10-Q: Fold Holdings Q3 2025: Bitcoin Treasury Soars, Net Income Returns

Fold Holdings, Inc. reported a net income of $0.6 million for Q3 2025, driven by significant gains in its bitcoin investment treasury, despite increased operating expenses and a history of net operating losses.

Summary

• Achieved a net income of $554,242 for the three months ended September 30, 2025, a substantial improvement from a net loss of $62,310,678 in the prior year period.
• Reported a net loss of $34,899,390 for the nine months ended September 30, 2025, compared to a net loss of $65,575,171 for the same period in 2024.
• Total revenues increased by 41% to $7,398,939 for Q3 2025 and by 48% to $22,662,702 for the nine months ended September 30, 2025.
• Banking and payment revenues grew by 35% to $7,054,195 in Q3 2025 and by 44% to $21,897,376 for the nine months ended September 30, 2025, primarily driven by merchant offers.
• Custody and trading revenues significantly increased to $346,478 for Q3 2025 and $739,933 for the nine months ended September 30, 2025, boosted by the new Fold Bitcoin Gift Card.
• Total operating expenses rose by 42% to $13,339,257 for Q3 2025 and by 106% to $44,428,907 for the nine months ended September 30, 2025, mainly due to higher compensation, marketing, and public company-related professional fees and insurance.
• Recognized a gain on digital assets investment treasury of $10,238,866 for Q3 2025 and $31,203,938 for the nine months ended September 30, 2025, primarily due to the increase in bitcoin price.
• Cash and cash equivalents were $6,663,463 as of September 30, 2025, with positive working capital of $6,100,000.
• The accumulated deficit reached $136,247,912 as of September 30, 2025.
• Held 1,494 bitcoin in its Investment Treasury, valued at $170,392,495, with 800 BTC ($91,300,000) restricted as collateral for convertible notes.
• Held 81 bitcoin in its Rewards Treasury, valued at $9,295,587, matching the existing customer rewards liability.
• Total principal debt outstanding from convertible notes was $66,300,000 as of September 30, 2025.
• Entered into a $250 million equity purchase facility in June 2025, having sold 1.15 million shares for gross proceeds of $3.48 million by September 30, 2025.
• Management expects existing cash, accounts receivable, financing available from the Facility, and digital assets to be sufficient to fund anticipated operations through one year from the report date.
• Identified material weaknesses in internal control over financial reporting related to formal documentation of top-down risk assessment and effective controls for accurate SEC disclosures.

Sentiment

Score: 7

Explanation: The company achieved net income in Q3 2025, driven by significant gains in its bitcoin investment treasury and strong revenue growth from banking/payments and new custody/trading products. Strategic product launches like the Fold Credit Card and Bitcoin Gift Card, along with a substantial equity facility and new credit line, provide a positive outlook for future growth and liquidity. However, the company continues to incur significant operating losses, has a large accumulated deficit, and faces challenges with cash burn and identified material weaknesses in internal controls, which temper overall sentiment.

Positives

• Achieved a net income of $554,242 for the three months ended September 30, 2025, a significant turnaround from a $62.3 million net loss in the prior year period.
• Reported strong revenue growth of 41% for Q3 2025 and 48% for the nine months ended September 30, 2025.
• Banking and payment revenues increased by 35% in Q3 2025 and 44% year-to-date, primarily driven by the expansion and marketing of merchant offers.
• Custody and trading revenues showed substantial growth, from a nominal amount to $346,478 in Q3 2025 and $739,933 year-to-date, supported by the new Fold Bitcoin Gift Card.
• Achieved product-level profitability for all core product lines, inclusive of the contra-revenue effect of rewards.
• The Bitcoin Investment Treasury grew to 1,494 BTC, valued at $170,392,495 as of September 30, 2025, generating significant gains.
• Added over 7,500 new accounts, bringing the total to over 625,000, and over 2,000 new Verified Accounts, totaling nearly 82,000, during Q3 2025.
• Processed over $3.3 billion in Transaction Volume from inception through September 30, 2025, with an average of over $78 million per month in Q3 2025.
• Secured a $250 million equity purchase facility, providing a significant potential source of future funding.
• Launched the Fold Bitcoin Gift Card in May 2025, with expected continued rollout to new distribution channels.
• Announced partnerships with Stripe, Inc. and Visa for the Fold Credit Card, expected to launch by the end of 2025, offering unlimited 2% bitcoin rewards for premium customers.
• Entered into a $45 million revolving credit facility with Two Prime Lending Limited in October 2025, with $5 million already borrowed.
• Management expects existing liquidity and financing to be sufficient for operations for one year from the report date.

Negatives

• Continued to incur net operating losses of $5,940,318 for Q3 2025 and $21,766,205 for the nine months ended September 30, 2025.
• Reported a significant accumulated deficit of $136,247,912 as of September 30, 2025.
• Total operating expenses increased significantly (42% in Q3, 106% YTD), outpacing revenue growth in some areas.
• Compensation and benefits expenses increased by 408% in Q3 and 492% year-to-date, partly due to increased headcount (39 employees vs. 22 in prior year) and $8.5 million in non-cash share-based compensation.
• Marketing expenses increased by 71% in Q3 and 473% year-to-date, indicating higher spending for growth initiatives.
• Professional fees increased by 26% year-to-date due to public company transition and ongoing regulatory/compliance costs.
• Incurred a $9,612,199 loss on extinguishment of debt related to the amendment of the December 2024 Initial Investor Note.
• Incurred a $14,470,683 loss from the change in fair value of convertible notes for the nine months ended September 30, 2025, including a $12.8 million day-one loss on issuance.
• Cash and cash equivalents decreased significantly from $18,330,359 at December 31, 2024, to $6,663,463 at September 30, 2025.
• Net cash used in operating activities increased from $3,393,225 to $11,426,231 for the nine months ended September 30, 2025.
• Net cash used in investing activities increased from $1,711,247 to $3,758,069 for the nine months ended September 30, 2025, primarily due to increased bitcoin purchases.
• 800 bitcoin, valued at $91,300,000, in the Investment Treasury are restricted from use as operating capital and serve as collateral for convertible notes.
• The equity purchase facility with SZOP Opportunities I LLC may cause substantial dilution to existing stockholders.
• The company may not have access to the full $250 million under the equity facility due to beneficial ownership limitations (9.99%) and the Exchange Cap (19.99% or 9,282,287 shares without stockholder approval).
• Identified material weaknesses in internal control over financial reporting, specifically lacking formal documentation for top-down risk assessment and ineffective controls for accurate SEC disclosures.

Risks

• Volatility in the valuation of bitcoin may affect operating results and the fair value of bitcoin-denominated assets and liabilities.
• The still-developing and uncertain regulatory landscape for bitcoin and financial services poses a risk to growth and operations.
• Ability to scale operations in a cost-effective manner is a challenge.
• Future capital requirements and the ability to obtain funding on acceptable terms are uncertain, potentially limiting growth.
• The equity purchase facility with SZOP Opportunities I LLC could result in substantial dilution to existing stockholders.
• The subsequent sale of shares acquired by SZOP, or the perception of such sales, could cause the price of common stock to fall.
• The company may not have access to the full $250 million available under the equity facility due to beneficial ownership limitations and the Exchange Cap, potentially impacting liquidity.
• Even with the full equity facility, substantial additional capital may be required to fund operations and execute the current business strategy.
• Sales of a substantial number of securities by selling stockholders could depress the market price of common stock and warrants.
• Material weaknesses in internal control over financial reporting exist, increasing the reasonable possibility of material misstatements not being prevented or detected on a timely basis.
• The company is a defendant in a bankruptcy clawback proceeding (PCT Litigation Trust v. Fold Holdings, Inc.), though it does not currently expect a material adverse effect.
• Section 382 of the Code may impose an annual limitation on the amount of taxable income that can be offset by net operating loss (NOL) carryforwards, potentially impacting future tax obligations.

Future Outlook

Fold Holdings plans to expand existing offerings and introduce new products to attract customers, with significant resources dedicated to its custody and trading platform, which is expected to be a major growth driver. The company anticipates refining its onboarding experience, funding options, systems architecture, and geographic footprint for its exchange product, including opening it to non-Fold cardholders and expanding to new states. New consumer financial services are expected to be added over the next few quarters. The company intends to increase investments in organic and paid marketing channels to grow its customer base, transaction volume, and revenues, particularly in conjunction with new product rollouts like the Fold Credit Card and Fold Bitcoin Gift Card. Management believes current macro conditions are favorable for accumulating more bitcoin for its treasury and plans to fund these acquisitions primarily through common stock issuances via various financial instruments. The company expects its existing cash, accounts receivable, the equity purchase facility, and digital assets to be sufficient to fund operations for one year from the report date.

Management Comments

• "Fold has a proven track record of launching products that enhance engagement with our current customers and attract new customers to our platform."
• "We intend to continue to build on this success by expanding our existing offerings to further engage our existing users, and we expect to introduce new products to attract new customers."
• "We are devoting significant time and resources to our custody and trading platform which we expect to become a significant growth driver for Fold."
• "We expect that each of these releases will further enhance our existing market position and drive increased volumes across the platform."
• "We believe existing macro conditions to be favorable towards adding additional bitcoin to our balance sheet at current market prices and we will continue to consider additional bitcoin accumulation opportunities over the near term."
• "Management expects that the Company's existing cash and cash equivalents, accounts receivable, financing available from the Facility, and digital assets received through September 30, 2025, will be sufficient to enable the Company to fund its anticipated level of operations through one year from the date of this report."

Industry Context

Fold Holdings operates in the evolving bitcoin financial services industry, aiming to bridge traditional finance with the crypto economy by offering FDIC-insured checking accounts, bitcoin rewards debit/credit cards, and trading/custody solutions. The company emphasizes trust and security, differentiating itself from past crypto failures. Its strategy aligns with broader industry trends of increasing institutional adoption and mainstream integration of bitcoin. The company acknowledges the impact of a still-developing and uncertain regulatory landscape, macroeconomic factors like general bitcoin awareness, political environment, monetary policy, and technological innovation on its business and the wider market.

Comparison to Industry Standards

• The filing states that its metrics are useful for comparison to other financial service providers but does not provide specific comparisons to industry benchmarks, comparable companies, or projects within the document.

Corporate Governance

Legal Proceedings

• On August 14, 2025, the company was named as a defendant in a bankruptcy clawback proceeding (PCT Litigation Trust v. Fold Holdings, Inc.) in the United States Bankruptcy Court for the District of Delaware, seeking avoidance and recovery of alleged preferential transfers.
• The company does not presently expect this matter to have a material adverse effect on its consolidated financial position, liquidity, capital resources, or annual results of operations.
• The company may be subject to other claims, inquiries, or legal proceedings arising in the ordinary course of business, but does not currently expect any such matters to have a material adverse effect.

Related Party Transactions

• On March 6, 2025, Fold entered into a Securities Purchase Agreement with SATS Credit Fund, LP, a related party, for a Convertible Note in an aggregate principal amount of approximately $46.3 million. SATS Credit Fund LP is an affiliate of Dr. Jonathan Kirkwood, a member of Fold's Board of Directors, who recused himself from the board's approval.
• During the year ended December 31, 2024, the Company entered into a SAFE with Thesis Inc., a principal shareholder, totaling $1.0 million.
• During the three and nine months ended September 30, 2025, the Company recognized nominal amounts of revenue related to merchant offers purchased by Thesis Inc.

Stakeholder Impact

• Shareholders face potential for significant dilution from the $250 million equity purchase facility and subsequent sales by SZOP, as well as stock price volatility due to bitcoin price fluctuations and sales by existing securityholders. However, they benefit from the return to net income and revenue growth.
• Employees benefit from increased headcount, share-based compensation, and new equity incentive plans (ESPP, 2025 Equity Plan), along with executive severance protections.
• Customers are impacted by the introduction of new products like the Bitcoin Gift Card and the upcoming Fold Credit Card, aiming to drive engagement and acquisition, alongside existing bitcoin rewards and insured custody services.
• Creditors are secured by bitcoin collateral for convertible notes and benefit from the establishment of a new $45 million revolving credit facility.
• Suppliers and partners continue to engage with the company through ongoing partnerships with entities like Visa, Stripe, and BitGo Trust Company.

Next Steps

• Continue to roll out the Fold Bitcoin Gift Card to new distribution channels over the coming months.
• Launch the Fold Credit Card by the end of 2025.
• Refine onboarding experience, funding options, systems architecture, and geographic footprint for the custody and trading platform.
• Add support for enhanced funding options and open the exchange product to non-Fold cardholders in the near term.
• Add users from new states where the exchange product has not previously supported access.
• Continue to add new consumer financial services that complement and enhance current offerings over the next few quarters.
• Increase investments in paid marketing and affiliate opportunities in conjunction with key product rollouts.
• Continue to consider additional bitcoin accumulation opportunities over the near term.
• Fund further bitcoin acquisitions primarily through issuances of Common Stock via various financial instruments.
• Remediate material weaknesses in internal control over financial reporting by designing and implementing effective controls, engaging consultants for technical accounting, financial reporting, and internal control reviews, and creating a top-down risk assessment framework.
• Assess the impact of Section 382 on NOL carryforwards.
• Assess the impact of the One Big Beautiful Bill Act (OBBBA) on financial statements.
• The initial $5 million advance under the Two Prime Credit Facility matures on October 1, 2026, and may be renewed upon mutual agreement.

Key Dates

Recommendation

Fold Holdings shows promising revenue growth and a return to net income in Q3 2025, largely driven by the appreciation of its bitcoin investment treasury. Strategic product launches like the Bitcoin Gift Card and the upcoming Fold Credit Card, along with a substantial equity facility and new credit line, provide avenues for future growth and liquidity. However, the company continues to incur significant operating losses, has a substantial accumulated deficit, and faces material weaknesses in internal controls. The potential for significant shareholder dilution from the equity facility and the inherent volatility of bitcoin prices also present considerable risks. A "Hold" recommendation is appropriate as the company navigates its growth strategy and addresses operational challenges, suggesting investors monitor progress on profitability, cash flow, and internal control remediation before making further investment decisions.

Keywords

Bitcoin, Financial Services, Crypto, 10-Q, Fold Holdings, FLD, Digital Assets, Convertible Notes, Equity Facility, Fintech, Rewards Program, Debit Card, Credit Card, Investment Treasury, Regulatory Compliance, Internal Controls