BitGo Holdings, Inc. 2026 Q2 Earnings Call

You may begin. Thank you, and good afternoon, everyone.

Our remarks today will include forward-looking statements. These include statements about our operating outlook, financial condition, business strategy, market opportunity, and future plans. Actual results may differ materially from these statements. Information about risks and uncertainties appear in our SEC filings under the heading Risk Factors in our annual report on Form 10-K and our quarterly reports on Form 10-Q. The forward-looking statements we make today reflect our views only as of today. We undertake no obligation to update them except as required by law. We will also discuss GAAP and non-GAAP financial measures. A reconciliation of each non-GAAP financial measure to the most directly comparable measure calculated in accordance with GAAP is contained in our earnings release and investor presentation, each of which is available on the investor relations section of our website at investors.bitgo.com.

Non-GAAP measures should be considered in addition to and not as a substitute for GAAP measures. Joining me today are Mike Belshe, Co-founder and CEO, and Edward Reginelli, CFO.

Mike, over to you. Thank you, Rachel, and thank you all for joining us today.

BitGo continued strengthening its institutional platform during the second quarter. We grew our assets on platform, deepened client relationships, and sharpened our operating model to support continued investment in the capabilities that make our infrastructure more valuable to clients in the broader digital asset ecosystem. That said, our Q2 financial performance fell short of our expectations. While we delivered revenue growth, profitability was impacted by lower margins and an unfavorable revenue mix. In digital asset sales, gross trading increased, but lower spreads on certain spot transactions and a lower contribution from derivatives reduced overall margin. In staking, revenue increased sequentially as a large institutional client added significant activity at a lower take rate. At the same time, high-margin transaction-based revenue from another large client declined, resulting in a lower overall take rate.

While these factors impacted our financial results this quarter, they do not change our long-term conviction in the business or the opportunity ahead. Our priority now is to translate that continuing platform growth into stronger financial performance. We took actions in the areas that we can control. We lowered our cost base, we sharpened our investment priorities, and concentrated resources on the capabilities with the clearest client demand and economic potential. At the same time, we remain committed to innovating in areas that we believe will support BitGo's long-term growth. Ed will discuss the financial drivers in more detail in his section. Looking at the next slide, I want to focus on the growth of the underlying platform. To provide context, let me frame the market that we operated in. The second quarter was difficult across all of crypto.

Total crypto market capitalization fell 13% from about $2.4 trillion to about $2.1 trillion, in a third straight quarterly decline and the lowest level since September 2024. Additionally, Bitcoin was down about 14%. Industry-wide trading volumes declined more than 20%, and volatility held at multi-year lows. Our results reflected that backdrop. While revenue grew, lower margins and unfavorable revenue mix pressured profitability, and Ed will walk you through how that impacts BitGo going forward. But the story of the quarter is the platform. While the market contracted in a quarter when the industry shrank, we gained market share, expanded our client base, and grew both normalized assets on platform and normalized assets staked on a sequential and year-over-year basis to approximately $65 billion and $12 billion respectively. These metrics are important because they reflect continued adoption of the BitGo platform.

As assets on platform increase, they create more opportunities to expand the number of services and workflows they rely on over time. That expansion is central to our land and expand strategy. Custody is typically where the relationship begins. From there, clients increasingly adopt additional capabilities such as trading, staking, financing, settlement, treasury services, and other workflows that allow them to operate on a single institutional-grade platform. Every additional workflow strengthens the client relationship, increases wallet share, and expands the long-term value of that customer relationship. While they don't always translate into revenue on a one-quarter basis, they provide the foundation for long-term growth. The other area I want to highlight is the discipline we brought to the operating model during the quarter. We focused our investment priorities and resources behind our highest-value growth initiatives. As part of that effort, we reduced our workforce in June and streamlined the organization.

We have also identified other cost reduction initiatives, including the repatriation of node infrastructure to reduce public cloud costs. Together, these savings are expected to generate approximately $15 million of annualized cash savings beginning in Q3. We expanded the use of AI across our entire business, particularly in engineering and operations, where we're already seeing measurable productivity gains. Today, autonomous AI agents are fully resolving approximately 20% of engineering issues each month, with every single change still reviewed by our human engineers. In client support, AI now provides the first response to roughly 17% of all inbound support tickets, improving response times and reducing support costs. We're also increasingly using AI-assisted development to build internal software tailored specifically to BitGo's needs. Based on vendor assessments, more than 40% of code is AI-generated or assisted.

We got there deliberately with human review and custody-grade controls at every step, and the pace is accelerating, with throughput up 220% in the last quarter alone. We believe over time, this will drive more top-line results and maintain a better cost structure that will increase BitGo's earning power. Looking ahead, building a more efficient and high-performance organization is an ongoing process, and we will continue looking for opportunities to improve our operating leverage over time. Together, these actions strengthen our cost structure, improve execution, and allow us to continue investing behind our highest priority strategic initiatives. Importantly, while we have strengthened our operating model, we have continued investing in the capabilities that make our platform more valuable to clients. A good example is our recently announced quantum risk management capabilities for Bitcoin wallets.

As institutional adoption continues to accelerate, quantum risk has emerged as a major area of concern for many institutions. While much of the industry remains focused on future standards, BitGo has already moved from discussion to execution, delivering quantum risk solutions that institutions can deploy today. At BitGo, security is much more than just a feature. Every improvement we make to security strengthens the value proposition of our entire platform. It reinforces client trust, differentiates BitGo in the market, and makes custody an even more compelling entry point for new institutional relationships. That philosophy extends well beyond quantum security. Every investment we make, whether in security, compliance, operations, or new capabilities, is designed to strengthen the full platform, because a stronger platform helps us win more clients.

As those clients deepen their relationship with BitGo, they increasingly adopt additional services that can help them securely access and participate in the digital asset ecosystem. That's the land and expand flywheel that drives our business. Everything I have shared so far reflects how we are strengthening the BitGo platform today. Looking ahead, we see three important trends reshaping the future of financial infrastructure. First, regulatory clarity continues improving across many of the markets we serve, enabling institutions to move from evaluating digital assets towards deploying capital and building products. Second, stablecoins are increasingly becoming mainstream. Today, U.S. dollar stablecoins represent more than $300 billion of circulating value and continue expanding into payments, settlement, and treasury applications. Third, tokenization is moving from concept to production. More than $35 billion of real-world assets have already been tokenized, and we believe we are still in the very early stages of that adoption curve.

These are not independent trends. As regulatory frameworks mature, stablecoin scale, and tokenized assets become more widely adopted, they enable a more global, always-on, 24/7 financial system where value moves seamlessly across institutions and jurisdictions on digital rails. For BitGo, every dollar that moves onto digital rails expands the need for our critical regulated infrastructure. That's why we believe our addressable market will continue to grow significantly. As this slide illustrates, BitGo sits at the intersection of these three rapidly developing markets. Every institution entering these markets will require trusted, regulated infrastructure to securely custody assets, move value, and perform financial activity. That is what underpins the long-term opportunity for BitGo. No one can predict precisely which networks, protocols, or business models will ultimately emerge as leaders. We have deliberately built BitGo so that our success does not depend on making that prediction.