BitGo's revenue for Q2 rose to $4.3 billion, with the low-margin transaction business still weighing on profitability

August 13th — Cryptocurrency asset custody and infrastructure company BitGo released its second-quarter financial report after going public. The report shows that BitGo's total revenue in the second quarter increased by 79.6% year-on-year to $4.329 billion, a quarter-on-quarter increase of 14.7%; the number of customers increased to 5,833, a year-on-year increase of 26.2%. However, while the revenue continues to expand, the company has not yet escaped losses, with a net loss of $19 million in the second quarter and an Adjusted EBITDA loss of $4.2 million.

On the surface, BitGo's revenue scale has reached the tens of billions of dollars, but this does not equate to a high-profit business. The financial report shows that the company's direct costs in the second quarter reached $4.287 billion, almost in line with the total revenue increase. The largest revenue source is Digital Asset Sales, which contributed approximately $4.198 billion in revenue, but the direct cost was as high as $4.19 billion. The quarterly gross profit was only about $7.1 million, with an overall profit margin of only 17 basis points, lower than the 32 basis points in the first quarter.

Key operational metrics continue to grow. BitGo's second-quarter platform customer base reached 5,833, with around 1.2 million users; Normalized Assets on Platform were $65.2 billion, a year-on-year increase of 31.4% and a quarter-on-quarter increase of 6.4%; Normalized Assets Staked were $11.9 billion, a year-on-year increase of 36.1%. The company stated that institutional customer adoption continues to increase, and the demand for digital assets, stablecoins, and tokenized financial markets is expanding.

The stablecoin business was a relatively clear highlight this quarter. BitGo's second-quarter Stablecoin-as-a-Service revenue was $38.8 million, a 148% year-on-year increase and a 1.7% increase from the previous quarter; the take rate rose to 8.0%, higher than the first quarter's 7.4% and the same period last year's 2.6%. Management stated that the addition of new stablecoin projects and higher reserve balances supported this business, and the company still sees more opportunities for projects to access the platform.

The quality of earnings is still a pressure point in the financial report. BitGo recorded a net loss of $19 million in the second quarter, which narrowed from a $60.7 million loss in the first quarter, but the Adjusted EBITDA loss expanded from $1.7 million in the first quarter to $4.2 million. The company explained that the improvement in net losses mainly came from a decrease in unrealized losses on digital assets and the normalization of IPO-related equity incentive expenses; however, operationally, the decline in contributions from digital asset sales and staking businesses still impacted the results.

BitGo also announced plans to reduce costs and optimize investment focus, expecting to achieve approximately $15 million in annualized cash savings. The company has also authorized a maximum of $50 million for stock repurchases. As of the end of the second quarter, BitGo held $159 million in cash and cash equivalents, 2523 owned bitcoins with a fair value of approximately $147.7 million, and stated that there is no corporate-level debt.