Financial Performance - Net revenues for the three months ended September 30, 2025, increased by $2.2 million, or 41%, to $7,398,939 compared to $5,241,889 for the same period in 2024[237]. - Banking and payment revenues rose by 35% from $5,211,630 in Q3 2024 to $7,054,190 in Q3 2025, driven by a 39% increase in net revenues from merchant offers[238]. - Custody and trading revenues increased from a nominal amount in Q3 2024 to $346,478 in Q3 2025, with expectations for significant growth in the future[240]. - The company reported a net income of $554,242 for Q3 2025, compared to a net loss of $4,169,159 in Q3 2024[236]. - Net revenues for the nine months ended September 30, 2025, increased by $7.4 million, or 48%, to $22.7 million compared to $15.3 million for the same period in 2024[257]. - Banking and payment revenues rose by $6.6 million, or 44%, from $15.3 million in 2024 to $21.9 million in 2025, driven by a 48% increase in net revenues from merchant offers[256][260]. - The company reported a net loss of $30.7 million for the nine months ended September 30, 2025, a decrease of 47% compared to the previous year[1]. Operating Expenses - Total operating expenses for Q3 2025 were $13,339,257, a 42% increase from $9,411,048 in Q3 2024[236]. - Compensation and benefits expenses surged by 408% to $3,728,954 in Q3 2025, reflecting an increase in employee headcount from 22 to 39[246][247]. - Marketing expenses increased by 71% to $237,625 in Q3 2025, as the company plans to invest more in growth partnerships and product launches[248]. - Professional fees decreased by 59% to $1,294,394 in Q3 2025, down from $3,171,141 in Q3 2024, due to reduced costs associated with the transition to a public company[249]. - Total operating expenses surged by $22.9 million, or 106%, from $21.5 million in 2024 to $44.4 million in 2025, primarily due to increased compensation and benefits expenses[1]. - Compensation and benefits expenses skyrocketed by 492% to $13.9 million in 2025, largely due to an increase in headcount from 22 to 39 employees[268]. - Other selling, general, and administrative expenses rose from $1.0 million in 2024 to $3.6 million in 2025, driven by higher insurance premiums and software amortization costs[278]. Customer Growth and Product Offerings - Fold added more than 7,500 new Accounts, bringing the total to over 625,000, and more than 2,000 new Verified Accounts, totaling nearly 82,000[202]. - The company launched the Fold Bitcoin Gift Card in May 2025, allowing customers to purchase USD-denominated gift cards redeemable for bitcoin[186]. - The Fold Credit Card, announced in September 2025, is expected to provide premium customers with unlimited 2% bitcoin rewards and drive new user acquisition[188]. - Fold+ subscription offers users reduced fees and higher rewards for $100/year or $10/month[203]. - The company expects to continue expanding its product offerings, including the Fold Bitcoin Gift Card, which generated $0.2 million in revenue for the nine months ended September 30, 2025[263]. Treasury and Investment Strategy - As of September 30, 2025, Fold held approximately 1,575 BTC in its Bitcoin Treasury, valued at $179.7 million based on a market price of approximately $114.1 thousand per bitcoin[196]. - The total bitcoin treasury increased from $102.1 million on December 31, 2024, to $179.7 million as of September 30, 2025, reflecting a significant growth in both rewards and investment treasury[197]. - Fold's Investment Treasury strategy includes accumulating bitcoin and utilizing it for corporate purposes, with 800 bitcoin restricted under collateral agreements as of September 30, 2025[199]. - The company held 1,494 bitcoin in its Investment Treasury, valued at $170.4 million, with 800 bitcoin valued at $91.3 million restricted as collateral for convertible notes[287]. Revenue Streams - Fold earns interchange revenue from transactions made with the Fold Debit Card, which varies based on transaction type and merchant category[204]. - As of September 30, 2025, Fold partnered with BitGo to facilitate bitcoin transactions, earning revenue through transaction fees and spreads, with fees reaching up to 1.5% for non-subscribers[205]. - The Fold Bitcoin Gift Card contributes to revenue, with the company recognizing gross revenues and costs for each card sold[206]. - Revenue Rewards are earned through qualifying transactions and are recorded as a reduction in related revenue, while Marketing Rewards are treated as marketing expenses[208][209]. - Merchant offers revenue is subject to seasonality, peaking during major shopping periods and the fourth quarter[211]. Cash Flow and Financing - The company had cash and cash equivalents of $6.7 million and positive working capital of $6.1 million as of September 30, 2025[286]. - Cash used in operating activities for the nine months ended September 30, 2025 was $11.4 million, compared to $3.4 million for the same period in 2024[296]. - Cash flows used in investing activities increased by $2.0 million from September 30, 2024 to September 30, 2025, primarily due to increased purchases of bitcoin[298]. - Cash provided by financing activities was $3.5 million for the nine months ended September 30, 2025, down from $8.0 million in the same period in 2024[299]. - The company sold 1.15 million shares of Common Stock for gross proceeds of $3.48 million under an equity purchase facility as of September 30, 2025[290]. - The company has an accumulated deficit of $136.2 million as of September 30, 2025, with significant portions related to fair value adjustments on SAFE notes and convertible debt instruments[286]. Market and Regulatory Environment - The company is exposed to market price changes in bitcoin, with assets and liabilities denominated in bitcoin being remeasured to fair value at the end of each reporting period, potentially leading to volatility in financial results[315]. - Negative swings in the market price of bitcoin could materially impact the company's earnings and the carrying value of its bitcoin-denominated assets and liabilities[315]. - The company anticipates that favorable regulations will encourage bitcoin adoption, while restrictive measures could hinder it[316]. - Increased participation by institutional investors is expected to drive market confidence and liquidity, supporting continued growth in bitcoin adoption[316]. - Advances in blockchain technology and improvements in scalability are anticipated to enhance bitcoin adoption and integration into financial systems[316].
FTAC Emerald Acquisition Corp.(FLD) - 2025 Q3 - Quarterly Report