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

Explicit Guidance:

• Revenue: No specific numerical guidance provided for FY2026 or FY2027. Management expects "increased revenue contributions" from the Fold Credit Card and Fold Reserve to begin in Q4 2026.
• Adjusted EBITDA: No explicit forward-looking target, though noted Q3 Adjusted EBITDA ($-4.5M) was the "best quarter of the year," signaling a trajectory toward positive cash flows as a stated economic priority.
• Capital Expenditure/Operating Expenses: No specific CapEx or Opex guidance; however, Q4 and future focus is on "maintaining operating cost control" and continuing to "improve efficiency."
• Cash Flow: Strategic priority to "move forward towards positive cash flows" by diversifying revenue streams, increasing margins, and growing Reserve balances.

Business-Segment Outlook:

• Deposits & Balances (Fold Reserve/Lead): Strategy is shifting from transaction-only to "balanced growth" (gathering balances). Early adoption shows customers hold "several times larger" balances than typical users. The goal is to become a "primary financial relationship" (payroll deposits, bill pay) rather than a transactional app.
• Credit Card: Current cap of 2,500 cardholders is a "phase" target; the next phase requires a credit facility partnership to "scale this thing to many many orders of magnitude larger." The roadmap includes a "pre-approval flow" to expand the top-of-funnel.
• Bitcoin Trading/Custody: "Custody and trading revenue" is expected to grow significantly when Bitcoin retail sentiment returns ("hot market"), leveraging the newly built distribution infrastructure.
• Merchant Offers: Revenue mix optimization continues toward higher-margin channels (Credit Card, Debit, Gift Cards) at the expense of lower-margin merchant offers, with this transition expected to be "stabilized."

Market and Competitive Outlook:

• Distribution Expansion: Digital distribution (e.g., TikTok, Blackhawk) is prioritized over physical retail as the primary growth engine. Management anticipates "more of the larger brands" signing partnerships as the sales cycle shortens with proven data.
• Holidays: Q4 and the holiday season are expected to be a "strong position" for growth, driven by gift card redemptions and increased distribution channels.
• Target Audience: Expansion beyond "niche Bitcoin" customers to the "mainstream audience" and "every American" seeking a better financial platform, retaining Bitcoin differentiation while appealing to traditional reward-seekers.
• Competitive Positioning: Folding to compete directly with neobanks and rewards platforms (like BILLS) for housing payments and bill pay, aiming to be the "most rewarding card in someone's wallet."

Macro / Industry Outlook:

• Bitcoin Market: Management anticipates the "retail Bitcoin market" to remain "soft" in the short term due to election uncertainty and hacking incidents, but expects a "meaningful recovery" in price and engagement later.
• Seasonality: Views the upcoming "Bitcoin market" volatility as a structural headwind to be navigated through product durability rather than cyclical timing.
• Partnership Landscape: Acknowledges that partners (e.g., TikTok, Kroger) are more hesitant to launch during "soft" Bitcoin sentiment, but data from existing partners is expected to reduce sales cycles for future deals.

Strategic Initiatives:

• Credit Facility: Ongoing conversations to secure a credit facility partner; expected to be announced "shortly" or in the "coming quarters." This is critical to uncap card issuance and allow for higher limits and broader marketing.
• Product Launches:
  • Lead Bank Spending Accounts: Expanding functionality to support direct deposit, expanded payments, and higher transaction limits to deepen the customer relationship.
  • Pass-through Bitcoin Buying: Already live; enables instant buying from linked bank accounts without prior funding friction.
  • Credit Card Pre-approval: Launching a pre-approval flow to reduce friction for non-users.
  • Mainstream Rewards: Rolling out updated messaging and rewards structures to appeal to non-crypto-native consumers.
• Partnerships: Expanding digital distribution to "more social networks" and "larger brands" throughout year-end and into the holidays.
• Infrastructure: "Rebuilt nearly everything" (app, exchange infrastructure, custody) to enable "speed to continue to innovate."

Risks and Headwinds to Outlook:

• Bitcoin Sentiment: Continued "softness" in the retail Bitcoin market and volatility could dampen engagement and revenue until sentiment recovers.
• Execution Risk: The success of the balance strategy depends on successfully converting customers to "deposit and balance" habits rather than just transactional flows.
• Financing Uncertainty: The credit card scaling is contingent on securing a "credit facility partner" with competitive terms; delays or unfavorable economics could limit growth.
• Macro/Regulatory: References to "uncertainty around the recent elections" and "hacking incidents across the industry" as external pressures that could impact the broader environment.

Management Tone on the Future:

• Confidence: High confidence in the "foundation coming together" and the "phase shift" from transaction to balance business. Describes the current state as "on the cusp of its next stage of growth."
• Strategic Shift: Repeated emphasis on moving from "transaction business" to "financial services platform" to monetize deposits and reduce dependence on Bitcoin price volatility.
• Patience vs. Acceleration: Willing to wait for the right credit facility partner to ensure long-term profitability, despite the pressure to scale; views the current "soft" market as an opportunity to build infrastructure ("laying the railroad tracks").
• Alignment: Notes strong shareholder alignment (reverse stock split approval, director buying) and a commitment to a "long-term view."

Miscellaneous:

• Stock Split: Shareholders approved a reverse stock split authorization on Oct 22, interpreted by management as a vote of confidence.
• Financials Reference: Q3 2026 revenue was $4.2M (-44% YoY), with Adjusted EBITDA at -$4.5M (improving from Q1/Q2).
• Treasury: $171 Bitcoin held in treasury (valued at $14.3M); none pledged as collateral.