BitGo Q3 Revenue Falls 51% to $2.85B as Treasury Gain Lifts Profit

BitGo nearly doubled its profit in the third quarter while its revenue got cut in half. The profit came from a paper gain, not from operations.

The custodian's November 9 earnings release shows revenue of $2.85 billion, down 50.9% from $5.81 billion a year earlier, and net income of $44.1 million, up 94.4%. A $71.5 million unrealized gain on BitGo Holdings' (NYSE: BTGO) digital asset treasury drove the bottom line. Strip that out and the business ran an operating loss of $19.2 million and an adjusted EBITDA loss of $4.3 million. Diluted EPS came in at $0.36, against $0.15 a year ago and a $0.16 loss in Q2.

Where the revenue went

Revenue also fell 34.1% from Q2's $4.33 billion. Digital asset sales, the bulk of the top line, dropped 52% year over year and 35.2% sequentially to $2.72 billion. That left a contribution margin of just $4.2 million, or 15 basis points. BitGo blamed weak trading and a heavier mix of lower-margin stablecoin transactions.

Revenue after direct costs fell 32.1% to $37.3 million. Operating expenses excluding direct costs dropped 5.5% from the prior quarter to $56.6 million, still well above what that revenue covers.

The quarter missed Wall Street estimates on both revenue and earnings. Revenue landed about 32% below the $4.2 billion Zacks consensus.

Clients up, assets down

Client count rose 33.1% to 6,640 from 4,988. Platform assets, though, fell to $59.9 billion from $104 billion, and staked assets sank to $10.5 billion from $28.6 billion. The decline tracks lower crypto prices. Normalized for price, platform assets grew 31.9% and staked assets 41.1%.

Among product lines, Stablecoin-as-a-Service revenue hit $37.4 million, up 52.5% year over year but down 3.8% from Q2. Staking revenue was $68.2 million, down 24.1% year over year and up 5.4% sequentially.

As of Sept. 30, BitGo held 2,399 BTC worth about $200.4 million, plus $143.2 million in cash and equivalents. With a crypto stack that size sitting behind the unrealized gain, the net income line is as much a bet on prices as a read on operations.

"During the third quarter, we continued to strengthen BitGo's position as a leading institutional digital asset infrastructure platform,"

CEO Mike Belshe said in the release. During the quarter BitGo also completed its acquisition of NYDIG's institutional trading business, expanded OKX settlement connectivity and repurchased $24.7 million of stock under a $50 million authorization.

Stock reaction

BTGO closed Monday at $5.10, up 4.94%, ahead of the release. Reports split on the after-hours tape: one shows a 1.14% slip to $5.04, another a further 2.9% gain in extended trading. Even after Monday's pop, shares are down about 60% since early in the year.

What it means

This is a custodian growing its customer base while the economics thin out. Stablecoin flows add volume but little margin, and the headline profit depends on a treasury mark. BitGo laid off about 15% of staff in June to refocus on trading, stablecoins and AI, and Q3 shows that pivot is not yet covering costs.

Product expansion continues, including the Jupiter x BitGo institutional SOL validator launched on Oct. 28. For traders, the watch items are contribution margin on asset sales and whether staking revenue keeps recovering from Q2.

The full figures are in BitGo's earnings release and its quarterly filing.