BitGo Holdings, Inc. Q2 FY2026 earnings call

Overall Platform Performance & Market Context

• Q2 2026 was a difficult quarter for the entire crypto industry: total crypto market cap fell 13% to $2.1 trillion, Bitcoin dropped 14%, industry trading volumes declined over 20%, and volatility stayed at multi-year lows. BitGo's Q2 profitability fell short of expectations due to lower margins and unfavorable revenue mix, but the company gained market share amid the industry contraction.
• Normalized assets on platform grew sequentially and year-over-year to ~$65 billion, and normalized assets staked grew to ~$12 billion, supporting BitGo's "land and expand" strategy that starts with custody and adds additional high-value services over time.

Operational Efficiency & Cost Reduction

• In Q2 2026, BitGo reduced its workforce by ~15% and streamlined organizational structure, plus implemented additional cost cuts including repatriating node infrastructure to reduce public cloud expenses. These initiatives are expected to generate $15 million in annualized cash savings starting Q3 2026, with a $1.3 million restructuring charge recorded in Q2.
• BitGo expanded AI usage across engineering and operations: autonomous AI agents resolve ~20% of monthly engineering issues (with full human review), AI handles first responses for ~17% of inbound client support tickets, and over 40% of internal code is AI-generated/assisted. Engineering throughput has increased 220% quarter-over-quarter, driving long-term productivity gains and a more efficient cost structure.

Product & Strategic Developments

• BitGo launched commercial quantum risk management capabilities for Bitcoin wallets, including a quantum resistance score to measure exposure and automatic quantum-aware transaction construction to reduce risk. This capability addresses growing due diligence requirements from ETF issuers, corporate treasuries, and long-term institutional holders.
• BitGo is a leading infrastructure provider for tokenized real-world assets: it serves as the wallet infrastructure for the DTCC tokenization initiative (first U.S. transactions successfully processed in July 2026), the sole qualified custodian for the Canton network, and the sole custodian for FIGUR's open network tokenized equities platform. BitGo demonstrated a full end-to-end workflow for tokenized equities including purchase, qualified custody, and borrowing against tokenized holdings as collateral.
• Management identified three long-term industry trends driving growth: improving regulatory clarity enabling institutional capital deployment, mainstream adoption of stablecoins (currently $300 billion in circulating supply), and tokenization moving from concept to production (over $35 billion in tokenized real-world assets already issued). BitGo's neutral infrastructure model positions it to capture growth regardless of which specific networks or protocols ultimately succeed.

Leadership Update

• CFO Ed Reginelli will transition out of his role in the coming quarter, and will remain with the company to support a smooth transition. Succession plans will be announced at a later date.

1. Digital Asset Sales: Revenue was $4.2 billion, up 14.7% sequentially and 84.3% year-over-year. After direct costs, quarterly margin was $7.1 million, with an overall margin of 17 basis points, down from 32 basis points in Q1 2026 and 19 basis points in Q2 2025. This segment accounts for approximately 97.7% of total Q2 2026 revenue.
2. Staking: Revenue was $64.7 million, up 30.9% sequentially but down 28.8% year-over-year, accounting for ~1.5% of total revenue. The take rate was 6%, down from 16.1% in Q1 2026 and 10% in Q2 2025. Normalized assets staked increased 3% sequentially and 36.1% year-over-year to $12 billion.
3. Subscriptions and Services: Revenue was $27.5 million, up 7.7% sequentially and 8.5% year-over-year, accounting for ~0.64% of total revenue. Growth was driven by increased client activity and project-based ecosystem work.
4. Stablecoin as a Service: Revenue was $38.8 million, up 1.7% sequentially and 148% year-over-year, accounting for ~0.9% of total revenue. The take rate was 8%, up from 7.4% in Q1 2026 and 2.6% in Q2 2025. Growth was supported by higher reserve balances and fixed fees from new stablecoin programs.

• Management expects overall digital asset market conditions to remain challenging entering Q3 2026, with the outlook assuming market activity and prices stay broadly consistent with recent levels.
• Digital asset sales revenue is expected to be relatively flat compared to Q2 2026, with a similar product mix between spot and derivatives trading.
• Staking revenue is expected to remain broadly consistent with Q2 2026 levels.
• Subscriptions and services revenue is expected to deliver sequential growth, supported by continued client activity and project-based ecosystem work.
• Stablecoin as a Service revenue is expected to deliver modest sequential growth, supported by higher reserve balances from existing programs and continued client adoption.
• Expenses excluding direct costs are expected to decline sequentially, reflecting the full benefit of Q2 workforce reductions and other cost-cutting initiatives.
• Management's target is to move the business closer to break-even, with potential for slight profitability in Q3 2026.
• Digital asset sales margins have already begun recovering in July 2026, and management expects margins to revert to the historical average range of 20-25 basis points over time.

• Broad crypto market downturn risk: Sustained declines in digital asset prices, trading volumes, and market capitalization can pressure margins, reduce revenue from staking and trading, and negatively impact profitability.
• Revenue mix and margin risk: Shifts in trading mix between spot (gross revenue recognition) and derivatives (net revenue recognition) and lower contractual take rates for large institutional clients can materially reduce overall margins and profitability, even as total revenue grows.
• Regulatory uncertainty risk: Delays in passing comprehensive U.S. digital asset regulation (such as the Clarity Act) could slow adoption by traditional financial institutions and limit near-term market growth in the U.S.
• Competitive risk: Growing competition from new entrants and existing providers expanding into custody, stablecoin services, and tokenized equities could put pressure on take rates and market share.
• Quantum security risk: Unaddressed quantum computing exposure poses a long-term risk to the security of client Bitcoin holdings, which could damage BitGo's reputation and client trust if not properly mitigated.
• Staking concentration risk: Reliance on activity from a small number of large institutional clients can lead to revenue and margin volatility if client activity levels decline.

Q: Do you expect substantial consolidation in crypto custody, and will the market end up with only a few large providers like traditional securities? / A: It is too early to predict the exact number of long-term dominant custodians. The digital asset market is global with differing regulatory frameworks across jurisdictions, so it will not be limited to a small set of U.S.-only regulated providers. BitGo’s flexible infrastructure model allows it to serve clients as a direct custodian, sub-custodian, or technology provider for self-custodial platforms, so it is well positioned for any future market structure, especially as tokenization of traditional assets grows globally.

Q: How do you position BitGo against growing competition in custody, stablecoins, and tokenized equities from new and existing players? / A: BitGo has a unique full-stack offering combining self-custody, qualified custody, and high-margin top-layer services including trading, staking, and lending that new entrants cannot quickly replicate. For tokenized equities specifically, BitGo built its offering on a proven UCC Article 8 entitlement foundation using its existing OCC national trust charter for qualified custody, a regulatory and structural advantage that most new entrants do not have. BitGo’s track record of over a decade building institutional infrastructure and growing platform assets quarter-over-quarter gives it a substantial lead over new competitors.

Q: Q2 digital asset sales margins fell to 17 basis points due to spot/derivatives mix shifts. What is the current derivatives volume, and where do you expect margins to go in the future? / A: Q2 derivatives notional volume was ~$1 billion, down from ~$3 billion in Q1, as spot trading grew strongly in the quarter. One quarter of low margins is not expected to be the new normal; margins already recovered in July 2026 and are expected to move back to the historical average range of 20-25 basis points. The company gained market share in Q2 even amid industry weakness, and management remains positive about the long-term trajectory of the business.

Q: How do you view the long-term future of stablecoins, and how many dominant winners do you expect? / A: Stablecoins benefit from strong network effects, so the market will likely end up with a small number of dominant large stablecoins, though many banks and traditional financial firms are still launching their own stablecoins for their specific distribution channels. Regulation has a major impact on the market structure, but stablecoin payments are far more efficient than traditional finance, so the sector will continue to grow long-term, a trend confirmed by investments from major incumbents like Visa and MasterCard.

Q: What is BitGo's monetization strategy for tokenized equities from the DTCC and other initiatives, and how does it differ from exchange models? / A: BitGo provides qualified custody for all major tokenized equity models, and is not focused on capturing trading fees (as it is not a broker-dealer). BitGo's primary monetization opportunity is facilitating new lending use cases: allowing any holder of tokenized equity to borrow against their holdings, including small holders that do not have access to this kind of lending in traditional markets. BitGo builds the foundational regulated infrastructure that enables new types of financial products for tokenized assets, and is incubating additional new use cases that are not possible in traditional market structures.