CEO Letter - 2024 Annual Report

Dear Shareholders,

In 2024, we achieved unparalleled success—our most robust quarter (Q4) and most successful year in asset management—coinciding with Bitcoin's record-breaking highs. Revenue surged 66% year-on-year to £126,790,433, up from £76,311,449 in 2023, with an EBITDA of roughly £110 million. This equates to an 87% EBITDA margin, showcasing our business model's efficiency and scalability.

2024 proved pivotal for us and the industry. Our initial thesis— digital assets' financialisation —materialised with the SEC's approval of Bitcoin ETFs and institutional adoption. Sovereign states are even actively debating adding Bitcoin to their balance sheets.

Envisioning CoinShares without US market presence revealed a stark reality—we would have forfeited significant industry relevance and competitive edge. As early as late 2022, we started anticipating an eventual policy shift by making some changes to our US Broker Dealer. In 2024, we became a global player through the Valkyrie acquisition, a US digital asset manager and ETF platform. Within a year, we transformed the platform, demonstrating our value extraction capabilities.

The acquisition marked our entry into the crucial US market without compromising on our European growth strategy. Despite a late product launch in February 2021, CoinShares Physical Bitcoin listed on Xetra, Euronext and London Stock Exchange became, in 2024, the European leader of its category. While industry conditions continue to influence our performance, we maintain our European dominance and relevance amidst increasing competition.

This insight underscores our organisation's DNA and singularity: despite our modest size compared to industry giants or privately-held competitors, we aim at identifying and capitalising on strategic opportunities without compromising on the execution of our core business strategy.

Our Business Model and Strategic Direction

CoinShares operates a diversified business model, across three complementary and mainly predictable recurring revenue streams:

• Asset Management: Generating predictable management fees accrued daily. (63%)

• Lending and Staking: Generating predictable lending and staking yield accrued daily. (23%)

• Capital Markets: Statistical arbitrage, delta-neutral trading, and liquidity provision generating spread-based revenue as a function of the market term structure and observed market volatility. (14%)

This structure provides resilience across market cycles and allows CoinShares to be profitable in all phases of the cycle.

Moreover, we continued to diversify our revenue base beyond CoinShares XBT Provider, by growing and investing in new asset management platforms in Europe and the U.S., including CoinShares Physical and Valkyrie. These platforms now serve as foundations for growth through new product launches and further strategic initiatives.

The digital asset landscape remains nascent. A lot of well funded projects are still searching for problems to solve. Among this crowd, Bitcoin emerges as one the most established use cases. Besides, it is noteworthy that the number of Bitcoin Maximalists is going up year on year. This environment isn't merely similar to venture capital—it is fundamentally powered by venture capital dynamics, but with a crucial distinction: blockchain projects offer unprecedented liquidity and accessibility through tokenisation, democratising investment opportunities previously reserved for institutional players through their permissionless philosophy.

My analysis of past product strategies suggests we've been guarded, particularly regarding ETP launches. In a market that functions like venture capital, offering optionality becomes essential. The success of our Solana ETP—now our third most profitable physical product—while other crypto ETPs underperformed illustrates this perfectly. Such outcomes defy conventional forecasting and traditional asset management mindset.

To borrow from venture capital philosophy: "Home Runs Matter, Strikeouts Don't." This represents calculated strategy rather than recklessness—a mathematical approach to transformative success. Looking forward, we must accelerate the launch of additional single-coin products across Europe. These initiatives require a lot of crypto market expertise but modest capital deployment.

Competitive positioning

We spent 10 years building an incredible company in Europe. Some of our earliest employees are still there pushing for growth and innovation. However, to remain relevant and competitive, we are not going to use the exact same playbook for the next 10 years.

Indeed, the U.S. market demands a different approach. While major traditional asset management franchises have largely avoided launching crypto ETPs in Europe since their inception in 2014—creating a market dominated by digital asset specialist firms like ours—these same institutions were positioned at the starting line when the SEC approved Bitcoin and Ethereum ETFs in the U.S. in 2024.

This has created a stark contrast: in Europe, pure-play digital asset managers maintain a significant lead, while in the U.S., we face immediate competition from established financial giants. Our competitive advantage lies in providing complementary offerings—specialised, distinctive products with strong added value.

We leverage our extensive expertise in alternative investment combined with over a decade of digital asset management experience. Our product team is actively developing innovative vehicles similar to our $WGMI ETF—an actively managed Bitcoin Miners ETF that maintains its distinctive position despite emerging competitive interest.

To summarize, we have methodically constructed a robust foundation across two continents. The infrastructure is established. The time has arrived to leverage those platforms through calculated initiatives that align perfectly with our strategic growth ambition.

Lack of Equity Value Recognition (New Version)

Despite strong financial performance in 2024—delivering a share price return of 115%, closely tracking Bitcoin’s performance—our valuation remains well below industry comparables. Our EV/EBITDA ratio stands at 3.6x compared to an industry average of 7-10x for alternative asset managers, and our P/E ratio of 3.8x contrasts with 22-26x for the same peers. This substantial valuation gap, despite our significantly above-average return on equity of 38%, highlights the disconnect between our financial performance and market recognition.

This undervaluation is partly attributable to our listing in Sweden, which limits global investor access and price discovery due to local market dynamics and a complete absence of local institutional capital investing in the digital asset space. To start addressing this, we have adopted a dividend policy and issued dividends, as well as an exceptional dividend payment. Additionally, we have launched a dedicated Investor Relations website, initiated analyst coverage with Red Eye and ABG Sundal Collier, participated in Swedish investor events, and amplified quarterly earnings coverage in Swedish media. However, these measures have yet to resolve the structural challenges associated with this listing venue.

When we listed in 2021, we were clear with the market that listing in Sweden was a step toward seeking a US listing. We reaffirmed this message when we were accepted onto the Nasdaq Stockholm main market in December 2022. With the most recent policy shift in the US, these plans are finally becoming actionable.

As we work to improve recognition for our financial performance and address the current valuation disconnect, we will keep the market updated on our progress.

Looking Forward

CoinShares enters 2025 with a strong foundation: a proven business model generating consistent profitability; established platforms across Europe and the U.S.; and clear opportunities arising from continued institutionalisation of digital assets.

The year ahead will bring challenges such as intensified competition and evolving regulatory landscapes (positively influenced by MiCA in Europe). However, our diversified revenue streams, operational expertise, and strategic agility position us well to continue navigating these developments effectively.

I extend my gratitude to our shareholders for your continued trust and support as we build on our achievements. I also thank our team members whose expertise drives our success daily.

CoinShares is well-prepared for its next phase of growth as we continue executing on our mission to deliver innovative digital investment solutions globally.

Sincerely,

Jean-Marie Mognetti
Co-Founder and Chief Executive Officer