BitGo shares climbed nearly 5% during Monday’s regular trading session as the crypto custody company reported a sharp increase in third-quarter profit despite a major decline in revenue.
BitGo said revenue fell 50.9% year over year to $2.85 billion, down from $5.81 billion a year earlier.
At the same time, net income rose 94.4% to $44.1 million, helped largely by unrealized gains on the company’s digital asset treasury.
The results highlight the mixed nature of BitGo’s quarter: trading activity weakened significantly, but higher treasury gains, cost controls and continued growth in its institutional client base helped offset some of the pressure.
BitGo stock gains nearly 5%
BitGo Holdings closed Monday’s regular trading session at $5.10, up $0.24, or 4.94%.
The stock opened at $4.80 and traded between $4.74 and $5.18 during the session.
About 915,000 shares changed hands before the market closed.
The gain came before BitGo released its third-quarter earnings results.
After the announcement, the stock slipped around 1.1% in after-hours trading to approximately $5.04.
BitGo shares remain well below their 52-week high
Despite the latest gain, BitGo shares remain far below their highest level over the past year.
The stock has traded between roughly $4.36 and $24.50 during the last 52 weeks.
That wide range reflects the volatility surrounding crypto-related equities, especially companies whose earnings depend partly on digital asset markets.
BitGo also reported diluted earnings of $0.36 per share during the third quarter.
That compared with $0.15 per share a year earlier and a loss of $0.16 per share in the previous quarter.
BitGo revenue drops nearly 51%
For the three months ended September 30, BitGo reported total revenue of approximately $2.85 billion.
That was down 50.9% from $5.81 billion in the same period last year.
Revenue also fell 34.1% from the second quarter, when the company reported approximately $4.33 billion.
BitGo attributed much of the decline to lower cryptocurrency trading activity and a greater share of lower-margin stablecoin transactions.
Digital asset sales remained the largest revenue source
Digital asset sales generated approximately $2.72 billion during the quarter.
That represented most of BitGo’s total reported revenue.
However, digital asset sales fell about 52% year over year.
They were also down roughly 35% from the previous quarter.
The decline reflects weaker trading activity across the company’s platform.
High transaction costs kept margins thin
Although digital asset sales generated billions of dollars in reported revenue, the business operated on very narrow margins.
After accounting for approximately $2.72 billion in digital asset sales costs, BitGo reported a contribution of only about $4.2 million.
That represented a margin of roughly 15 basis points.
The same margin stood at 17 basis points in the second quarter and 20 basis points in the comparable quarter last year.
This shows why headline revenue alone can be misleading when evaluating BitGo’s trading business.
Revenue after direct costs fell to $37.3 million
Across the company, direct costs totaled approximately $2.81 billion.
After subtracting those costs, BitGo reported revenue after direct costs of $37.3 million.
That was down 32.1% from the previous year.
The figure gives a clearer picture of how much economic value remained after the large volume of digital asset transactions passed through the business.
Cost-cutting helped reduce operating expenses
BitGo continued implementing cost-reduction measures introduced during the second quarter.
Operating expenses excluding direct costs declined 5.5% sequentially to $56.6 million.
The lower expense base helped offset part of the decline in trading-related revenue.
However, BitGo still reported an operating loss of approximately $19.2 million.
Adjusted EBITDA was also negative at roughly $4.3 million.
Digital asset gains lifted BitGo’s profit
The main reason BitGo’s net income improved despite weaker operating performance was a large unrealized gain on its digital asset holdings.
The company reported approximately $71.5 million in unrealized treasury gains.
Those gains helped push quarterly net income to $44.1 million.
Without that boost, the company’s underlying operating results would have looked considerably weaker.
This distinction is important because unrealized digital asset gains can change rapidly as crypto prices move.
BitGo held 2,399 Bitcoin
As of September 30, BitGo held approximately 2,399 Bitcoin on its balance sheet.
The position was valued at roughly $200.4 million.
The company also reported approximately $143.2 million in cash and cash equivalents.
That gives BitGo a substantial liquidity base alongside its crypto treasury.
However, changes in Bitcoin’s price can materially affect the value of its holdings and future earnings.
BitGo’s client base continued to grow
Despite weaker revenue, BitGo reported strong growth in its institutional and customer base.
The company served 6,640 clients during the quarter.
That was up 33.1% from 4,988 clients a year earlier.
BitGo’s platform also served approximately 1.3 million users.
The growth suggests the company is still expanding its market reach even as trading volumes remain under pressure.
Platform assets fell in reported terms
BitGo reported approximately $59.9 billion in assets on its platform at the end of the quarter.
That was down from around $104 billion a year earlier.
Assets staked through the platform also declined to approximately $10.5 billion from $28.6 billion.
At first glance, those figures suggest a sharp contraction.
However, BitGo says crypto price movements explain a large part of the decline.
Normalized asset figures showed growth
BitGo also provided normalized figures that adjust previous periods using current-quarter median cryptocurrency prices.
On that basis, assets on the platform increased 31.9% year over year.
Normalized staked assets rose 41.1%.
The adjustment is intended to separate changes in customer activity from changes caused by crypto market prices.
A decline in Bitcoin or other digital assets can reduce the dollar value of assets under custody even if clients have not withdrawn funds.
BitGo acquires NYDIG institutional trading business
One of BitGo’s most significant moves during the quarter was its acquisition of NYDIG’s institutional trading business.
The deal expanded BitGo’s capabilities beyond custody.
It added services including:
- Derivatives
- Structured products
- Financing
- Institutional trading
The acquisition supports BitGo’s strategy of becoming a broader institutional digital asset platform rather than remaining focused primarily on custody.
BitGo Prime expands trading infrastructure
BitGo also expanded its Prime brokerage services.
The company introduced BitGo Prime’s Global Liquidity Layer as part of its effort to improve access to institutional trading markets.
It also expanded settlement arrangements with OKX internationally.
These developments suggest BitGo is increasingly combining custody, trading, financing and settlement under one institutional platform.
Riot Platforms moved custody to BitGo
BitGo also gained a high-profile custody client.
Riot Platforms completed the transfer of its Bitcoin custody from NYDIG to BitGo on October 29.
The move ended Riot’s previous custody relationship with NYDIG, which had started in November 2023.
For BitGo, the transfer reinforces its position as a major institutional Bitcoin custodian.
Stablecoin revenue increased
Stablecoin-as-a-Service remained one of BitGo’s stronger business segments.
The company reported approximately $37.4 million in stablecoin-related revenue.
That was up 52.5% year over year.
However, the figure declined 3.8% from the previous quarter.
The results suggest longer-term growth remains strong even though quarterly momentum slowed.
Stablecoin sponsor fees rose sharply
BitGo recorded approximately $34.5 million in stablecoin sponsor fees.
That resulted in a take rate of roughly 7.7%.
A year earlier, the take rate was around 3.6%.
The increase suggests BitGo is capturing more revenue from each dollar of stablecoin-related activity.
That could help diversify the company away from lower-margin trading revenue.
Staking revenue declined year over year
BitGo reported staking revenue of approximately $68.2 million.
That was down 24.1% from the same quarter last year.
However, staking revenue increased 5.4% compared with the second quarter.
The sequential improvement suggests some recovery in staking activity.
Subscriptions and services contributed another $25.6 million in revenue.
BitGo repurchased $24.7 million in stock
The company also used part of its capital to repurchase shares.
BitGo bought back approximately $24.7 million of common stock during the quarter.
The repurchases were made under a $50 million authorization.
That leaves approximately $25.3 million available for additional buybacks.
Share repurchases can reduce the number of shares outstanding and potentially increase per-share value if the company continues buying stock.
Profit growth came from market gains, not operating strength
The most important takeaway from BitGo’s quarter is the gap between reported profit and underlying operations.
Net income nearly doubled.
But revenue fell sharply.
Operating income remained negative.
Adjusted EBITDA also remained below zero.
The difference was largely explained by gains on BitGo’s digital asset treasury.
That means future profit could remain volatile if cryptocurrency prices change significantly.
BitGo’s business is becoming more diversified
At the same time, the company is expanding well beyond its original custody business.
BitGo now operates across:
- Crypto custody
- Institutional trading
- Lending and financing
- Stablecoin services
- Staking
- Prime brokerage
- Settlement
- Structured products
This diversification could reduce its dependence on any single revenue stream over time.
The NYDIG acquisition is an important part of that transition.
Institutional growth may matter more than headline revenue
BitGo’s reported $2.85 billion in revenue sounds large, but most of that figure comes from low-margin digital asset sales.
The more important long-term indicators may be:
- Client growth
- Assets under custody
- Stablecoin margins
- Staking growth
- Prime brokerage adoption
- Institutional trading activity
These areas may provide a better measure of the company’s underlying business quality.
What to watch next
Investors will likely focus on several trends in future quarters.
One is whether digital asset trading activity recovers.
Another is whether stablecoin revenue continues growing.
The performance of BitGo’s digital asset treasury will also matter because it had such a large effect on Q3 earnings.
The NYDIG integration will be another important test.
If the acquired institutional trading business adds meaningful revenue and improves margins, it could strengthen BitGo’s broader strategy.
Final thoughts
BitGo’s third-quarter results tell two very different stories.
Revenue dropped nearly 51% as crypto trading weakened and lower-margin stablecoin activity increased.
Yet net income rose 94% to $44.1 million, largely because of a $71.5 million unrealized gain on digital assets.
At the same time, BitGo continued expanding its institutional business, added more clients, completed the NYDIG trading acquisition and increased normalized platform assets.
The company’s stock gained nearly 5% before the earnings release but slipped modestly in after-hours trading.
For investors, the next question is whether BitGo can turn its growing institutional footprint into stronger recurring operating profits rather than relying heavily on gains from its crypto treasury.
