BitGo Q3 revenue drops 51% as trading slows, but net income climbs on treasury gains

BitGo's Q3 revenue falls by half, but profits still rise

Crypto custody and trading firm BitGo reported a sharp drop in third-quarter revenue, even as its net income nearly doubled. The company blamed weaker digital asset trading for the revenue fall, while its profit growth came from paper gains on the crypto it holds.

According to BitGo's press release, Q3 revenue was $2.85 billion. That is down 50.9% from a year earlier and down 34.1% from the previous quarter. After direct costs, revenue was $37.3 million, down 32.1% from a year earlier.

Key numbers from the quarter

• Q3 revenue: $2.85 billion, down 50.9% year-over-year and 34.1% from the prior quarter.
• Digital asset sales fell 52% year-over-year and 35.2% from the previous quarter.
• Revenue after direct costs: $37.3 million, down 32.1% year-over-year.
• Net income: $44.1 million, up from $22.7 million last year.
• Operating loss: $19.2 million. Adjusted EBITDA loss: $4.3 million.
• Bitcoin held on its own balance sheet as of Sept. 30: 2,399 BTC, valued at $200.4 million.
• Shares rose 4.94% to close at $5.10 on Monday and added another 2.9% in extended trading.

What the company says about the drop

BitGo said the revenue decline was mainly driven by lower digital asset sales amid a continued soft crypto trading environment. It also pointed to a higher mix of stablecoin transactions. Stablecoins are cryptocurrencies designed to hold a steady value, usually tied to the US dollar. The company said these transactions carry lower margins, meaning they bring in less profit per dollar of revenue.

The rise in net income came primarily from a $71.5 million unrealized gain on the company's digital asset treasury. An unrealized gain is a paper gain on assets the company still holds and has not sold.

CEO points to institutional growth

"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 statement.

Belshe highlighted the Go Network, the firm's institutional settlement and trading infrastructure, along with its tokenized equity initiatives. Tokenized equities are traditional stocks represented as digital tokens on a blockchain, the shared ledger technology behind crypto.

"We see significant opportunities to broaden access to U.S. equities through existing digital asset and stablecoin networks, while expanding the utility of traditional investment portfolios through on-chain settlement, collateral, and financing applications," Belshe said.

Other developments in the quarter

The company said normalized assets on its platform rose 32% year-over-year when adjusted for price changes, which it described as continued institutional adoption. BitGo also completed its acquisition of NYDIG's institutional trading business during the quarter and expanded off-exchange settlement connectivity, including with exchange OKX.

BitGo repurchased $24.7 million of its common stock under a $50 million buyback authorization.

Why it matters

The results show how a slower crypto trading market affects companies that earn money from trading activity. BitGo's core revenue fell sharply, yet its bottom line improved because of gains on the bitcoin it holds. The company is also pushing into new areas, such as tokenized equities and institutional trading, to broaden its business beyond trading revenue.

Sources

• The Block
• BitGo press release