USD and Luna.
Voyager does not yet USD listed on the platform and has not placed any asset in any deep by lending protocols such as the anchor platform.
With lower trading volume and a loss in our rewards program, we had an operating loss of $43 million or <unk> $37 million for stock based compensation.
As we move into the fourth quarter, we are making a concerted effort to tighten our spend across the board and have already made progress in narrowing this with the adjustment of our tiered rewards program.
Drive at least a breakeven program.
And overall liquidity, we finished the quarter with nearly $100 million in cash and adjusted working capital of $185 million.
This concludes our prepared remarks with that I'll now turn it over to our operator open the line for questions.
Alright at this time, if you'd like to ask a question. Please press the star one on your Touchtone phone you may remove yourself from the queue at any time by pressing the pound key once again the star one to ask a question.
We'll take our first question from George Sutton from Craig Hallum.
Thank you.
<unk>, Steve based on a couple of things you said that things could be challenging for the following reason you mentioned youre maintaining very high ratings.
In downloads, but you are also in the most competitive category on the App store. So can you help us with that versus now looking to pull back on expenses.
Sort of things are you looking to try to accomplish in terms of key metrics.
Thanks, George and thanks for being with US this morning.
It is challenging there is competition, but where we do set ourselves apart and we always have.
Is the two places one is the number of coins, we have on our platform and we've always said that the ability for consumers to have an easy to use platform.
Probably be best.
That form.
With all the points and participating in the old coin space with our platform as one of our big Differentiators.
That's one two is the.
The debit card that's began to rollout is another big differentiator is people can earn rewards on not.
Just holding USD with us that they earn rewards for the use of our platform. So we still think that the platform we have even though it's more competitive <unk> product.
Product differentiated with those two things.
Our expansion in the international will all make our metrics, which we still look at it as that's an important metric is new accounts.
As our key metric.
But we don't do it at all costs and I think Pam and the team has done a great job.
To maximize.
The efficiency of our marketing program, which again sets us apart so <unk> API for us still number of new accounts the differentiated platform.
How we really set ourselves apart and drive cost efficiency and our marketing dollars.
As everybody else plus covenant, we seem to be very very good at finding areas that others are not participating as well and we find those places and become very cost effective as well and then on the rest of our cost infrastructure finding areas that I think.
Imperative that as a company, whether it's us or anybody else Youre always looking at your cost structure to find out how you can be more cost efficient.
We've made a concerted effort now to begin that as well.
One other question if I could given that the cease and desist came at the end of the quarter can you give us any perspective on how how much impact the business might see from the C synthesis.
We've had we've seen zero impact from the cease and desist.
Business is as usual.
We have and will continue to operate as I said in the statement is that.
We're working with each of the states.
And they seem to be very open to working through all those orders.
Thank you.
Thanks George.
Our next question comes from Kyle Vogt from K B W.
On the regulation.
It sounds as though you're speaking to those individual states to create an acceptable path forward.
However, can you confirm whether you are also sticking with the SEC about our path forward.
And I guess, given what we saw with Wi Fi and their path forward with the FCC laid out with them.
In terms of the filing a registration statement is that what investors should also be thinking about as a base case.
Or how you could continue to offer the earn program or.
Is that not going to be necessary or do you think given your conversation so far with the states and possibly with the SEC.
Well thanks for taking time this morning appreciate it.
Look we as we've been saying for a long period of time, we've had ongoing conversations with all regulators as part of being in a regulated.
Or in this case, an unregulated business, but being part of.
In our regulated business for 20 something years.
The conversations with regulators are always ongoing.
We don't believe we've said that in the statements June we don't believe that these are securities what we offer.
There are multiple paths.
If the path that's determined is to register than.
We have multiple ways to do that as well so.
We're just going to keep having the conversation, but I don't think there is.
In my mind and.
There's a lot of path forward here and it's not necessarily has to be registration.
Got it understood. Thank you very much and then.
Another follow up would just be and sorry, if I missed this in the prepared remarks, but just how quickly do you expect to see those rewards paid to customers.
Move below the aggregate level of the staking and lending revenues.
Like we're still firmly kind of a negative territory for fiscal third quarter. What can we expect it to be kind of breakeven if not maybe profitable on that as we head towards year end.
Yes, so we made adjustments in the program as of May one, we put a tiered rate structure in place.
And so starting in May we expect to be breakeven to profitable in.
In May and June so a lot also from how profitable or breakeven. It is based upon the pharma market as well.
But those those inputs and those changes were made as of May one.
Understood.
And if I can just squeeze one more in just over the past week with investors have become increasingly concerned about contingent risks stemming from tariffs and stable corns more broadly so I appreciate.
The prepared remarks around around tether.
Can you also remind us how much of your lending activity.
It's collateralized as you expect that to change.
Or if you expect the trajectory of that lending balances to change as well and I guess given the uncertainty over the past week or two did you call out any of those loan balances.
Yes so.
Disclosed in our financials the number that's collateralized of the loans Theres collateral there.
So a very small portion as we've been saying for the longest period of time, but.
The people we lend to.
Some of the biggest names in the industry as we stated too we had conversations and verified there was no.
Contagion with them had conversations with every single one of them.
Since we limit who we lend to to these parties.
We're really comfortable we did not have to call anything in and get zero issues with any of our borrowers.
Great. Thanks, Steve.
Thanks, Tom.
Our next question comes from Joe comes from Noble capital.
Good morning.
Hey, Joe.
So outside of the.
We rewards program.
What else are you are you looking at in order to try and cut on the expense side as you said it bring it more in line to where today's environment is.
Yes, it will be.
<unk> rewards program itself will be savings of upwards of $15 million a quarter.
As well and then in addition to that it's just an overall review of all our expenses.
And where we can tighten our belt.
On that front, so it's an ongoing thing.
To add to that a few areas.
We have grown so much.
In the past.
18 months as you know we were tied up with some contract earlier on so now you achieve the economies of scale and library contracts are coming up for renewal.
I'll be using that leverage that we had to apply that.
Negotiate those of our key contracts.
Okay, great for that insight I appreciate it.
One more Steve.
Steve maybe if you could just kind of give us obviously, what's happened here in the past 10 days or so I mean.
What are you guys have been seeing in terms of attracting new people.
To the platform over this.
Interesting times, let's call. It I mean is it just kind of come to a stop just business as usual.
Any insight that you can kind of give us sort of what's been happening here kind of since the beginning of may would be appreciate it. Thank you.
Yes may has started off to be a really good month for us here.
We have seen in the last week.
We have tremendous activity on the platform.
We've seen levels of.
Account growth that were equal to some of the highest point of 2021. So we've seen some some times here that.
We are a place where people go.
When they want to trade and we've seen that customer acquisition I'll pick up quite a bit not go the other way in the last week.
Now we also have seen customers, yes different sets of customers right subset of customers and there are a subset as we mentioned too that in this volatility phase they put their money into USD <unk>. So we've seen usdt balances grow but we've also seen a bunch of new accounts come on the platform and trade. Some of these coins that are pretty volatile.
Great. Thanks for that I appreciate it I'll get back in queue.
Thanks, Joe.
Our next question comes from Matt here, Steve from eight capital.
Good morning, guys. Thanks for taking my question here and my apologies if I may have missed this in your prepared remarks, but I wanted to get into it and just maybe more.
More volatile market I know, you said, you're going to cut a little bit.
The spending but I just wanted to think how does that change your overall.
Investment priorities.
Thank you I appreciate the question I'm not sure I actually mean.
<unk>.
We're going to continue to invest in the business, but I think as Evan pointed out here too.
Do have a bunch of contracts.
That have come up that were renegotiating getting more cost efficiencies out of that as we've grown in scale some of the infrastructure we have.
Allows us to take advantage of scale of higher volume disc.
Discounts.
And then on top of it is the rewards program that we have now changed and turned from being a cost center.
To a profit center.
Those are three main ways that we are but we're not going to stop investing in the business, we see all of that.
The way, we can spend marketing dollars, we're going to be more efficient than the competition and we have been for the longest period of time of where we are.
Found other ways to market.
Others haven't yet and we're going to continue to be most efficient as we can with the capital.
Okay, Great and then are you finding that user acquisition is slightly different in this environment as well or is that kind of a steady path that you guys are really leveraging your brand to kind of get out too.
The word to users.
Yes.
Cost as we've said in the statement as well as that.
Our <unk> was about $288 on an annual basis, and we're getting that paid back in 10 months or less.
With the March quarter, which wasn't very didn't have a lot of volume and wasn't all that volatile.
We've seen a.
A pickup in volume and a pickup of our effectiveness of our marketing again in may.
And again volume and volatility drive a lot and help us drive the.
The costs down, but the other thing that we've started to do is we had.
Probably the strongest crypto community.
In the industry.
And we're leveraging that community to help drive the costs down and with our new Voyager loyalty program two point Aro coming out with some of the benefits that consumers get for referrals and using the platform and then throw in the debit card on that as well we have so many effective ways to drive the marketing costs in the <unk>.
<unk> down that path.
It gets me so excited about this business because we're starting to see it I mean, you can go onto social media and Twitter and see everybody posted the use of the debit card what better way to use marketing tend to have customers help you out and support you and bring that I mean, it's all over Twitter These days with people using.
Their debit card and we have we've got just a small fraction of the 200000 people using that debit card just imagine what's going to happen when the debit card gets some 200000 peoples lands over the rest of the quarter.
No that's definitely true and I look forward to thanks, a lot guys all passionately.
Thanks Pierre.
Once again star and wanted to ask a question we will take our next question from Chris Allen from Compass point.
Good morning, Thanks for thanks for taking my question.
I just wanted to follow up your newer stating that youre seeing account growth in may.
Which to me is is kind of shocking in the current environment.
Anecdotally I've been talking to people, who have trouble, having trouble liquidating assets on our platform and actually taking them out of your platform. So I just wanted to confirm that and the activity that youre seeing from a trading perspective are you seeing people actually putting money to work in crypto or are they liquidating.
Luca will be in position to move to cash more to stable growth.
Yes, we're seeing a whole bunch of things and I don't think anyone has had any.
Any issues, we're taking money in or moving coins off the platform at all.
Platform.
Customers are really active on our platform the platform knock on wood here. When every other platform went down in the last week, we didn't go down.
It's a testament to our cash and the team and the work that we put into scaling the business over 2021 that slowed down a little bit of a product development because we how to scale this business and its proven to fruition right now.
Picked up accounts, we've said this all along that.
That our business is bigger and deeper than just bitcoin and ethereum and by having coins that are active in the marketplace that are volatile.
We're seeing people trade on our platform. These coins and we've seen a lot of active trading in the last week. So we've always been on this mission to bring the accessibility of more than two points in more than five points or six points to the retail consumer we've done that we're seeing people trade a lot.
We are seeing a group of customers that are retreating leaving there their money in USD, which is the FDIC insured up to $250000 on our platform just like any other bank.
Cash youll hold with US has that FDIC insurance cost and we have USD see that people are.
Our getting the rewards on that on the U S. D C as well so within multiple touch points in multiple activities from various groups of customers.
And again I think the last piece is.
And this is all being done we've never listed U S. T. So we have all the other coins we have on the platform. They are active again theres an activity spike.
Happening in May and we're getting we're taking advantage of it and our customers have taken advantage of the ease of use of our platform to trade on our platform.
Why are you cutting costs and raising capital.
Look we want to from.
From a raising capital perspective. These are some of the best names in the industry that wanted to be part of Voyager and expand their relationship with Voyager.
And they're going to help us grow where we're adding more extensions on safety more extensions on our execution.
Assistance in getting us into Ftes and web three all of these are either some of the best names that wanted to be part of Voyager and help us grow grow the business. So we felt it was a really opportune time for us to do that.
Show the market, how important and how we are growing and how Voyager is.
He is one of the top crypto companies in the U S and Thats before we even get into our international expansion and cutting cost is always something every good smart companies should do.
And were just to do that we're going to make sure with a drive to profitability, we want to get to breakeven. So we're looking at every single cost we've gone through all our contract as Evan mentioned the ability for us to renegotiate because of our scale is all at the top of mind.
And then last one for me.
So you changed the rewards program to bring it to breakeven historically one of your arguments for why.
You would avoid being classified as securities there is because.
<unk> lost money on it so you can bring it to breakeven.
Until a risk now with the SEC.
To be classified more as a security.
We don't think that has.
That has much of a bearing in this point in time.
We've also looked at the rates across industry and where we can.
We're comfortable with our analysis on on the program and where it is and then it's not a security.
And we will continue to move forward that way I want to also add one other thing on that.
On the capital too in the capital raise is yes, we're having a good good may but there is uncertain times and to have even more capital on our balance sheet.
From strategic investors puts us in a really good spot.
Thanks Ross.
Thanks, Chris.
And we do have a follow up question from Kyle Voigt from K B W.
Hey, Thank you.
Yes, I just wanted to follow up on the cost discussion.
And really around the operating environment. This remains challenging for a prolonged period, where we're kind of really entering this kind of next crypto winter is there a specific number for kind of the maximum cash burn that we shouldnt really be thinking about per.
Per quarter, and I know it doesn't sound like this quarter.
There is as much concern because it's already right size, the rewards program and it sounds like the activities and generally fairly good but.
Again, if we're kind of in a prolonged.
More challenging operating environment.
Yes.
$225 million of capital in a challenging environment.
There was.
March type quarter of lack of volume and volatility we still with the $225 million of capital. We're extremely comfortable that we can operate our business and grow our business.
Or well into 2023 and 24, we have lots of capital now to continue to grow.
And be able to execute our game plan.
We've seen one thing I want to say that at least.
This team has seen it before.
I've been through this in at <unk> 2001 in my own business at light speed in 2008, when market environments get challenging.
You Buck you buckled down you prepare for the worst and you just figure out how you're going to grow and continue to grow the business and then even in 2020, when we had a little quicker.
We buckled down we figure it out and we feel like where we are today.
We're.
Good for the next couple of years with the capital we have so.
I'm really excited about getting this raise done and having these great partners with us and where this business is going to go.
Okay.
Okay.
And this does conclude the question and answer session I will now turn the program back over to Steve for any additional or closing remarks.
Yes, I just wanted to say thank you again to everyone for joining us. This morning, we're really excited if you cant tell about our business and how it's moving forward.
And lastly to one of our partners and our in our brand and our sports sponsorship partners.
<unk> two our friends over at the Dallas Mavericks and Mark Cuban.
Pulling off of.
Historical win last night, and look forward to participating with them as they keep moving on so thanks to everybody.
I appreciate the time today and thank everyone soon.
This does conclude today's program. Thank you for your participation you may disconnect at this time have a great day.
Okay.
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Yes.
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