Summary Bitcoin Depot shares have dropped ~70% from June’s yearly high, trading at historically low P/S and forward P/E multiples for a crypto stock. Q3 revenue grew 20% YoY to $162.5 million, with gross margin improving 250 bps to 17.4%, showing operational leverage on higher transaction volumes. Management highlighted regulatory headwinds, including KYC mandates and transaction caps, but sees compliance as a competitive advantage over smaller operators. Despite softer near-term guidance for Q4 and seasonal weakness, operational growth, strategic acquisitions, and a strong liquidity position Bitcoin Depot well for 2026. In the past week, virtually every stock with Bitcoin ( BTC-USD ) in its name has sold off in an equal response to Bitcoin’s own drawdown. Bitcoin Depot ( BTM ) is down ~70% from the yearly high attained in June. BTM reached the yearly high in June (Seeking Alpha) Q3 results were released last week amidst the weak sentiment in the crypto market. Near-term forward-looking guidance was softer than expected for Bitcoin Depot (between $112 million and $115 million revenue in Q4), and this in turn has made investors cautious despite the growing revenue and the company making some solid strides in operations in Q3 and for the better part of the year. A recent $15 million equity raise through the sale of 4,285,716 class A shares at $3.50 per share last month, which increased public float, has all added downward pressure on BTM share price. In the Q3 results, Bitcoin Depot delivered strong revenue growth, maintained a positive bottom line, and grew cash reserves. Revenue grew by 20% YoY to reach $162.5 million. Gross profit was $28.2 million, and net income was $5.5 million, or $0.08 per share. Gross margin was 17.4%, an improvement of 250 basis points compared to a year ago (it was 14.9% gross margin in Q3 2024). The 250 bps gross margin improvement over a 20% revenue growth shows that Bitcoin Depot is effectively increasing the profit they keep from each transaction while scaling up volume. Adjusted EBITDA improved by 75% YoY to $16.1 million. Operationally, Bitcoin Depot scaled its active kiosk fleet to ~9,300 machines while seeing robust consumer demand push the median transaction size up 40% YoY to $350, which ultimately catapulted revenue to $162.5 million. International expansion also took more shape in Q3, majorly in Australia. And locally, the acquisition of National Bitcoin ATM assets added over 500 kiosks and expanded Bitcoin Depot's reach across 27 states. That acquisition is a major highlight because it means Bitcoin Depot absorbed one of its major competitors and has secured a broader revenue base. Liquidity was solidified in Q3 with $59.3 million in cash and equivalents, and $13.6 million in working capital and crypto treasury assets, bringing total liquidity to $72.9 million. CapEx was high in Q3 at $4.1 million, but operations were also highly efficient, and cash from operations of $6.6 million offset more than the CapEx, and Bitcoin Depot ended the quarter with $2.55 million in free cash flow (based on an unadjusted calculation that differs from Bitcoin Depot's reported $6.5 million FCF). $8.8 million was also raised through financing activities in Q3. It seems Bitcoin Depot is aggressively pursuing both debt and equity financing to capture market share through both organic kiosk expansion and strategic acquisitions, like in the case of the National Bitcoin acquisition. I think the raises (like the $15 million raised last month, mentioned in the opening of the piece) serve to replenish liquidity after the acquisition and other investments, and to provide an ample runway to navigate the expected regulatory headwinds and revenue drop in Q4. Total debt now stands at $72.15 million, but isn't an overhang yet, as the interest coverage ratio is around 2.8x. Interest expense for Q3 was $4.1 million and was covered well by the $11.8 million operating income, with $5.5 million left as net profit. Management mentioned some regulatory headwinds in the Q3 earnings call and expected QoQ revenue decline in Q4 due to seasonality. Softer Q4 revenue guidance due to seasonality does not come as a surprise. For investors familiar with Bitcoin Depot, Q4 has always turned out to be the typically weakest fiscal quarter for the company’s top line compared to Q2 and Q3. This might cloud Bitcoin Depot's short-term prospects, but the full integration of the acquired National Bitcoin assets (which include over 500 Bitcoin ATMs) by the end of Q4 will be a positive offset going into 2026. Seeking Alpha Management also mentioned some regulatory headwinds going into Q4 which include stricter KYC requirements and caps on transactions. This isn't the first time caps on transactions at Bitcoin ATMs have been introduced by regulators. Bitcoin Depot has navigated these regulatory headwinds in the past. For instance, early last year when regulators in California (and some other states followed suit) began operating under the Senate Bill SB 401 which was passed and imposed stricter regulatory compliance protocols for KYC and AML and a cap on daily transactions at Bitcoin ATMs within the jurisdiction to $1,000 a day, that was a low point for the business which caused a stretch of revenue decline last year, but Bitcoin Depot has in turn ramped up compliance efforts and offered customers a workaround by combining the Bitcoin ATM Service with BDCheckout to effectively increase the daily limit, the evidence is in the recovery of revenue this year and the gross margin improvement on transaction volumes. In early October, we announced the rollout of our new compliance standards that make Bitcoin Depot one of the only operators in the industry to require customer identification before transacting for any amount of money. This initiative applies to all new and existing customers, ensuring they benefit from the highest level of protection well beyond what is currently required by federal law. - CEO Brandon Mintz, during the Q3 earnings call. In light of emerging compliance challenges, management in the Q3 call reiterated Bitcoin Depot's commitment to being regulatory complaint and pointed to recent rollout of mandatory KYC verification by Bitcoin Depot to keep pace with ongoing regulatory requirements. They even saw this as an opportunity where smaller, non-compliant Bitcoin ATM operators will be forced out of the market, which opens more market opportunities for bigger, compliant operators like Bitcoin Depot. The only caveat I see here is that as regulatory requirements tighten, SG&A costs could also potentially rise because increased monitoring and compliance staffing, and legal support are necessary to manage the more complex legal and regulatory frameworks. Seeking Alpha With the drop from June’s high, Bitcoin Depot is now one of the few crypto stocks that trade at attractive sales and earnings multiples. P/S ratio is currently 0.09x, and the forward P/S is 0.2x, while the forward P/E is 4.51x. It is a bit rare these days to get these lower-end valuation multiples for a crypto company. But Bitcoin Depot's business model is one the broader market has not fully recognized over the years, compared to interest in Bitcoin miners and even the more corporate digital asset treasury companies. While valuation looks attractive, with softer guidance and potential regulatory headwinds in the near term, caution is still warranted.
