Galaxy's $323M profit leans on crypto marks; data center rent ramps

Galaxy Digital is a New York company whose crypto businesses cover trading, advisory, asset management, staking, self-custody and tokenization.¹ It is also building data centers for AI computing, anchored by its Helios campus in Texas, a former bitcoin mining site it is converting.² Its stock was listed in Toronto from 2018 and has traded on Nasdaq since May 2025.³

Galaxy reports three segments. Digital Assets holds the trading desk, called Global Markets, plus asset management and infrastructure services. Data Centers holds Helios. Treasury & Corporate holds Galaxy's own crypto and investments, which came to $1.72 billion of net exposure at September 30, including $538 million of bitcoin and $841 million of venture and fund stakes.¹ Because that book moves with market prices, Galaxy's profits rise and fall with crypto. Its own risk list names declines in the prices of digital assets or in trading volume.²

Helios has one customer so far, CoreWeave, an AI cloud company, and the 10-Q says the data center business is highly dependent on it.¹ CoreWeave has leased 526 megawatts of computing capacity in three phases. Phase I, 133 megawatts, was fully delivered by the end of the second quarter and carries $315 million of yearly base rent.² Phase II, 260 megawatts, carries $675 million a year, with rent starting in the second quarter of 2027 and an estimated build cost of $4.0 billion.³

Galaxy says the wider market is tight. Its slides cite a U.S. data center vacancy rate of 0.9% and global data center spending near $1 trillion in 2026; both are industry estimates the company chose to show.

The road here was rough. Galaxy lost $482 million in the fourth quarter of 2025, mainly because digital asset prices fell, and it lost $301.6 million in the first half of 2026.¹ Bloomberg reported that second-quarter results missed revenue estimates and the shares fell.²

Old legal costs also linger. The 10-Q carried a $113.8 million provision for claims tied to the LUNA token, which covers the New York Attorney General settlement that calls for $60 million in each of 2027 and 2028.¹ The 10-K had put the provision for that settlement at $151.0 million at the end of 2025.² In an Ontario case over Galaxy's past Terra disclosures, the plaintiffs' lawyers said in August that the court certified a class action.³

Two changes came just before the quarter closed. The chief accounting officer resigned effective September 30, and on September 22 the board named the Head of Accounting Policy as principal accounting officer with the title Corporate Controller.¹ Insiders also traded earlier. A director bought 12,000 shares at $21.536 in an open-market or private purchase in August, and the chief legal officer sold 4,993 shares at $27.03 under a preset trading plan he adopted on May 27, 2026.²

The stock had a hard autumn before the report. Our price file begins at $22.28 on September 15, so we cannot give a full-year price range. GLXY fell 46% from $27.15 on September 22 to $14.69 on October 23.¹ Over the same days Coinbase fell 18% and CoreWeave about 38%, so crypto and AI stocks both sold off, but Galaxy fell harder than either.²

Net income was $322.8 million, against a loss of $85.3 million in the second quarter. Diluted earnings were $0.66 a share and adjusted earnings $0.83.¹ The adjusted figure assumes all partnership units are swapped into Class A stock, so it is spread over 452 million shares.² The quarter was still weaker than a year earlier, when Galaxy earned $505.1 million, and net income for 2026 through September was only $21.1 million.³

The investment book did the heavy lifting. Treasury & Corporate produced $395.0 million of the $454.7 million of adjusted EBITDA, about 87%.¹ Its net income of $347.9 million was larger than the whole company's, because Digital Assets lost $24.7 million and Data Centers lost $0.4 million.² In the second quarter the same book produced negative $78 million of adjusted EBITDA, so the swing came from $427.5 million of gains in that segment, not from a new stream of fees.³

By the company's definition, adjusted EBITDA starts from net income and adds back stock pay, note interest, taxes, depreciation and other one-off items.¹ This quarter that meant $322.8 million of net income plus $93.4 million of note interest, $21.5 million of tax, $21.9 million of depreciation and $16.1 million of stock pay, less $20.9 million of other items, for $454.7 million.² A $102.3 million write-down of crypto carried at cost was not added back: revenues and gains of $8.69 billion, less $8.02 billion of transaction costs and that write-down, leave the $569.3 million of adjusted gross profit.³

Three things make the quarter harder to read. From this quarter, premiums on collar loans are spread over each loan's life as lending income instead of booked up front as gains, and the $37.0 million of lending income includes a catch-up for the year, with earlier quarters not restated.¹ The figures are also preliminary and could change when the quarterly accounting is finished. And the accounting chief changed on the last day of the quarter.²

The trading side grew but did not turn a profit. Galaxy's trading volumes rose 12% from the second quarter, and the average loan book grew 27% to $1.8 billion.¹ Global Markets made $53 million of adjusted gross profit, and asset management drew over $160 million of net new money.² Still, after $59.1 million of pay and benefits, the Digital Assets segment's adjusted EBITDA was negative $9.0 million.³

Data Centers is the part investors are paying for. Lease revenue rose to $79.1 million from $18.9 million in the first full quarter after all 133 megawatts of Phase I reached CoreWeave.¹ That matches Phase I's $315 million of yearly base rent, which works out to about $79 million a quarter.² Adjusted EBITDA reached $68.7 million, but the unit carried $75.4 million of note interest, used $129.1 million of cash in operations and booked $757 million of capital spending.³

The biggest money move was Phase II. A Galaxy subsidiary sold $3.507 billion of 9.875% senior secured notes due 2031, which cost about $346 million a year in interest, with the first payment due February 1, 2027.¹ The notes are secured by first-priority liens on substantially all of that subsidiary's assets, so those lenders are paid first from Phase II.² In return, Galaxy got the money to build 260 megawatts that CoreWeave is set to rent for $675 million a year, against an estimated $4.0 billion cost, and the company says Phase II is fully financed.³

Galaxy ended the quarter with $4.9 billion of cash, stablecoins and Treasuries: $1,325 million of cash, $812 million of stablecoins, which are crypto tokens pegged to the dollar, and $2,756 million of Treasury bills and notes.¹ Much of it came from the new notes. The Data Centers unit took in $3.5 billion of note proceeds, bought $2.75 billion of investments, and ended with $759.7 million of cash, about 57% of the company's cash.²

Debt coming due is not small. $445 million of 2026 exchangeable notes come due in 2026, and they convert at about $33.34 a share, more than double the $15.68 price, so holders are likely to want cash.¹ The $1.3 billion drawn on the Helios I term loan matures on August 15, 2028, and from the first full quarter after the project stabilizes it requires debt service coverage of at least 1.40 times.² Total liabilities of $13.4 billion also include $2.3 billion of borrowed crypto and $2.6 billion of collateral payable, both part of running the trading and lending book.³

Leverage is hard to measure because profits swing. Notes payable totaled about $6.75 billion, so after the $4.9 billion of cash, stablecoins and Treasuries, net debt by that measure was about $1.9 billion.¹ Adjusted EBITDA summed from the fourth quarter of 2025 through the third quarter of 2026 comes to about negative $328 million, so a net debt to EBITDA ratio means nothing here.² In this quarter alone, adjusted EBITDA covered note interest about 4.9 times. Without the investment book, the trading and data center segments made about $60 million against $93.4 million of note interest.³

Galaxy has two classes of stock. The public holds 191.9 million Class A shares, and 196.6 million Class B shares are held by an entity controlled by founder and chief executive Mike Novogratz and by others.¹ Each Class B share, paired with a partnership unit, can be swapped for one Class A share, and the founder controls a large part of the vote.² Class A holders own 49.4% of the operating partnership, so their share of net income was $153.8 million. The exchangeable notes could add up to about 74.2 million more Class A shares.³

In a bad case, Phase II noteholders have first claim on the Phase II subsidiary, and the Deutsche Bank-led Helios I lenders hold a senior secured loan. Exchangeable noteholders and other creditors also come ahead of shareholders.

The buyback is the other big use of cash. Galaxy finished its first $200 million program on October 15, buying about 9.8 million shares, an average of about $20.40 a share.¹ At the end of the second quarter $134.9 million was still unspent, so most of the program was spent in the third quarter and early October.² On October 26 the board approved another $200 million, about 6.6% of the Class A market value at $15.68, or about 3.3% counting the Class B units, and the program has no end date and can be stopped at any time.³

Galaxy says this year's buybacks more than offset dilution from stock pay. For the company, though, it is cash that does not go to Helios or the 2026 notes.

Galaxy's own goals are large. It says the three CoreWeave phases should bring average yearly revenue of over $1 billion at lease-level adjusted EBITDA margins above 90%.¹ It puts total potential contract value above $30 billion, but that assumes CoreWeave uses two five-year extensions after the 15-year term. At the end of the second quarter, the 10-Q put future minimum lease income at $4.75 billion.² Galaxy also claims a Texas pipeline of over 5.7 gigawatts, which assumes full approval of power, while the Texas grid operator has given only conditional classifications during an audit it expects to take several months.³

The bull case: Helios is becoming a rent business, with each data hall leased through a 15-year base term.¹ Phase II rent starts in the second quarter of 2027 and builds as halls are delivered; at the full $675 million a year it would be about 1.9 times the $346 million coupon, or about 1.4 times once the notes' 4% yearly amortization, about $140 million, begins at least ten months after completion.² Galaxy also holds $4.9 billion of cash, stablecoins and Treasuries, though much of it is Phase II note money held in the Data Centers unit. That unit took in $3.5 billion of Phase II note proceeds, bought $2.75 billion of investments and ended the quarter with $759.7 million of cash.³

The bear case, strongest first. The profit is mostly marks on a book that produced negative $78 million the quarter before. Without it, the businesses made about $60 million against $93.4 million of note interest, and Phase II's first coupon comes before its rent starts, though the notes' proceeds also funded debt service reserves of undisclosed size.¹ The data center plan rests on one customer, whose stock fell about 38% from September 22 to October 23, and 830 megawatts approved at Helios II have no tenant yet.² And the numbers are preliminary, an accounting change moved collar-loan premiums from gains into lending income without restating earlier quarters, and the accounting chief changed at quarter end.³

The market has not yet answered. GLXY rose 6.7% on the last trading day before the filing, from $14.69 on October 23 to $15.68 at the October 26 close, a price set before Galaxy released results ahead of the Nasdaq open on October 27, so it does not show the reaction.¹ At $15.68, the Class A shares are worth about $3.0 billion and all 388.5 million partnership units about $6.1 billion, about 2.0 times the $2.99 billion of total equity on the books.² The stock last closed above $20 on October 9.³

The dates to watch: the full 10-Q, which will confirm or change these preliminary figures; the $445 million of 2026 exchangeable notes, due by the end of 2026; the first Phase II coupon on February 1, 2027; the fourth-quarter report, likely in early February 2027, since the last one came on February 3, 2026; Phase II deliveries from the second quarter of 2027; and the Helios I loan maturity on August 15, 2028.¹ Our cautious view would be wrong if the fourth-quarter report, likely in early February 2027, shows Data Centers' adjusted EBITDA above its note interest and Digital Assets back above zero, or if Galaxy signs a tenant for Helios II, for which it has given no timing.² A rally in bitcoin, $538 million of the investment book, could also lift results the way investment gains lifted the third quarter.³

The Data Centers unit that issued the Phase II notes ended the quarter with $759.7 million of cash after buying $2.75 billion of investments, but Galaxy does not say how much of that is locked in debt service reserves or construction accounts, so how much of the $4.9 billion could fund buybacks or the 2026 notes is not known.

The release gives Treasury & Corporate's $395.0 million of adjusted EBITDA but not which tokens or stakes drove it, or how much was cashed in rather than marked up.

Galaxy gives the book's $1.72 billion of exposure at September 30 but no figure for October, when the stock fell sharply.

Galaxy held a call on October 27 at 8:30 a.m. Eastern Time, but we found no transcript, so answers to analysts on Helios II leasing, the 2026 notes or the buyback pace are not in this report.

The release says 830 megawatts of approved Helios II capacity is not yet under lease and names no likely tenant, rent or timing.

Lending income of $37.0 million, $35.8 million of it in Digital Assets, includes a year-to-date catch-up of collar-loan premiums once booked as gains, but the supplement gives the catch-up no separate figure.