Fold's Third Quarter 2026 Earnings Call - FOLD HOLDINGS INC

Financial Performance:

• Reported Q3 2026 revenue of $4.2 million, a 44% year-over-year decrease primarily driven by a drop in merchant offer revenue from $6.6 million to $2.4 million due to lower volumes and portfolio optimization.
• Custody and trading revenue quadrupled to $1.3 million (up from $200,000 YoY), fueled by the full Bitcoin gift card product which contributed $1.2 million.
• Adjusted EBITDA narrowed slightly to a loss of $4.5 million compared to a $4.2 million loss in Q3 2025, representing the best quarterly adjusted EBITDA of the year after losses of $5.8 million in Q1 and $5.5 million in Q2.
• GAAP net loss was $2.6 million, contrasting with a $0.6 million net income in the prior year period.
• Balance sheet shows $21.7 million in cash and equivalents, positive working capital of $13.8 million, and 171 Bitcoin in treasury valued at $14.3 million (none pledged as collateral).
• Operating expenses (excluding stock-based compensation) decreased 21% to $10.5 million; interest expense dropped 54% to $500,000.
• Transaction volumes averaged $53 million per month in Q3, down from $78 million per month in Q3 2025.

Guidance and Future Outlook:

• Expects significant revenue contributions from the full-scale credit card and Fold Reserve products to begin in Q4 2026.
• Q4 strategy focuses on growing customer balances, increasing product utilization, scaling distribution channels into the holiday season, and improving operational efficiency.
• Management anticipates unlocking the credit card program's full growth potential upon securing a financing partner, moving beyond the current cap of 2,500 cardholders.
• Plans to expand into broader Total Addressable Market (TAM) segments beyond Bitcoin-centric users, targeting mainstream consumers seeking high-reward financial platforms.
• Aims to transition from a transaction-based business model to a balance-based model to create more predictable, recurring revenue streams.

Business Segments and Product Lines:

• Fold Reserve & Lead Bank Accounts: Launched new balance products leveraging a partnership with Lead Bank; thousands of customers activated accounts within weeks, holding balances several times higher than the average user. These products monetize deposits through yield and offer high-tier rewards.
• Bitcoin Gift Cards: Secured distribution via TikTok, which became the number one customer acquisition channel; the product generated $1.2 million in revenue in the quarter.
• Credit Card: Expanded to 2,500 cardholders (the current target phase); launched a pre-approval flow to reduce friction; currently self-funded but seeking a credit facility to scale limits and user base.
• Pass-Through Bitcoin Buying: Introduced feature allowing users to buy Bitcoin directly from linked bank accounts without funding the Fold wallet first, reducing friction and increasing trading velocity.
• Rewards Program: Launched a free tier accessible to all users, removing the subscription barrier for entry rewards.

Market and Competitive Landscape:

• Operating in a soft retail Bitcoin market with uncertainty stemming from recent elections and industry hacking incidents; however, Fold grew custody/trading revenue 270% YoY despite this environment.
• Competing against neobanks and rewards platforms (specifically mentioning "Bills" in the housing rewards space) rather than just traditional crypto exchanges.
• Digital distribution (e.g., TikTok) is outperforming physical retail (e.g., Kroger) in terms of customer acquisition speed and volume; Fold is the only Bitcoin gift card on TikTok Shop.
• Aiming to become a "full financial services platform" where customers keep money, not just spend it, differentiating from pure transaction apps.

Risks and Challenges:

• Macroeconomic headwinds: Retail engagement has been slow to recover despite Bitcoin price rebounds, and volatility remains a factor.
• Credit facility dependency: Future credit card growth is contingent on securing a financing partner with competitive terms; delays in this deal cap current program expansion.
• Market sentiment: Partner adoption for gift cards is often tied to positive Bitcoin sentiment; current low sentiment may slow onboarding of new retail partners.
• Transition risks: Moving from transaction-based to balance-based revenue requires successful customer adoption of new deposit products to fully realize margin improvements.

Management Commentary and Tone:

• Tone is confident and execution-focused, emphasizing the transition from "ideas stage" to "real execution" and a strategic phase shift toward a diversified financial platform.
• CEO Will Reeves expressed pride in rebuilding the app infrastructure, custody systems, and product suite from the ground up to enable rapid innovation.
• CFO Wolf Repass highlighted the strategic pivot to "balance growth" over transaction growth as a path to higher margins and profitability.
• Management emphasized that they are "heads down building" through the macro slowdown and feel well-positioned for the next growth stage once Bitcoin sentiment returns.

Analyst Questions and Answers:

• TikTok vs. Kroger Economics: Analyst Dave Storms asked about follow-on behavior; Management confirmed TikTok users show higher follow-on gift card buys and app engagement driven by content virality, whereas Kroger traffic is more traditional.
• Pass-Through Adoption: Management confirmed pass-through buys are reducing friction by eliminating the need to pre-fund accounts, expected to increase frequency and conversion.
• Credit Facility Hurdles: Management explained delays are due to a need for granular data on loss rates and charge-offs to secure optimal terms in a competitive market involving traditional lenders and crypto-native lenders (e.g., Stripe Tempo).
• CAC Metrics: TikTok gift cards are acquired at near $0 CAC due to the program's cost-neutral structure, significantly lower than the hundreds of dollars typical for bank acquisition.
• Marketing Spend: Management indicated marketing spend will increase significantly (potentially the largest in company history) once the credit facility is secured and Reserve messaging is finalized to target a mainstream audience.
• Balance Strategy: Fold Reserve customers hold balances in tiers starting at $5,000 up to $100,000, with strong adoption across all tiers, validating the "balance-first" model.

Other Key Points:

• Stockholders approved a reverse stock split authorization on October 22nd; management views this as a vote of confidence in long-term value.
• Directors and officers have shown alignment by purchasing shares on the open market or limiting sales to tax obligations.
• Capital resource adjustments include replacing a $250M equity line with a $25M committed equity facility and extending debt maturity to November 2027 with an additional option.
• The company is actively diversifying distribution beyond TikTok and Kroger, adding new digital partners and leveraging data from existing wins to pitch larger national brands.
• Management reiterated that Fold is no longer just a Bitcoin exchange but a rewards platform competing for rent, mortgage, and bill payments.