BitGo Reports Q3 Net Income Surge Despite 51% Revenue Decline
The digital asset custodian saw net income almost double thanks to a $71 million unrealized gain on cryptocurrency holdings, though both revenue and earnings fell short of analyst projections.
BitGo Holdings, the publicly traded digital asset infrastructure provider based in the United States, announced third-quarter net income of $44.1 million, representing an almost twofold increase compared to the same period last year, even as the company posted an operating loss of $19.2 million that was offset by gains in cryptocurrency valuations.
The cryptocurrency custody provider booked an unrealized gain of $71.5 million on its digital asset portfolio during the three-month period that concluded on Sept. 30, based on the company's quarterly regulatory filing. In the corresponding quarter of the previous year, the firm had posted operating income totaling $3.9 million.
Total revenue experienced a 51% year-over-year decline, dropping to $2.85 billion as the pace of digital asset transactions decelerated, the company disclosed on Monday. BitGo's accounting practices involve recording the complete proceeds from these sales as revenue while treating associated costs as separate line items. When factoring in direct costs, revenue decreased by 32% to reach $37.3 million.
The company's performance fell short of Wall Street projections for both top-line revenue and bottom-line earnings during the third quarter, with revenue landing 32% beneath the $4.2 billion consensus forecast compiled by Zacks Investment Research, a US-based financial research organization.
BitGo's stock price climbed 4.9% during Monday's trading session, settling at $5.10 per share, clawing back a portion of the approximately 60% drop the stock has experienced since the beginning of the year, based on data from Yahoo Finance.
As of Sept. 30, the company disclosed maintaining $143 million in cash and cash equivalents alongside a corporate treasury position of 2,399 Bitcoin (BTC), which carried a fair market value of $200 million at the quarter's end.
During the month of June, BitGo executed workforce reductions affecting approximately 15% of its employee base as part of a strategic realignment to concentrate resources on key business segments such as trading operations, stablecoin initiatives and artificial intelligence development.