BitGo said on Aug. 12 that Chief Financial Officer Edward Reginelli will resign effective Sept. 15. In the same announcement, the digital-asset infrastructure company reported a second-quarter net loss of $19.0 million, compared with a $38.3 million profit a year earlier, even as revenue rose 79.6% to $4.33 billion.
CFO departure and transition plan
BitGo’s Form 8-K said Reginelli notified the board on Aug. 10. The company said his resignation was not the result of any disagreement related to its operations, policies, or practices, and that it has started a formal search for a successor.
BitGo said Reginelli is expected to remain in an advisory role after stepping down and will support the transition while the company looks for a replacement.
Quarterly loss narrows from Q1, but adjusted EBITDA worsens
The company’s net loss narrowed from $60.7 million in the first quarter. Still, adjusted EBITDA moved to a $4.2 million loss from a $3.0 million gain a year earlier, and also worsened from a $1.7 million loss in the prior quarter, according to the earnings release.
Revenue expands as trading margins tighten
Most of BitGo’s revenue flowed out as direct trading costs. Digital Asset Sales generated $4.20 billion in revenue and $4.19 billion in direct costs, leaving what the company described as a quarterly margin of about $7.1 million.
Unit margin in that business fell to 17 basis points, down from 32 basis points in the first quarter and 19 basis points a year earlier. BitGo said the decline reflected lower spreads on some spot trades and a smaller contribution from derivatives activity.
The company also said it records spot trading revenue on a gross basis and derivatives revenue on a net basis. Because of that accounting treatment, changes in the mix between the two products can materially affect reported Digital Asset Sales revenue and the related margin.
Staking weakens while stablecoin services grow faster
Staking showed similar pressure. Revenue increased 30.9% from the first quarter to $64.7 million, but fell 28.8% from a year earlier. BitGo’s staking take rate dropped to 6.0%, from 16.1% in the first quarter and 10.0% a year ago.
Stablecoin-as-a-Service was one of the faster-growing lines. Revenue in that segment rose 148% year over year to $38.8 million. Sponsor fees totaled $35.7 million, producing an 8.0% take rate, versus 2.6% a year earlier.
Cost cuts follow June layoffs
The earnings followed BitGo’s June announcement that it would cut about 15% of its workforce. The company now says broader changes to investment priorities and its operating model are expected to generate around $15 million in annualized cash savings.
The quarter also included a $1.3 million restructuring charge.
Client count rises, platform assets decline on an unadjusted basis
BitGo reported 5,833 clients, up 26.2% from a year earlier. Its unadjusted assets on platform fell 27.8% to $65.2 billion, while its price-normalized measure increased 31.4%.
The company said the normalized metric is calculated by repricing prior-period digital-asset balances using median prices from the current quarter.
Balance sheet and buyback authorization
BitGo ended June with $159.0 million in cash and 2,523 company-owned Bitcoin worth about $147.7 million. It said the company had no corporate-level debt.
On June 17, BitGo’s board authorized a $50 million share-repurchase program. At then-current prices, that amount was equal to about 8% of Class A shares. The authorization has no fixed expiration date and does not obligate the company to repurchase any shares.
Management focus for the second half
Reginelli will continue to assist with the handoff as BitGo searches for a new CFO. In the earnings release, he said the company’s focus in the second half was “translating continued business growth into stronger earnings.”