Consumer loan marketplace volume reached $2.7 billion, an increase of 131% year-over-year.
Adjusted net revenue was $158 million, up 106% year-over-year.
Adjusted EBITDA grew 426% year-over-year to $81.3 million, with an adjusted EBITDA margin of 51.6%.
Democratized Prime ended the quarter with a balance of $206 million, reflecting nearly 10x quarter-over-quarter growth in matched offers.
YLDS in circulation neared $500 million, increasing over 20x since the end of the third quarter.
Net take rate was 3.8%, up 40 basis points year-over-year.
The company ended the quarter with approximately $1.2 billion in cash and cash equivalents.
The board authorized a $200 million share repurchase program.
It seems like the SBC jumped from previous quarter at $2.8M to be $17.5M and will be normalized around $21M for few quarters. CFO said it’s from third party fully vested grants. This breaks the model analyst had forecast so they adjusted the price target and cause the stock price to drop further last Friday (as well as whole market being red).
On one hand, I’m being excited with their long term growth because they’ve expanded from the HELOC market only to democratized prime. On the other hand, it looks like their cost from SBC is increasing and it is not just a one time thing so I’m not sure what to think of this.
I think it’s important to remember that even though SBC is reported as a dollar amount expense, it has zero impact on cash flow. The cost of SBC to us shareholders is in dilution. I’m not trying to say that dilution is not real, but it is not an operational cost either.
Personally, I tend to minimize the impact of SBC when analyzing the financial performance of a company. In context, SBC is a factor with respect to EPS, but irrelevant from an operational perspective. This is one of the reasons I tend to ignore GAAP financial statements in favor of adjusted statements. While there are no accounting standards for restating income as adjusted, the only time I have seen a reconciliation to GAAP which did not include a line for SBC was when there was no SBC awarded.
Nice find there on the YLDS site which tracks it there! I found the FAQ helpful to understand it is highly regulated by the SEC and audited by KPMG. It sounds like both individuals and institutions can use the coins. I would be interested to learn more if YLDS will have a direct impact on revenue. It seems mainly to facilitate transactions with the added bonus of stable value and generating monthly interest.
There is also this site to track the loan volume on their Provenance blockchain,
It does not seem like there are any major jumps up in loan volume but it is rising at a pretty good rate there. While the company does not give guidance, the combination of these two tracking sites and their monthly updates provide quite a bit of near real time information on the performance of the business.
I thought these were some of the most impressive stats from the last update,
307 partners vs 250 last quarter
SMB loans up 2x qoq
DSCR loans up 4.3x qoq
It seems these newer types of loans are ramping up fast, and I’m hoping there is a correlation between YLDS circulation growth and new partners onboarding.
I’m also thinking with the market cap around 6.5B and 1.2B of cash on the balance sheet, the value looks reasonable for a company posting a lot of impressive metrics and growth.
YLDS growth looks great. I am not suggesting anything is wrong with YLDS (I own Figure), but any new scheme crypto related needs to be carefully evaluated.
The FAQ did not provide information like what the yield was. When I clicked the link on reserves, I got an unsaved search page with no other info - this is a yellow flag, if you’re giving a link in FAQ at least point to the actual filing.
"How do we see what reserves are backing YLDS?, Expanded
“YLDS reserves are invested in short dated treasuries and/or held as bank deposits.”
Does anyone understand in more detail on how it works - if they just buy treasuries, what is the advantage and why should Figure investors care? And why do buyers choose to use this vehicle.
Here’s an example of a what looked like a reputable crypto company giving 10% interest. I remembered this as my friend was pitching it to me back then, I asked him how they were able to give such a high yield and he didn’t know. Sure enough, they went bankrupt.
AI response:
. The Setup: Gemini Earn
In 2021, Gemini launched a retail product called Gemini Earn . It allowed everyday investors to deposit their crypto and earn massive yields (often floating around 8% to 10% depending on the coin).
To generate those returns, Gemini wasn’t just holding the money safely in a vault. They were acting as a middleman, handing those retail deposits over to Genesis . Genesis would then take those funds and loan them out to massive crypto hedge funds (like Three Arrows Capital and Sam Bankman-Fried’s Alameda Research) at even higher rates, pocketing the spread.
It further explains that Figure keeps 35 - 50 bps of the yield. Obviously even on $600m in circulation, this is not a lot of revenue, but with the rapid growth…
Bear
PS I tried to copy only short segments from the most relevant parts of the ChatGPT conversation above, but one other thing. What Figure keeps is not pure profit. GPT says that is used to cover:
The description of the yield and backing is right on that page linked when you scroll down. It says it gives around 4% interest and is backed by US treasuries. The 86 page prospectus was also linked at the bottom of the page, https://cdn.figure.com/docs/markets/fcc-prospectus.pdf
One interesting new detail I learned is that the YLDS in circulation can go down based on the minting and burning mechanisms. First time I checked YLDS.com it was showing 606M and then shows it at 600M now.
YLDS is structured with what is called a “SEC-registered face-amount certificate” and I was reading this is a bit different than a traditional stable coin. The minting and burning aspects work like most stable coins. Here is a rough summary I found of how this works,
Minting (supply goes up) - New investor deposits USD which goes to the Figure Certificate Company and adds them to reserves. New YLDS tokens are created and sent to the investor’s wallet
Burning (supply goes down) - Holder sends their YLDS back to Figure Certificate Company, the smart contract permanently destroys those tokens, equivalent USD is returned to the holder from reserves
It is probably good to know for newer investors here that these YLDS balances are small in comparison the bigger stable coins. These are the top three with approximately circulation balances,
Tether USDT - 112B
Circle USDC - 32B
DAI - 5.3B
I am still trying to understand how YLDS plays into the broader ecosystem with loans. Also wondering if tracking the Democratized Prime matched offers may track better to where revenue could be headed.
Yes, I see the 4% now, I missed it when I looked the first time. I was just pointing out most money market funds show their holdings easily. When I click that SEC link it still goes nowhere.
50bps is still a lot when the total yield is 400bps. But for this use case it might be ok, there are not other alternatives that give 3.5% while holding cash in crypto accounts. I was curious on why anyone would buy YLDS and here’s the answer from Gemini. I feel it’s riskier since it’s not FDIC insured and subject to credit risk of the issuer.
Why buy $YLDS instead of a Money Market?
An investor would choose $YLDS if they need their cash to stay “productive” while being immediately available for other blockchain transactions.
Instant Collateral: In Figure’s “Democratized Prime” marketplace, you can use $YLDS as collateral to take out a loan. Unlike a bank, where moving MMF cash to back a loan takes days, this happens instantly on-chain.
Direct Settlement: On the Figure Markets exchange, $YLDS is the “base currency.” You can trade Bitcoin or SOL directly against $YLDS. This means you earn yield on your cash right up until the second you decide to buy crypto, and start earning it again the second you sell.
Peer-to-Peer (P2P) Payments: You can send $YLDS to another user’s wallet instantly. It is effectively a “high-yield Venmo.” Traditional money markets cannot be “sent” to a friend; you must sell the fund, wait for the cash, and then transfer it.
Cross-Chain Access: Figure recently expanded $YLDS to the Solana and Sui blockchains. This allows crypto-native traders to hold a regulated, yield-bearing US dollar alternative without leaving the DeFi ecosystem.
The “Catch” (Risk Profile)
Unlike a Money Market Account at a bank, $YLDS is not FDIC-insured.
Structure: It is issued as a “Face-Amount Certificate” by the Figure Certificate Company (FCC).
Backing: It is backed by U.S. Treasuries and Treasury repo agreements, similar to a “Prime” money market fund.
Credit Risk: Because it is an unsecured debt security of FCC, your investment is technically subject to the credit risk of the issuer, though the assets are held in a specific regulatory structure intended to protect the $1.00 peg.
I think strategy on YLDS is actually similar to what Robinhood is doing with their deposit account where HOOD’s customer can earn from high yield saving account. This help HOOD to mitigate the cyclical revenue from crypto and equity bull/bear market.
For FIGR, it will probably make their revenue become more stable quarter over quarter.
