BitGo Holdings, Inc. Class A

Ladies and gentlemen, thank you for standing by. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the BitGo second quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time. Thank you. I would now like to turn the conference over to Rachel Dye, Head of Investor Relations. 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.bitco.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 Ed 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 and 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. Thank you so much for joining us. Looking at the next slide, I want to focus on the growth of the underlying platform. And 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 in 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. And 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'll 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've 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 an 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, Bitco has already moved from discussion to execution, delivering quantum risk solutions that institutions can deploy today. Thank you for watching. See you next time. 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. And 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've shared so far reflects how we're 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, US 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're still in the very early stages of that adoption curve. These aren't 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. As institutions continue to adopt digital assets, stablecoins, tokenized markets, they will require secure custody, compliant asset movement and trusted settlement infrastructure. Our role is to provide that critical infrastructure regardless of which assets, networks, or applications ultimately succeed. This positions us to capture growth and serve clients across multiple potential market outcomes. We are already supporting institutions as these markets move from experimentation towards production. Across different networks and issuance models, we provide the qualified custody, compliant asset movement, trading, collateral, and settlement capabilities they need to operate at scale. Thank you for joining us. were proud to provide the wallet infrastructure supporting the DTC tokenization initiative. In July, the first U.S. transactions using DTCC tokenized assets were successfully processed, marking an important step ahead of the platform's full production launch. This is not an isolated example. BICO also serves as the sole qualified custodian for the Canton network, supporting DTCC's tokenized equity initiative, and the sole custodian for FIGUR's open network tokenized equities platform as additional examples. These partnerships demonstrate that institutions are increasingly selecting BitGo's regulated infrastructure as they move digital assets, stablecoins, and tokenized securities into production. Everything we've discussed today ultimately comes down to one thing, continuing to strengthen the BitGo platform and extending our leadership in institutional digital asset infrastructure. Our approach to product development has always been disciplined. We don't build products to chase headlines or every new trend. We invest where we see durable client demand and where we believe we can meaningfully strengthen our platform over the long term. To make that more tangible, I'd like to walk through two examples. Before I begin, I want to note that the following demonstrations are for illustrative purposes only and do not constitute an offer to sell or a solicitation to offer or buy any security. The availability of these capabilities may be subject to applicable securities laws and regulatory approvals. First, I'll demonstrate how BitGo is building the underlying infrastructure for tokenized equities, bringing together regulated custody, on-chain ownership, and capital markets infrastructure in a way we believe will become increasingly important as traditional financial assets move onto digital rails. Then I'll highlight our recently announced quantum-resistant wallet capabilities. Quantum computing has been a growing concern for our institutional Bitcoin holders, and rather than waiting for future standards, BitGo has already introduced tools that help clients to identify, measure, and reduce quantum exposure today. Together, these examples illustrate how we're continuing to expand the BitGo platform, not by adding features for the sake of it, but by solving real customer problems for institutional clients and reinforcing the foundation for our next generation of financial markets. To show how these capabilities come together, let me walk you through something live. For most of our financial history, owning a share meant holding a piece of paper. Whoever held the paper owned the equity. That worked at small scale and it broke catastrophically at large scale. Today, stocks are moving on chain for the same reason money and everything else is going digital. What Structure Wins When They Do? What you see in front of us is my logged in account in Pitco. I'm going to place an order to buy 100 shares of SpaceX, our tokenized entitlement representing SpaceX shares that are held at Pitco Bank & Trust. Once submitted, the trade occurs on the open public market at competitive pricing through our clearing relationship. The trade is executed, and now we have an additional 100 shares of SpaceX, represented as Go SpaceX tokens, in my account. BitGo Bank & Trust has a fiduciary duty to hold the underlying share on your behalf. I can always direct BitGo to sell the underlying shares on my behalf using the order type of my choice. From here, I can hold it, move it amongst my own wallets, or, as I'll show next, I'll put it to work as collateral. So let's go apply for a loan. Instead of selling my SpaceX position, I will borrow using it as collateral. For this demonstration, I'm going to choose to borrow SoFi Dollar, a stablecoin issued by SoFi Bank in partnership with BitGo. I'm going to borrow $20,000 and submit my request. Biko Prime evaluates the loan, pricing the collateral against current market conditions, and then returns these terms. All right, the loan is approved. I now need to pledge X amount of GoSpaceX as collateral. And it looks like 203 is required. And then I'm going to enter my password here and pledge it. We'll receive our SoFiUSD shortly as a deposit into my account without ever selling the underlying position. And... Here's that SoFi dollar that we just received. Alright, so I think what we've done here is pretty amazing. In just a few clicks, we've orchestrated a complex financial transaction across three different financial systems. First, we accessed the capital markets to tokenize a stock purchase in real time. Second, we put that tokenized asset into qualified custody at a regulated U.S. national bank. And third, we issued a loan against that asset in the form of a regulated U.S. stablecoin from SoFi. That's the core GoStocks loop. Buy, hold in your own wallet, and borrow against it. Real ownership made usable. GoStocks are entitled to the full economic benefit of the underlying share, including corporate actions, dividends, voting, and more, so that holding a GoStock never means giving up the rights that come with owning the real thing. And this is just the foundation. Today's demo is Buy and Borrow. Tomorrow, it's a completely on-chain equity platform built on real ownership from the ground up. The second example focuses on a very different challenge, but one that's been increasingly important. As we've discussed, security remains foundational to digital assets, and quantum computing has become a growing area of focus for institutions with long-term Bitcoin holdings. Rather than waiting for future industry standards to emerge, BitGo has taken a different approach. At the core is our quantum resistance score, which allows clients to measure how much of their Bitcoin may be exposed to future quantum risk using publicly verifiable blockchain data. Where exposure exists, client can remediate it with a single action by moving assets to fresh addresses while preserving the same ownership, policies, and security controls. Behind the scenes, we've also redesigned how Bitcoin transactions are constructed. Every transaction is quantum aware by default, automatically reducing exposure over time without changing the client experience. In our view the best security enhancements are the ones that clients don't have to think about. Importantly, we're not stopping there. We're continuing to invest in post-quantum cryptography, next-generation MPC infrastructure, and future blockchain security standards so that BitGo remains prepared as the industry evolves. What makes this significant is that quantum readiness is increasingly becoming part of the due diligence process for ETF issuers, corporate treasuries, and other long-term institutional Bitcoin holders. That's another example of how we continue strengthening the BitGo platform, solving tomorrow's institutional challenges before they become today's requirements. The two examples we just walked through aren't really about individual products. They're examples of what becomes possible after more than a decade of building institutional digital asset infrastructure. Neither tokenized equities nor quantum-resistant wallets could exist as standalone applications. They require regulated infrastructure, secure custody, deep engineering expertise, and an institutional platform that brings all those capabilities together. That's what drives BitGo's platform advantage. Our advantage isn't any single product. It's the combination of regulatory infrastructure, technology, and institutional network that allows us to earn client trust, continuously expand client workflows, and create stronger economics over time. That's the business model. Everything I've discussed today is ultimately designed to support one objective, building deeper institutional relationships over time. Institutions typically begin with custody, but they rarely stop there. As their digital asset businesses grow, they need trading, settlement, financing, staking, stablecoin infrastructure, tokenization, and other capabilities. Because those services are built on the same integrated platform, each individual workflow strengthens the client relationship while increasing the revenue per client, improving retention, and creating operating leverage. The digital asset industry has never developed in a straight line. We've now operated through multiple market cycles, and each one has expanded institutional adoption, strengthened the ecosystem, and created new opportunities for infrastructure providers. Throughout those cycles, Bitco has continued to grow its clients, assets on platform, and product capabilities, positioning us to benefit as institutional participation continues to accelerate. We believe Bitco is uniquely positioned to not only participate in that long-term growth, but to help define the infrastructure that enables it. Before we turn it over to Ed, I'd like to share an update regarding our leadership team. You may have already read in today's earning release, Ed will be transitioning from his role as Chief Financial Officer during the coming quarter. On behalf of everyone at BitGo, I want to thank Ed for his leadership and the many contributions he's made to the company. He's been an important part of our growth and our evolution. Ed will remain with the company to help ensure a smooth and orderly transition, and will provide an update on our succession plans at the appropriate time. With that, I'll turn it over to Ed to walk through our financial results in more detail and our Q3 outlook.