Ladies and gentlemen, thank you for standing by and welcome to Securitizer's third quarter 2026 earnings results. All participants are in listen-only mode and this call is being recorded. Following the prepared remarks, we will hold a question and answer session. To ask a question, and if you have joined via the webinar, please use the raise hand icon which can be found at the bottom of your webinar application and be prepared to unmute your line when prompted. I would now like to turn the call over to Sam Ross, Head of Investor Relations. Mr. Ross, please go ahead.

Thank you, Max. Good evening, and thank you all for joining Securitize's third quarter 2026 earnings call. For today's call, I am joined by our chairman and chief executive officer, Carlos Domingo, our chief financial officer, Francisco Flores, and our president, Brett Redfearn, who will be joining us for the Q&A portion of the call. I'd like to remind you that today's presentation, which is available for download on our investor relations website, investors.securitize.io, may contain forward-looking statements which are based on management's current expectations and are subject to risks, uncertainties, and changes in circumstances. Actual results may differ materially from these statements due to a variety of factors, including those described in our earnings materials, as well as in our SEC filings. And with that, I'll turn the call over to Carlos.

Thank you, Sam. And thank you, everybody, for joining us today. It's great to be with you as we report our third quarter results. This was our first quarter as a publicly traded company, and we made significant progress both financially and strategically. We delivered strong recovery in revenue, continued to build and scale our platform, and advanced several initiatives that we believe will shape the next phase of tokenized capital markets. So our mission, as you know, is to tokenize the world, and it remains very simple. It means bringing real financial assets on chain with the rights, protections, and infrastructure that institutions and investors expect from traditional capital markets, but with all the efficiencies provided by blockchains. I'll begin with the financial and business highlights for the quarter, then spend some time in our progress in tokenized equities, fund tokenization, and strategic partnerships. I'll also discuss our fund acquisition of RiverOne, which represents an important expansion into credit origination and asset-backed financing. and our additional regulatory capabilities. After that, our CFO, Francisco, will walk you through the financial results and our outlook in more detail. Let me start with the highlights of the quarter. As many of you know, our second quarter revenue came below where we wanted. This quarter, we delivered a very strong $18.6 million of revenue, 29% sequentially and 13% year over year. That makes Q3 our second highest revenue quarter on record. Thank you very much. Securitas Fund Services reached $25.2 billion in assets under administration, and we ended up the quarter servicing 669 active funds. Aggregate transaction volume was $4.3 billion, up 20% year-over-year. Taking together these results showed both improved quarterly execution and the growing scale of our platform. Beyond the financial results, we continue to expand the business in several important areas that will go into detail later. In public equities, we tokenize our own stock, and the SECZ when we listed in July at the New York Stock Exchange. And following the quarter end, we launched Securitize Stocks, which already has a net to 25 US equities. In funds, we've earned our institutional offerings with Newberg & Berman's High Income Fund, the ARK Venture Fund and additional work with Blackboard. We expanded integration and distribution opportunities across the decentralized finance, stable coins, global markets and institutional partners. And Securitize Capital became an SEC registered investor advisor and the adding to our regular regulatory capabilities. The common thread is that we're building much more than a tokenization service. We're building a regulatory infrastructure that can support the ownership, trading, servicing, and increasing the financing of financial assets. Let's go over with tokenized equities, which we believe represents one of the largest opportunities for being a regulated financial market on-chain. As we've mentioned before, the global equities market is enormous. It's estimated to be $169 trillion, and a very, very small portion is today represented on-chain. That tells us how early this market remains. It's also important to recognize that not all tokenized equities are created equal. There are three fundamental different approaches. The first one is issuer-sponsored tokenization, where the token represents the actual share and ownership is reflected in the issuer's holder register. Second is what are called custodial security entitlements, where tokens that are backed to one by underlying shares and holder have legally recognized entitlements. These are regulated under Article 8 of the UCC and fully legal and compliant in the U.S. and third, they are synthetic products that provide exposure to a set price without the same ownership structure. These are mostly offered offshore and in the current structure do not comply with U.S. regulations. Our strategy focuses on the first two approaches, issue sponsored shares and back security entitlements. The differentiation is not just the blockchain technology, it's the legal rights and regulated infrastructure underneath. We bring together transfer agency, broker-dealer capabilities, trading infrastructure, and access to issuer relationships. That's why we believe we're particularly well-positioned as this market develops. As we mentioned before, tokenized stocks are at a very, very early stage. There's about 4.6 billion in the market represented by this chart. We will go over the breakdown a little bit in a second. That's October 27th. That is roughly the level stablecoins reached in March 2020. Since then, stablecoins grew substantially 64 times as their utility increased, and this analogy shows what early-stage adoption can look like. We're not predicting that tokenized stocks will follow the same path or growth at the same rate. The opportunity depends on real investor rights, trading access, liquidity, and practical use cases with tokenized stocks. When we went public in New York Stock Exchange on July 2nd, we decided to list our own shares on the Solana and Avalanche blockchain from day one. We were the first company doing this to showcase how tokenization is possible in the U.S. in a regulated manner. From September 30th at the end of the quarter and during most of the Q3, SSDC was the largest individual tokenized stock with approximately $278 million in value. Roughly 2.6 times the next largest stock represented on this chart, which is a synthetic representation of another company. In our case, Continental, who is our transfer agent, provides the shareholder record infrastructure and we provide the tokenization capabilities. For the trading portion of it, Jam helps provide the liquidity and extended hour trading in the Solana ecosystem. We follow regulations related to pricing for trading, providing always prices that are within the NBBO or National Best Bid and Offer, therefore providing on-chain the same pricing that you can have trading on a traditional broker-dealer, but on a blockchain. SSC is also accepted as collateral in non-chain lending market, and we will be expanding that lending utility over time. We demonstrated that the issue-responsible model with our own public shares from first day of trading is possible in the U.S. in a regulated way. Subsequently, right after quarter end, we launched Securitize Stocks on October 8th with 12 U.S. equities on Solana and another 13 more on November 2nd, bringing the offering to 25 of the top and most traded U.S. stocks on-chain. Each token is fully backed one by one by underlying share, health or security entitlement under existing law, not a synthetic instrument. The structure is designed to preserve the applicable dividends, voting rights, and economic benefits of the underlying shares. We also do not lend out the backing shares, and we allow investors to tokenize shares to lend themselves their shares, retaining most of the economics, as opposed to what happens to the international markets, where your shares are being lent out with broker-dealers retaining most of the economics. We also think that for retail investors, being able to borrow against their shares is very important and something not easily available in today's markets that DeFi markets and blockchain infrastructure can bring to market. Our convertible entitlement token model also creates a pathway for holders to convert into issuer record shares when an issuer adopts a compatible structure in a seamless way without having to reissue the tokens or change anything on the investor end. So let us summarize where we are in terms of 24-7. First, we already have a live US broker-dealer model for securitized stocks on Solana with USDC instant settlement and extended trading hours. JA is the liquidity partner alongside infrastructure partners that support trading, clearing, custody, and collateral opportunities. Our objective is to expand distribution through additional venues, including the proposed New York Stock Exchange digital ATS that is launching in Q4 and the OKXI's JV tokenized securities venue, or TSV, that is launching in the coming days. Pool 24-7 trading remains a goal, and the additional venues are subject to their respective launch and regulatory milestones. It's important to distinguish what is live from what is planned. As trading moves on-chain, there might be multiple regulatory routes, and our existing business is built to work within today's rules. Another important regulatory milestone in this quarter was the long-awaited SEC innovation exemption that was published on September 17th and that provides conditional relief for trading stocks on-chain using permissioned automated market maker tools. It includes safeguards around equivalent rights, issuer notice and objections, and limits on eligible securities and trading models. We welcome responsible innovation in market structure. Just as important, security of existing regulated broker-dealer approach does not depend on this exemption, but we will be supporting multiple venues, including multiple TSVs. Given the bit of a confusion in the market between the two models, we wanted to bring here a table to just explain how the regulated venues, like the one we run, differ from the TSVs under the innovation exemption. First, from a regulatory perspective, we operate with a fully registered broker dealer, an ATS, and the licenses are permanent to be able to operate without any expiration date. The innovation exemption is an exchange exemption. It allows people to operate without an exchange license and expires in September 2031. More important, what we do is fully regulated and therefore does not require issuer consent. It's not required for convertible entitlement tokens and only for issuer-sponsored tokens that will require collaboration with the issuer and their transfer agent. However, the innovation exemption requires a 30-day issuer opt-out and given the extent nature of the trading venue. You can see also here that there is another important thing in terms of the different execution paths that you can choose under fully regulated broker dealer or the innovation exemption, as well as how pricing works. In our case, we have to follow the national best bid and offer pricing and the innovation exemption PSVs are exempt from the order protection rule. We welcome additional innovation and will continue to build within the existing regulatory framework. Let's move to fund tokenization, which remains a foundation to our institutional business. As we mentioned in the previous earnings announcement, we continue working on unlocking opportunities across the yield curve. This creates new types of opportunity to generate yield and also introduces underwriting credit and liquidity consideration that tokenization itself does not eliminate. What is especially exciting is the utility of the issuance. How eligible holders can use tokenized assets as collateral or connect them with other on-chain services. In Q3, in August, we released a new fund with Neuberger Berman for high income. That is an illustration of this progression along the yield path. Let's review a bit of the fund. So this fund offers tokenized access to actively managed high-income credit spectrums. The fund is launched on Avalance, Ethereum, Solana, and SWE, and supported by Securitize Brother regulated and servicing infrastructure. Eligible holders can use HINC as collateral in the loop-scale USDG lending market, and soon in the Aave market, where we have submitted for a government proposal, which has already been approved. The fund has a 30-day yield of 7.13%, making it as a very attractive asset as for DeFi collateral markets. Subsequently, we launched a new fund with ARK. It's the ARK Venture Fund with ARK Invest, which is an existing registered crossover investment product that we've put on chain with a $500 minimum for eligible investors. This is a retail product, essentially. The fund provides a mix of private and public companies and contains a lot of the most desirable companies, both public and private out there, like SpaceX, Kalshi, OpenAI, Anthropic, Stripe, and very probably it also includes Equity and Securitize. Let's move into tokenized treasuries. As you know, and as we mentioned last quarter, tokenized treasuries have grown dramatically since we launched BlackRock's Biddle in March 2024. The market is approximately 14 times larger than it was at that launch. Securitize accounted for approximately 14% of the tokenized US treasury funds as of September 30, and we are reflecting the position we built in the category alongside major institutional loans. What matters most is the institutional cash and treasury products have demonstrated real demand for tokenized infrastructure. And we continue working to make those assets more useful for liquidity settlement and collateral. In Q3, we also deepened our partnership with BlackRock and continue expanding well beyond the initial bidder launch in March 2024. During the quarter, we supported the launch of B-Reserve, BlackRock's new registered money market fund designed to serve as a genius compliant reserve assets for eligible stable funds. Securitize provides the tokenization and transfer agent infrastructure. We also expanded Biddle to Tempo, connecting an established institutional cash product with another blockchain ecosystem. We think Tempo is going to be one of the important players there, given the support from Stripe, which is one of the largest fintechs in the world. We're also adding liquidity capabilities through atomic on-off ramps, designed to allow eligible investors to move instantly between institutional share class of Biddle and USDC, with Athena as the liquidity provider. These initiatives show how tokenized funds and stablecoin infrastructure are becoming more closely connected, creating opportunities for greater liquidity and utility. All right, let's move into partnerships and how we, you know, connect regulated securities infrastructure with distribution of payments and utility. In Q3, we announced a very exciting partnership with a company called Socios.com where we are exploring how regulated tokenized equity could open a new ownership opportunities around professional sports. Socios.com is the largest fund engagement company where they issue fund tokens for funds of multiple professional sport teams. And they have not recognized that the funds want to move your owning fund tokens into owning ownership on the clubs that they support. Given that providing equity ownership is a regulated manner, Socios.com has partnered with Securitize to bring securities issuance, onboarding, and investing infrastructure to its support relationship and fund engagement capabilities. It's an example of how the addressable market beyond conventional funds and public equity Also, stablecoins are one of the most important infrastructures for our products to be successful. You want to have on-chain, not just tokenized securities, but also tokenized dollars. So things like redemptions, paying and settlement, trading, et cetera, can become more efficient. This quarter, we joined two partner networks supporting USDG and OUSD, bringing stablecoin infrastructure closer to our tokenized funds and securities. USBG is already integrated in our platform and is using the HING collateral market on the scale. These stablecoin rails can support more efficient funding, settlement, and on-chain lending for eligible investors. Beyond the operational benefits, the most important thing is that network participation can also create additional economics for Securitize when we mint and distribute stablecoins rather than simply relying on third-party stable liquidity. By being a member of the network, we retain some of the economics of the underlying assets in the stablecoin. The next area where we have signed two important partnerships is Korea. We're working with major Korean institutions to develop tokenized securities as the local regulatory framework evolves. We think in the future, Korea can become a very important market for us, so we're setting the foundations and preparing for the coming regulatory changes. Our first collaboration is with KB Securities, one of the largest securities firms in Korea. It combines institutional distribution of REITs with securities as regular infrastructure. The initial focus is a tokenized money market fund for institutions and optimism, with potential to expand in other investment strategies as securities rules permit in the country. We also announced a memorandum of understanding with LG CNS, a very large Korean system integrator to explore tokenized assets, stable coins, and market infrastructure for financial institutions in Korea and across Asia. All right, so let's move to the RiverOne acquisition. As we mentioned when we were public, one of the reasons we wanted to go public is because we think the market is going to consolidate and we wanted to be in a position of being able to acquire companies, both with our cash in our balance sheet as well as our liquid equity. So today we're announcing the first plan acquisition of a company called RiverOne that represents our entry into trade and asset origination, creating opportunities beyond the tokenization and servicing business we've already built today. We spent years building the infrastructure to bring traditional financial assets on-chain, first through funds and more recently through public equities. We believe the next big opportunity is great. With our plan acquisition of RiverOne, we're expanding into asset-backed finance, a large market where stable home capital and blockchain infrastructure will create meaningful new opportunities. This is not simply about financing assets we already tokenized. It's about expanding into a new asset class and participating in a new part of the value chain with the potential for additional revenue streams. Today, there are approximately $300 billion in stablecoin supply, but very little of it is actually used to finance activity in the real economy. At the same time, the U.S. asset-backed finance represents approximately a $6 trillion market projected to grow to $9 trillion in 2030. We see an opportunity to connect these two markets by directing capital towards appropriately underwriting credit assets that finance business and real economy activity. This is a natural next market for security stupors. Organization doesn't eliminate trade risk, but we believe it can help connect investors, originators, and funding sources in more efficient ways. RiverOne is a structured credit and asset-backed finance business that works with fintechs, originators, and other capital-intensive companies driving capital from the stable funnel. Its team brings specialized expertise in origination, structuring, and the writing using an AI engine and managing credit facilities, including finances secured by receivables and other underlying assets in a programmatic way. That's compelling for us because RiverOne adds both a new capability and an experienced team that would otherwise take significant time to build internally. What makes RiverOne especially interesting is the combination of its creative expertise and its proprietary technology. They have three modules in their platform. The first one, called Argo, supports underwriting and creating analysis using an in-house AI underwriting platform that the creative team uses. The second one helps manage the financing facilities, monitor governance, and track performance in a more efficient way, and replaces 2-3 days of spreadsheet reviews with on-chain infrastructure that is much more efficient and instant. Finally, hardware provides a path to tokenize and distribute created structures through secured as existing infrastructure capabilities. Together, these capabilities could allow us to participate early in the lifecycle of created assets from origination and structuring through financing with stablecoins and on-chain distribution of the tokenized created products. that creates opportunities for origination fees and participation in financing economics with the potential for higher value monetization as the business develops. This is important. We're getting a team with deep expertise in asset-backed finance and crypto technology. The strategic rationale is very straightforward. We're building infrastructure to tokenize service and distribute assets. RiverOne will expand our business into trade origination itself. The acquisition remains subject to closing and we're excited about the opportunity it could create for Securitize in the coming days when closing happens. Finally, let's talk a little bit about new regulatory capabilities. Regulation has been central to our strategy from the beginning. In Q3, Securitize Capital became an SEC registered investor advisor, another important milestone in the development of our regulatory platform. As of September 30th, Securitize Capital had approximately 439 million assets in assets under management, exceeding the 150 million allowed for Excema advisors to operate. This registration gives us greater flexibility to scare our advisory business, develop additional institutional strategies, and pursue management fee opportunities. It reinforces something that has differentiated Securitize from the very beginning. We're not simply a technology provider using tokenization. We bring together a transfer agent, a broker dealer, an alternative trading system, investment advisory, and fund admin capabilities with operation both in the U.S. and Europe. That's the infrastructure institutions need as tokenization becomes an increasingly important part of our capital markets. With this, I'd like to conclude my overview of our strategic progress, and I will turn over to Francisco for the financial results and outlook.

Thank you, Carlos. Good evening. For my prepared remarks today, all reference growth rates are on a year-over-year basis, unless I indicate other ones. Total revenue was $18.6 million in the quarter, up 13% versus the prior year period, driven by higher tokenization revenue, partially offset by modestly lower asset servicing revenue. On a sequential quarter basis, total revenue was up 29%. As Carlos mentioned, this was the second highest order for total revenue in the company's history. Total revenue for the first nine months of 2026 was $52.5 million, an increase of 15% versus the prior year period and a record nine-month period for the company. Tokenization revenue was $11.5 million, an increase of 29% versus the prior year period, largely due to the integration of new protocol as well as higher distribution fees in the current period. Asset servicing revenue was $7.2 million, a decrease of 6% versus the prior year period, primarily driven by lower fund administration and accounting fees in the securitized fund services business, given the decline in assets under administration, partially upset by higher service fees in our transfer agent business. Turning to expenses. Total operating costs and expenses were $42.2 million, an increase of $27.3 million, or 183%, predominantly driven by higher SG&A and higher compensation benefits, including expenses associated with the completion of our business combination. While I'll discuss each one in greater detail momentarily, our total expenses this quarter included approximately $21 million of expenses, which we would generally consider to be non-recurring in nature. Corp. operating expenses excluding these items was approximately $21 million. Cost of revenue in the third quarter was $4.5 million, an increase of $1 million, or 29%, primarily due to higher software, systems, and market data costs, and higher cost of revenue generating employees and contractors. As mentioned last quarter, cost of revenue consists largely of direct labor in our blockchain engineering and integration divisions, fund accounting, and client-facing personnel, and capitalized software amortization. SG&A expenses were $20.8 million, an increase of $14.1 million versus the prior year period. The increase was primarily driven by share-based expenses related to warrant obligations, higher legal, accounting, and consulting fees, including costs associated with operating as a public company, higher advertising, promotion, and public relations costs, and higher insurance costs. These were partially offset by lower software and subscription expenses in the quarter. Compensation and benefits were $16.5 million, an increase of $12 million versus the prior year period. The increase was primarily driven by higher share-based compensation expense, including $5.3 million of non-cash earn-out-related expenses in connection with the closing of the business combination, and higher headcount, including the hiring of corporate roles necessary to becoming a public company. Provision for credit losses was approximately $300,000 versus approximately $100,000 the prior year period, turning to non-operating income and expenses in the third quarter. Total other expense net was $42.6 million, driven by two notable items related to the business combination, partially upset by higher dividend income. Looking at these two notable non-operating items, they combine for $43.9 million of expenses in the quarter. Before I get into the specifics of each, I'd importantly stress that both of these expenses were non-cash charges. First, we recognize a $20.6 million loss associated with the settlement of convertible instruments. This was a one-time non-cash charge from converting our pre-closing convertible notes, saves, and preferred stock option into equity at the close of the transaction, reflecting the difference between the value of the shares issued and the carrying value of those instruments. Given that this was related to finalizing the business combination, we do not anticipate any impact for these instruments in future periods. Additionally, we recognized a $23.2 million charge for the change in fair value of earn-out liabilities. If you recall, both securitized and sponsored earn-out shares were granted as part of the business combination. Even that sexy share price at September 30, 2026 was $14.59 versus $11.78 at the time of closing, accounting rules required us to recognize a corresponding expense. with note that this line item will fluctuate quarterly as it's entirely non-cash. For example, if our share price at the year end were at today's level, we would expect to report a meaningful non-cash gain in the fourth quarter. Separately, with other non-operating income and expenses, dividend income was $2 million, driven by the higher average balance of dividend-bearing investments. reflecting the investment of cash received in connection with the business combination. However, given our intention to strategically leverage our balance sheet in a dynamic way, we would caution against assuming that we will generate this type of dividend income on a quarterly basis going forward. Looking at adjusted EBITDA. Adjusted EBITDA was negative $2 million compared to negative $5.5 million in the prior quarter, representing a sequential improvement of $3.5 million. Compared to positive adjusted EBITDA of $3.6 million in the prior year period, this represents a decrease of $5.6 million, driven by higher compensation and benefits as we continue to scale the business, higher SG&A expenses, including professional and consulting costs associated with becoming a public company, partially offset by the higher total revenue. For the third quarter of 2026, Securitize reported a GAAP net loss of $66.3 million compared to net income of $4 million in the prior year period, a decrease of $70.3 million. The higher year-over-year net loss was driven by higher expenses, including headcount growth to support the expansion of our business and prepare for being a publicly traded company, and stock-based compensation, along with non-recurring costs associated with the company's business combination. The higher net loss also reflected losses on convertible instruments and change in fair value of earned liabilities, both of which were related to the closing of our business combination in July 2026. Net loss per diluted share in the third quarter was 41 cents. I would note that given the accounting rules around share count as a private company, there's no real meaningful earnings per share comparison to the prior year period to highlight. Again, I think it's important to put our results into context. While our reported GAAP net loss appears significant, approximately 90% of it, or roughly $60 million, was attributable to charges that were mostly non-cash in nature, including those associated with closing the business combination and the warrant-related expenses. From a capital and balance sheet perspective, Securitize remains in a very strong position with roughly $300 million in net cash and liquid securities on our balance sheet, with zero debt, a little bit less than $2 in net cash per share as of September 30, 2026. We will continue to leverage this balance sheet strength to grow our businesses, both organically and inorganically, but we'll be disciplined around financial returns for this investment. and as you likely saw in our press release, our board of directors has approved a share repurchase program to repurchase up to $50 million of our common shares through the end of 2027. Given the volatility in our shares since being a public company, this authorization provides us the flexibility to be opportunistic when we see significant market dislocations. This is just another tool in the toolkit that our strong balance sheet allows us to pursue. Now, before I turn to our outlook for 2026, I wanted to cover one small housekeeping item. As it pertains to the river acquisition that Carlos discussed, we're not disclosing financial terms for that transaction today. So at note, the deal was attractive to us from both a strategic and financial point of view. We also do not expect the acquisition to have a material financial impact on our fourth quarter 2026 results. Now, onto our financial outlook for the full year 2026. We're quite pleased with the strong third quarter and the momentum we're seeing in our businesses. However, as previously discussed, the timing of revenue recognition for certain tokenization initiatives and on-chain integrations is influenced by project milestones and execution schedules, which can result in some variability between quarters. As a result, we continue to expect total revenue to be in a range of $70 to $80 million for the full year 2026. Looking ahead to the fourth quarter, we expect improved poor operating results supported by continued revenue momentum and disciplined cost management as we move beyond the significant transaction-related impacts of the business combination in Q3. So I'll just wrap up my remarks by saying how proud I am of our team and financial results for our initial quarter as a public company. We posted the second best revenue quarter in our history today. And while there was some expected expense noise in the quarter from the closing of our business combination, we managed the business tightly and saw a modest $2 million adjusted EBITDA loss, significantly improving from previous quarter. We remain extremely excited about the opportunities ahead and our balance sheet strength with approximately $300 million of cash on hand. Positions securitize well to capitalize on what we still see as the infancy of the secular trend towards tokenization. And with that, we'd be happy to take your questions. Operator, please go ahead and open the line for Q&A.

We will now move to our question and answer session. If you have joined via the webinar, please use the raise hand icon which can be found at the bottom of your webinar application. When you are called on, please unmute your line and ask your question. We kindly ask that you limit yourself to one question and one follow-up. We will now pause a moment to assemble the queue. Your first question comes from Devin Ryan with Citizens. Devin, please unmute and ask your question.

Great. Hi, Carlos. Hi, Francisco and Sam as well. How are you? Good to see you. A question on tokenized equities. Obviously, I think a lot of us are tracking some of the public companies that have opted out of the OKEx ICE tokenization pilot. I think that's also creating some confusion. Thank you for joining us. We'll be right back. The issuer and transfer agent being directly involved. And so I'm curious kind of what you're hearing from conversations. And then ultimately, the question is, does that push the market maybe more towards securitizers, more issuer-led model? And what do you think issuers would need to see before they become more comfortable participating directly?

Thank you, Ryan. Definitely all these offshore synthetics, the 10 different varieties is creating a lot of confusion for issuers. And you might have seen how some very public CEOs like the AMC CEO, they've been complaining about their shares being tokenized offshore without following U.S. regulations. and I think that has created also a confusion when the OKEx ISTSB sent a notification to the issuers which was just like sending a notification to the headquarter and in some cases we've talked to some issuers they don't even know who actually received the tokenization and I've talked to the head of digital assets Two of the issuers that opt out and they didn't even know who was the person opting out. I think that first we need to clarify that for what we do, because we're fully regulated, we don't require any opt out from the issuers. This is strictly for the TSB because of the exemption situation from the SEC. I think that what is allowing this is we obviously have reached out to many of the issuers that have opt out and as well as discussed with others and has allowed us to actually have a conversation with them to be able to explain them between the different models, the offshore synthetics, the fully regulated US-based, the issuer sponsor versus organizing their entitlements as well as what the TSV is. So this allows us to have these conversations that otherwise would have been hard to have. So we still continue being very bullish about it. and many more. Thank you very much. and all the noise in the industry about the different tokenization models that we need to live with. But overall, we don't think that this is a problem long term on moving into tokenized markets and insurers accepting to tokenize their shares. Because as I mentioned many times, there is no publicly company CEO that doesn't want to reach out more investors, have better liquidity or be able to identify and communicate and engage with their investors in a more direct way. Once you manage to explain those advantages as well as why there's regulated venues and not regulated venues and the difference between that, I think that's when you start getting traction with them.

This is Brett Redfearn. I just wanted to add one thing. So, Devin, great question. Tokenization and TSVs are two different things. Just to put a fine point on what Carlos said, if somebody opts out of a TSV, it does not mean they are opting out of tokenization. One is tokenization is the form in which the security is offered. The other one is sort of an innovative new market type. So as you will see with all of these issuer opt-outs, we continue to launch tokenized stocks on a regulated platform and we will continue to do so. That's just a very different thing than opting out of a TSV.

I appreciate all that colors question we get and I think just getting some deeper context there is helpful. Just as a follow up, can you talk a little bit more about the pipeline of potential either new partners or new products on the asset management side and just how that's have been progressing obviously and see the progress with BlackRock and Neuberger and others where it seems like you have partners that are finding product market fit. And so if you can give us any sense of how that's maybe igniting new conversations. Is there anything that also is connected you're kind of watching for on the regulatory side that could drive more of an unlock with the asset management partners where you feel like either regulatory wise or some type of capability that will bring more of them into the mix as they see some of the larger firms having success with some of your, obviously what you've done with them on the tokenization side.

So without being able to disclose any specific names, what I can tell you, Ryan, is that I've been doing this for a long time, is that the last 12, 18 months, the amount of inbounds that we're getting from large asset managers, as well as large banks that some of them have asset management franchises, and many more. The first conversation is still the product actually launched. And when we engage with these very large organizations, in many instances, they have to go through internal procurement process, if you want, with an RFP that is very formal, that they invite dozens of companies to bid for the projects, etc. will be very positive that we're going to continue seeing Securitize dominating on the, if you want, tier one asset management space, which I think is where we have our strength because of our regulatory capabilities, as you mentioned, and also because of the credibility that we have as a regulated entity by having worked already with, you know, some of the largest asset managers in the world. So conversations take time. The process of, you know, being chosen for the tokenization partner and launching products. It's an enterprise sale type process that takes time, but we're very positive about the space. You will continue seeing some further announcements in Q4 and into Q1 with some names that you will recognize very well.

And this is Brett again, Devin, just to address the part about the regulatory unlock. We remain in the most favorable regulatory environment we've ever seen in terms of what can be done with tokenization and products on the blockchain. Even with the elections, we are in a world where people see that, people are building towards it, and that regulatory unlock continues unabated.

Great. Well, I'd love to sit here and keep asking questions. There's a lot to talk about, but I appreciate it, guys, and I'll hop back in the queue and pass it along.

Thank you. Your next question comes from the line of Gareth Cassetta with Kantor. Gareth, please unmute and ask your question.

Hey guys, thanks for taking the question. Maybe just double clicking on the last one and kind of the new fund launches you guys talked about. I'm wondering if you could detail the difference in economic profile that comes with the different types of roles you guys are playing, maybe using the new BlackRock fund and ARKVX as an example. Correct me if I'm wrong, but I think on BlackRock, you guys are the transfer agent and the token is actually the fund's share itself. And then on ARKVX, the token is an entitlement to shares that Securitize Markets holds as a broker-dealer. So could you just maybe walk through at a high level which one of those ends up contributing more to the Securitize top line? And then if there are any other types of involvement structures that you might have with other funds on the platform?

Yeah, actually, we can use the three funds that we launched this quarter to kind of illustrate the three different models on the B Reserve. As you mentioned, this is a BlackRock managed fund where it has been created specifically to be on chains and tokenized. And we are their transfer agent and tokenization platform. So we manage the shares of the fund. And as such, we take this as a service provider, which is a percentage of the fees that the asset manager charges. So I would say this is like you know model number one in the with BlackRock as well for BIDO for instance we also have distribution fees because we act as a property dealer as a distributor as well which we're working to be for BIDO Reserve as well on the second model which is the product that we launched with Neuberger this is a fund that Securitize Capital our registered investor advisor manages and many more. and the third model which is the ARK VX with ARK Invest. This is an existing fund where we have just basically issue an entitlement against shares that we're keeping in custody and then there where the value occurs for us is on the distribution portion of it, not that much on the asset servicing side.

That's really helpful, Collar. Thank you. And then maybe just a higher level one on the RiverOne acquisition. Maybe just like, can you walk us through the deal from start to finish on who the actual borrower is, what the collateral is, and where the stablecoin capital might come from, and just the overall business model of RiverOne? Sure.

So as we mentioned in the presentation, there is $220 billion in stablecoins out there. If you look at how much of those are being lent out to earn a yield, it's around 10%, which is the stablecoins that are lent out on DeFi markets. The actual yields that you're getting there are pretty low. Surprisingly, you can go to Aave and other places to see it. Some stablecoins have high yield because they're subsidized. But if you're an individual user holding a stablecoin and you lend them out on markets, and many more. that there is an opportunity to basically enable stablecoin issuers or stablecoin holders to be able to kind of lend assets into better lending markets that are built out with a similar kind of structure. It's all controlled and managed on-chain but against real-world assets that are used as collateral and then What those real assets are, we've listed some in our presentation, but this could be fintechs, mobility, telecom, payment lenders, etc. that have assets that they need to borrow against them. So the way it works is that the RiverOne team has an AI underwriting platform. and many more. The credits are managed and the loans. And then on top of that, we can tokenize the loans from the LPs. So the flow is very simple. So we are approaching on one side, you know, stable coin, either issuers or holders to be able to borrow from them. And then we're approaching people that need to borrow from, let's say, companies that are doing, you know, and many more. Thank you very much. Thank you very much. and then because we there take the net interest margin, which is the spread between the borrower and the lender, the monetization opportunities are much higher than just simple originating or distributing assets. So I think that this is from a take rate perspective, this is going to be, you know, a higher business for us once we get it to scale.

Awesome. That's really great, Kohler. And thanks for the questions and congrats on good quarter.

Your next question comes from the line of Sanat Shah with Rosenblatt Securities. Please unmute your line and ask your question.

Hi Carlos, Francisco, and Sam. Thank you for taking the question and congrats on the quarter. Could you just spend some time talking about the revenue model for the various venues that are coming up like the OKX TSV venue and the NYC ATS and how that's going to affect the economics for the products you're offering?

So the OKExize TSB, we expected it to launch, you know, pretty soon. Don't want to disclose dates that have not been disclosed by them, but as we put on the deck, this is imminent. There, you know, we are the provider of the tokens that will trade there. These will be some issuer-sponsored tokens as well as convertible entitlement tokens. And then we have an arrangement with them to share trading fees that we have not disclosed, but that's and many more. to the ATS broker dealers connect and the broker dealers bring the retail flow. So as a broker dealer bringing retail flow, we'll be able to take commissions on trading from the retail people trading, not from the New York Stock Exchange ATS. So overall, both, you should think of it as, you know, trading volume being probably the main driver. Same for the stocks that we're trading today in Solana with Jam as the main source of revenue growth. But then we're also working, as you might have seen, on enabling other interesting opportunities with lending of equities, tokenized equities, which is something that today is very hard to do for retail people. Like if you have equities from a broker dealer, you can take margin to trade more, but you cannot just borrow to buy a house or buy a car. and if you this is for the high ultra high network is available but not for everybody so we think that lending markets are also going to be another interesting money decision opportunity for us there.

Awesome and for the socios.com sports team ownership partnership is that very similar to the fund admin business is that where it would show up is that the same revenue model?

No, no, it's completely different. So on that partnership, basically, we are going to be the regulated entity, basically distributing and eventually trading those tokens that represent equity. So we will have distribution fees. which we will share back with socio.com because they're bringing the flow of the retail people that they already have on their platform for the fund engagement tokens. And then once those tokens also become liquid and they can trade, we have a fully regulated and many more. So there will be distribution fees and trading fees. It will not be asset servicing. Asset servicing is more for funds and things like that that we manage as a transfer agent or a fund admin. When it comes to equity, the revenue opportunities are distribution and trading. It will happen with stocks as well.

Awesome. Thank you for taking the question and congrats on the quarter again.

Thanks, Sid. Your next question comes from the line of John Todaro with Needleham and Company. Apologies for that. John, please unmute and ask your question.

Hey guys, thanks for taking my question and congrats on the progress this quarter and the good results. I have a broad one and then a little bit more in the weeds one, just kind of related to modeling. But on the broader side, number of different product segments you guys are launching now, where do you see kind of it evolving? Maybe the near term most impact and then maybe medium or longer term most impact? on the tokenization side, benefiting the platform. Is it single name stocks? Is it some of the funds that you found success in? Just help kind of frame that landscape up for us. And then I have that follow up modeling question.

Well, on the fund side, this is our bread and butter, is where the majority of our revenue today comes, and we definitely continue seeing big opportunities. We just launched three funds this quarter, so we see those contributing significantly to future growth. I think ARK is more about distribution and giving retail access to this product that is otherwise hard to invest, and we're going to be looking at potential trading opportunities in the future with them. then on the Neuberger Fund, it's more about people that want to use it as collateral for DeFi because it's a good source of collateral, it's a high quality asset, it was yielding above 7% so you can borrow at a cheaper rate against it to either leverage it or create another trading strategy, etc. So we see a driver as and many more. Now, especially with Genius becoming effective in Q1 next year, more companies will want to launch stablecoins and many of them will want to actually have the reserve in tokenized form to be on chain as well and provide visibility about the reserves. And then we see the growth coming from capturing that stablecoin reserve market. Now, on the equity side, I think it is very early days, as we show on the presentation. There is very little, you know, equities on chain. Most of them are still synthetics. Volumes are also very, very small. But we're very bullish as a long-term opportunity because we think that you know very small percentage of growth uh and volume could actually provide significant uh you know few opportunities for us so so you're gonna see us continue making progress in q4 in two directions first one is continue bringing more names uh second supporting new venues where our uh stocks can trade if our stocks are the most and many more. and many more. and Q1 onwards, tokenized stocks start taking off and start becoming a significant portion of our future revenue.

That's great. Thank you for that. I appreciate it. And then just on maybe SG&A spend, I know you're not going to comment on some of the RiverOne financials, but just as that integration goes through, what is a good kind of run rate or framing for SG&A that we should be thinking about?

Hi, John. Thank you. Thanks for asking me a question. I was starting to feel bored here. So as we mentioned, Q3 was affected by some of the business combination expenses. So it's good to normalize the view. If we take a look at SG&A, we recognize expenses associated with the warrant expense, as well as some transaction-related expenses. These are roughly $13.4 million that need to be adjusted. If we make the adjustment to normalize the number, we end up with roughly for $4.5 million, which could be seen as a wrong rate, as most of the expenses are skewed towards the big side of the type of expenses. You didn't ask, but I think it's also important to normalize compensation and benefit expenses. In that case, we also saw some entries that were related to the compensation of share base associated with the business combination. If we also normalize that number, we end up with roughly $9.5 million. It is also a good reference going forward. Just bear in mind that we will continue to increase headcount, probably not at a high pace, but we will continue making our field hires towards the end of the year to support the growth of the business. But if you factor that part in, it could be a good baseline for the run rate.

Understood. Thank you. Appreciate it, gentlemen.

Keep in mind, we are in an industry that is exploding. So I think that we need to keep a balance between trying to stay close to profitability as we did this quarter, but without losing growth opportunities. There is a lot of stuff out there. As I mentioned in one of the early polls, some of these projects are very expensive. and many more. that we continue investing in the space and we don't miss growth opportunities in the future. And as Francisco mentioned, our balance sheet is super large compared to the cash that we're consuming. So I think we can afford continuing investing in the future of the business.

We will now take our final question from the line of Pete Christensen with Citi. Pete, please unmute and ask your question.

Good evening. Thanks for taking my question. A couple questions here. First, and maybe you can help reconcile this a little bit for us in the way of thinking maybe like a scenario over the next – and a couple of quarters, but the relationship between tokenized AUM, also transaction growth versus tokenization revenue. I'm just curious, how should we be thinking about that and the scenarios there underlying that, especially if we think about, I guess, tokenized revenue yield, I guess, as a percentage of AUM. Does that skew differently over the next couple of quarters, months with equities or some other projects or pipeline items that you're considering?

Thanks, Pete.

So as we mentioned before, tokenization revenue is still pretty much driven by the integration of protocols. Still, this portion represents the majority of the revenue, but we're pleased to say that AUM-based and transaction-based revenues are starting to pick up. I will say that this quarter is still not meaningful, but it's trending in the right direction. Going forward, as Carlos already mentioned, we do believe that tokenization of equities will bring additional transactional revenue, but I see the integration of blockchains and protocols still to drive most of the results under this category, at least going through next year. Going forward, we believe that the combination of a faster pace in the growth of the other revenue streams, such as AUM-based and transactional-based, will surpass the on-chain integration revenue, and in the medium and long term will become the main driver of our revenue in general.

On the AUM side as well, it's not linear. I think we've explained this before, but it's worth going over again. The AUM growth or decline because it's not stable, it fluctuates over quarters. It doesn't directly correlate linearly with revenue because it depends on the AUM composition. We have some products that are bigger, that fluctuate more, like let's say, you know, pressure is orbital. that have a lower take rate than we have other products that are smaller, but that, you know, we monetize more. So you might see that revenue goes up, AUM goes up, but revenue doesn't go up the same amount. But you can also see that AUM sometimes, you know, declines a little bit and still revenue, you know, It's not a straight line, one or the other, because it depends on the composition of the AUM, because as we mentioned in the other question that we were asked before, depending on how the product is being served by us, we monetize more or less, and also depending on the fees of the product itself, and some products like Treasuries have lower fees than some other products like Let's say income products or credit have much higher fees. So it's not a correlated line. I think you could build a model because you can go through all the perspectives of the different funds and you can reverse engineer that if you wanted to. I'm not going to do your job, but there's a model that you could build based on there. Now, on the transaction side, as we mentioned we put it as an indication of the health of the platform because we believe that if the platform is a stall like some platforms out there where there's like you know somebody investing and nothing happening then you should suspect that maybe that is not like an organic and many others. We are not monetizing that today, except for a very, very small percentage. But as things like equities take off, where transaction, as I mentioned before, is going to be one of the main metrics of how we monetize. And as we start to enable, you know, bringing retail flow, launch of the trading venues, etc., that will become more meaningful and be monetized in the future.

That's helpful. That's a good suggestion too. I think we're going to have to track these things individually. But no, that's super helpful. I think the RiverOne acquisition is super interesting. I'm trying to understand it a little bit as an enabler versus an adjacency, that kind of thing. But I guess it kind of comes down to You know, why did you need to acquire them? Why not just partner with an existing private credit manager, that kind of thing? Like what having RiverOne in-house, you know, what does that enable you to do to really get this specific use case, this specific market opportunity going?

So we already partner with private credit companies and we distribute private credit products. The reason to acquire, you know, RiverOne, which is an originator, is precisely to move, you know, up in the value chain, if you want, from a monetization perspective, because that part of the business, it's much more, you know, higher, more profitable if you want, and more higher take rate than just the pure, let's say, asset servicing or tokenization of an actual, you know, Thank you very much. on-chain infrastructure for stable coin platforms has worked on the sky protocol and some of the start like OBEX, etc. And they have already the full platform built. They have the skills, they have the tech, the AI and the writing, etc. So yes, we do have build that, but it was going to take us 18 to 24 months. At the same time for them being now part of Securitize, It gives them an opportunity to become part of a larger, more institutional platform that will allow them to scale their business much faster than if they had to go and try to convince people to lend them money or people to borrow from them, which being an early stage startup. and many more.

But do you think this is like an example, like you're almost coaching the market on what on-chain lending downstream, what have you, is going to look like in the future? You're almost an example in this sense. I mean, do you see potentially other credit shops mimicking this type of model at some point?

Well, so once we have this infrastructure, because we'll be able to borrow and manage and chain loans from stablecoin holders and providers, we hope that other credit platforms come to us. It's a platform, right? So we know. We're not going to be either the ones providing the loans, not doing the lending only. We still think of this more as a marketplace in between. As I mentioned, this is very early days. There's very few people doing this, but I think given the scale of the stablecoin economy, I think it's right for this type of approach to come now. We have programmable money, but we don't have programmable credit. It makes no sense, right? So I think, you know, we're going to be the ones hopefully bridging the gap between programmable money, which is stable coins with programmable credit and how you can then manage those, you know, those loans and the lenders in a much more efficient way using chain infrastructure.

Interesting thesis. Thanks for your thoughtful answers.

There are no more questions at this time. I'd now like to turn the call over to Sam Ross, head of investor relations for closing remarks.

Great. Well, if there's no further questions, thanks for joining this evening's call, and we look forward to speaking with you all again soon.