Galaxy Digital Inc. (GLXY) Q3 2026 earnings review
Galaxy Digital's data-center rent quadruples, but its crypto unit loses money
Galaxy Digital's first full quarter of AI data-center rent topped the gross profit of its entire crypto division. Data-center leasing revenue from CoreWeave quadrupled from last quarter to $79 million, matching the company's plan and generating $69 million in segment Ebitda excluding one-offs. Chief executive Mike Novogratz highlighted $323 million in net income, but by our math 87% of total Ebitda excluding one-offs came from gains on Galaxy's own investment portfolio.
| Data center leasing revenue | $79.1M $18.9M last quarter (plan: ~$80M) |
|---|---|
| Net income | $323M -$85M loss last quarter |
| Digital Assets Ebitda, excluding one-offs | -$9.0M -$10.5M loss last quarter |
| Helios Phase I & II annual base rent outlook | $990M $315M Phase I now live; $675M Phase II from Q2 2027 |
⚖️ Verdict: 🟢 Bullish
The story got better because the Helios data center is now proving its economics in reported numbers and Phase II construction is funded on schedule. One caution: the crypto operating division lost money on an Ebitda basis for a fourth straight quarter, and interest on the new $3.5 billion Phase II debt wiped out Data Centers GAAP net profit.
The question now is whether Galaxy can lease the next 830 megawatts at Helios II to a second major tenant while keeping Phase II construction on schedule for spring 2027. Signing a new tenant would diversify Galaxy away from single-customer reliance on CoreWeave, whereas further delays would leave its 5.7-gigawatt pipeline unproven. A Helios II lease announcement and second-quarter 2027 data-hall handovers will settle it.
🐂 Bull Case
Helios Phase I Rent Tops Crypto Gross Profit
Galaxy Digital, a cryptocurrency trading and AI data-center group, finished handing over the first phase of its Helios campus in Texas to cloud provider CoreWeave at the end of June. The third quarter was "the first full quarter of revenue-generating operations under the Helios I, Phase I lease", the company said. Leasing revenue jumped from $18.9 million last quarter to $79.1 million, matching the roughly $80 million target set three months ago.
- Data Centers gross profit excluding one-offs: $79.1 million, up from $20.1 million in Q2 and surpassing Digital Assets at $71.3 million
- Data Centers Ebitda excluding one-offs: $68.7 million, up from $11.5 million in Q2, or 86.9% of leasing revenue by our math
- Phase II construction: "progressing on schedule and within budget" toward second-quarter 2027 deliveries, funded by $3.5 billion of new senior notes
This matters because one 133-megawatt building now generates more gross profit than Galaxy's entire crypto trading, lending and asset-management business. Phase II will add another 260 megawatts of computing capacity and $675 million of annual base rent starting next spring, which will more than triple the campus's rent roll.
What to watch: the start of Phase II data-hall handovers to CoreWeave in the second quarter of 2027. On-time delivery would begin converting the $675 million annual Phase II rent stream into reported revenue.
Institutional Deals Lift Staking and Lending
Galaxy's Digital Assets division runs trading, lending, fund management and staking, where clients lock up tokens on Galaxy's computer nodes to earn network rewards. The US group signed a multi-year deal to provide staking and serve as a design partner for BNY, a custody bank overseeing $60 trillion, and launched the Galaxy Sharplink Onchain Yield Fund, which brought in most of the quarter's $160 million of net fund inflows.
Trading volumes rose 12% from last quarter, "outperforming the broader spot market, where volumes declined", Galaxy said. Its average loan book expanded 27% to $1.83 billion on demand for the Galaxy Onchain Financing Rate (GOFR), a benchmark rate for crypto loans, while assets under stake climbed 64% to $4.56 billion.
What to watch: Asset Management and Infrastructure Solutions gross profit excluding one-offs, which rose 11% from last quarter to $18.7 million. A break above its two-year ceiling of $23 million would show the BNY partnership and new funds are adding lasting fee revenue rather than just tracking token prices.
🐻 Bear Case
Market Swings Drive Profit as Crypto Loses Money
Chief executive Mike Novogratz said progress across digital assets and data centers is "strengthening and diversifying our earnings profile". Yet the third-quarter swing to $323 million of net income came mostly from mark-to-market gains in Treasury and Corporate, the unit that holds Galaxy's own $1.72 billion portfolio of tokens and venture stakes.
- Treasury and Corporate Ebitda excluding one-offs: $395.0 million, or 87% of Galaxy's $454.7 million total by our math
- Digital Assets Ebitda excluding one-offs: a loss of $9.0 million, its fourth straight quarterly loss
- Digital Assets staff pay: $59.1 million, up 5% from last quarter and taking 83% of the division's $71.3 million gross profit excluding one-offs by our math
The crypto operating business still cannot cover its payroll and technology costs even in a quarter when token prices and client assets rose. Because Galaxy's own investment book rose 48% from last quarter to $1.72 billion, consolidated earnings remain tied to quarterly crypto and venture valuations.
What to watch: Digital Assets Ebitda excluding one-offs and staff pay next quarter. Another loss while staff costs stay near $60 million would show the crypto franchise cannot earn a profit without a trading boom.
New Data Center Debt Tripled Quarterly Interest Costs
To pay for the $4.0 billion construction of Helios Phase II, Galaxy borrowed $3.5 billion through senior secured notes in July. That borrowing lifted total debt on the balance sheet by 96% from last quarter to $6.96 billion by our math, including $441 million of current notes payable due within a year.
Because Phase II will not start paying rent until the second quarter of 2027, the interest bill hit the income statement ahead of the revenue. Consolidated notes interest expense nearly quadrupled from $25.1 million last quarter to $93.4 million, with $75.4 million of that charged to the Data Centers segment.
That interest charge, alongside $17.3 million of depreciation, wiped out all $68.7 million of the Data Centers segment's operating cash profit and left the division with a $0.4 million GAAP net loss. The segment also burned $129.1 million of operating cash on working-capital outflows before spending $489.7 million in cash on construction.
What to watch: quarterly notes interest expense in the fourth quarter, which will include a full three months of the July notes. The interest drag will keep Data Centers GAAP profit near or below zero until Phase II rent begins in spring 2027.
Helios II Still Lacks a Tenant
Galaxy holds 830 megawatts of grid-approved power capacity at Helios II that is ready to lease, alongside 800 megawatts at Helios I that is already leased to CoreWeave. In the release, Galaxy said it "continues to advance discussions with prospective tenants" for Helios II, "with market dynamics seen as increasingly favorable".
Four quarters after those talks began, Contracted Power Capacity across the entire 5.7-gigawatt pipeline remained unchanged at 800 megawatts. Every dollar of contracted data-center rent still depends on a single customer, CoreWeave, and Galaxy has not yet signed a second tenant to diversify its credit risk or validate its expansion sites.
What to watch: a signed lease announcement for any part of Helios II's 830 megawatts before year-end. Another quarter of talks without a contract would leave Galaxy exposed to a single tenant across its entire active build-out.
Risks this quarter didn't answer
Three standing regulatory and legal risks received no update in the third-quarter earnings release or presentation.
- Texas grid approvals: 3,326 megawatts of the 5.7-gigawatt pipeline remain classified as Batch Zero Studied Load, subject to the grid operator's ongoing audit and community review; the quarterly filing or call must show when power allocations will be finalized.
- US crypto market-structure legislation: the release gave no update on stalled Senate legislation or fallback federal rulemaking.
- Legacy legal liabilities: the release did not update the Ontario class action or the $120 million New York settlement payments due in 2027 and 2028; the quarterly filing's legal footnote will carry any changes.
👓 Other Themes
Buybacks Do Not Stop Share Count Growth
Galaxy finished its $200 million buyback in October, purchasing 9.8 million shares this year—"more than offsetting equity-based compensation dilution", the firm said—and approved a new $200 million plan. However, profitable quarters bring convertible notes into the share count: notes added 53.6 million diluted shares, pushing the share count for profit per share excluding one-offs up 16% from last quarter to 452.3 million.
💲 Other KPIs
Doubled from $2.46 billion at the end of June after Galaxy raised $3.5 billion of senior notes for Helios Phase II. The company parked $2.76 billion of the proceeds in U.S. Treasury bills and notes, alongside $1.32 billion in cash and $812 million in stablecoins (digital tokens pegged to the dollar), to fund construction through 2027.
Up 69% from $448 million last quarter and $354 million in the first quarter as construction ramped on Helios Phase II. Of the third-quarter total, $490 million was paid in cash and $267 million was accrued in accounts payable, lifting net property and equipment on the balance sheet from $2.22 billion to $2.95 billion.
Up 1% from 1,741 last quarter and up 15% from 1,532 a year ago. Onboarding of institutional trading clients has grown every quarter over the past two years, though the quarterly pace slowed from 3% in the second quarter to 1% in the third.
🔮 Guidance
Unchanged in substance. The presentation sets anticipated annual base rent for the 133-megawatt Phase I lease at $315 million across its 15-year term. By our math, that implies $78.8 million per quarter for the fourth quarter and through early 2027, matching the $79.1 million delivered in the third quarter.
Trimmed by $15 million on the annual revenue estimate, with the delivery schedule unchanged. Data-hall handovers for the 260-megawatt second phase are still scheduled to begin in the second quarter of 2027, with estimated construction costs held at $4.0 billion.
Unchanged on the floor. Across all 526 megawatts of contracted critical IT load (including 133 megawatts in Phase III starting in 2028), Galaxy still anticipates over $1 billion of average annual revenue and more than $30 billion over 25 years if two five-year extensions are exercised, at a 90%-plus lease-level margin before overhead.
❓ Key Questions
Why has Helios II not signed a tenant yet?
Galaxy has held 830 megawatts of approved power at Helios II since January and says market conditions are increasingly favorable, yet contracted capacity stayed at 800 megawatts for a fourth straight quarter.
What will it take for Digital Assets to break even?
Even with staking assets up 64% and the loan book up 27% from last quarter, the Digital Assets segment lost $9.0 million in Ebitda excluding one-offs as staff pay consumed 83% of segment gross profit.
What are the fee terms of the BNY partnership?
Galaxy became a staking provider and design partner for BNY's $60 trillion custody platform, but management did not disclose how much revenue the deal will generate or when it starts.
How will Galaxy pay the $441 million current debt?
Current notes payable of $441.3 million mature in December 2026; investors need to know whether Galaxy will pay them off with corporate cash or refinance them.