BitGo Holdings, Inc. (BTGO) Earnings

Management highlights

- Overall Business Performance * Despite broad softness in the digital asset market and downward pressure on headline revenue from the derivatives accounting mix shift, underlying business momentum remained strong, with continued market share gains across custody, trading volume, and core product verticals. * Reported end-of-quarter assets on platform were $63 billion and staked assets were $11.8 billion, both down in dollar terms due to lower digital asset prices. On a price-normalized basis, assets on platform grew 29% year-over-year and 10% sequentially, normalized staked balances grew 21% year-over-year and 27% sequentially, and Bitcoin/Ethereum balances grew 131% year-over-year. Total clients grew 42% year-over-year to 5,569, with total users reaching 1.2 million. * 72-73% of clients use two or more BitGo products, and over half use three or more products, supporting the company's "land and expand" go-to-market strategy centered on custody as an entry point. - Strategic Partnerships * Expanded partnership with 21Shares, a leading crypto ETP issuer, to support growing demand for regulated crypto exposure in Europe. * Announced a joint venture with OKEx to launch automated off-exchange settlement infrastructure for institutional clients trading on OKEx in the U.S., addressing the structural problem of counterparty risk from pre-funding requirements and cementing BitGo's leadership in institutional settlement. * Secured new stablecoin infrastructure partnerships with StableC, SoFi, and the Better Money Company, and was named issuer and primary custodian for FYUSD, a USD-backed institutional stablecoin for Asian markets. - Product Expansion * Launched derivatives trading in January 2026, reaching $3 billion in notional volume in Q1, with existing spot clients already adopting the product for risk management, hedging, and yield generation. Derivatives carry higher net margins than spot trading. * Launched BitGo Mint, a one-stop portal for clients to mint, burn, and convert stablecoins, expanding the company's full-stack stablecoin infrastructure capabilities that cover reserve management and transaction processing. * Launched a unified institutional financing platform and expanded Prime Services capabilities, adding new risk management, structured products, and treasury tools to keep more client workflows within the BitGo ecosystem. * Added new traders to BitGo Prime's European regulated liquidity network in April 2026. - Financial Position * GAAP net loss for Q1 was $60.7 million, driven by negative mark-to-market adjustments on BitGo's digital asset treasury and elevated IPO-related stock-based compensation, which management expects to normalize going forward. * Adjusted EBITDA loss was $1.7 million, including $3 million in one-time legal and professional costs related to the IPO and strategic initiatives. The balance sheet remains strong, with $186.6 million in cash and $167.1 million in Bitcoin held in treasury at quarter end, providing flexibility to invest through the market cycle.

Guidance

- Based on current quarter-to-date trends, management expects digital asset market conditions to remain broadly consistent with the end of Q1 2026 for Q2 2026. - Digital Asset Sales revenue is expected to stay broadly consistent with Q1 levels, with comparable margins assuming the current spot/derivatives product mix holds, and strong year-over-year growth is projected. - Staking revenue is expected to remain broadly consistent with Q1, with continued growth in staked asset volumes offsetting ongoing token price volatility. - Subscriptions and Services revenue is expected to grow sequentially, driven by rising custody and wallet client growth and a return of non-recurring ecosystem and implementation project activity. - Stablecoin as a Service revenue is expected to grow modestly sequentially, supported by continued client adoption and new partnerships. - Total operating expenses (excluding direct costs for core segments) are expected to decrease from Q1 levels, as one-time IPO-related charges drop out and stock-based compensation normalizes. BitGo will continue to invest in long-term platform growth and go-to-market execution.

Segment performance

BitGo reported total Q1 2026 revenue of $3.8 billion, up 113% year-over-year and down 39% sequentially. The sequential decline is largely explained by an accounting mix shift: newly launched derivatives are reported net, while spot trading is reported gross. The segment results are as follows: - Digital Asset Sales: Revenue of $3.7 billion, up 128% year-over-year and down 39% sequentially. The segment contributed 97.4% of total reported revenue. Overall margin improved to 32 basis points from 20 basis points year-over-year and 24 basis points sequentially, driven by higher-margin derivatives activity. - Staking: Revenue of $49.4 million, down 66% year-over-year and 15% sequentially, contributing 1.3% of total reported revenue. The decline was driven by lower digital asset prices, while take rate increased to 16.1% from 7.6% sequentially and 12.5% year-over-year, due to improved validator and token mix, including higher returns from Canton-related activity. - Subscriptions and Services: Revenue of $25.6 million, up 11% year-over-year and down 35% sequentially, contributing 0.67% of total reported revenue. The sequential decline reflected lower one-time ecosystem and implementation project activity after an elevated Q4 2025, while underlying recurring custody and wallet revenue remained strong. - Stablecoin as a Service: Revenue of $38.2 million, up 44% sequentially, contributing 1.0% of total reported revenue. Take rate improved to 7.4% from 5.5% sequentially, driven by growing client adoption, new product launches, and new partnerships. - Interest Income: Revenue of $0.9 million, up 259% year-over-year and 89% sequentially.

Risks & headwinds

- Digital asset price volatility directly impacts the dollar value of reported assets on platform, staked assets, and staking revenue, as well as mark-to-market results for BitGo's treasury holdings, leading to earnings volatility. - Soft broader digital asset market conditions reduce trading activity and pressure headline financial results. - Regulatory uncertainty can delay entry and expansion plans for more conservative traditional financial institutions, limiting near-term adoption growth. - New product lines (including derivatives, stablecoin infrastructure, and tokenization services) carry unproven demand and execution risk, even as early adoption has been encouraging.

Analyst Q&A

• Q: How has stablecoin as a service demand evolved amid progress on the Clarity Act, and what is BitGo's opportunity in tokenized equities?

  A: Stablecoin demand remains strong, as financial institutions increasingly look to either launch their own stablecoins to capture yield or partner with a regulated infrastructure provider. BitGo has a strong unannounced pipeline of deals, and recently extended its successful USD1 partnership. For tokenized equities, which have seen rapid growth over the past six months, BitGo as core infrastructure supports all go-to-market models, including serving as sole custodian for Figure Markets' tokenized equity offering and participating in DTCC's upcoming launch. This positions BitGo to capture significant growth aligned with the expansion of prime brokerage services.

• Q: What advantage does BitGo's stablecoin as a service offering provide to clients related to network distribution, and could BitGo launch its own L1 blockchain for stablecoins?

  A: BitGo's large existing client base of hundreds of exchanges and broker-dealers across its self-custody wallet platform means any stablecoin launched on BitGo's infrastructure immediately gains access to this entire network. BitGo also helps clients with go-to-market strategy to scale their stablecoins, a capability that many new entrants lack. While there is growing demand for new L1 blockchains that allow transaction fees to be paid in stablecoins (addressing a key pain point of existing chains), BitGo has not announced any public plans for its own L1, and market participants should stay tuned for updates.

• Q: How does the net economics of BitGo's spot trading compare to its new derivatives business, and what should investors expect as the mix shifts over time?

  A: As observed in traditional financial markets, derivatives volumes are expected to eventually outpace spot volumes in crypto, and BitGo has already seen significant conversion of existing spot clients to derivatives in the first quarter of launch. BitGo's margin on derivatives products is higher than on spot trading, so the mix shift will improve overall net margins for the trading segment over time. Early results after one quarter of launch have been better than expected, and the spot trading business still delivered strong year-over-year growth despite the sequential decline tied to Q4 2025's exceptional client volume.

• Q: What concrete new opportunities does BitGo's OCC national bank charter unlock beyond regulatory credibility?

  A: BitGo was able to complete its OCC charter conversion in an accelerated timeline, unlike most applicants that face 9-18 month waiting periods after conditional approval, because it already had the required infrastructure and processes in place from years of operating as a regulated fiduciary. The charter approves BitGo's entire existing business plan including custody, trading, staking, and all other core services under a single unified regulatory framework, eliminating the need for repeated new licensing and updates as the business expands new products. This positions BitGo to scale its full suite of services toward the end goal of a full institutional prime brokerage offering.