Summary Bitcoin Depot's Q1 showcased strong operational momentum with revenue climbing 19% YoY to $164.2, adjusted gross margin expanding by 7.7 percentage points, and adjusted EBITDA tripling to $20.3 million. Despite improved operating cash flow, the Company's balance sheet remains structurally fragile, with a shareholders' deficit of approximately $4.6 million due to liabilities exceeding assets. Operational focus is shifting from rapid fleet expansion to maximizing unit economics by optimizing the existing BTM network, with second-year kiosks reportedly generating around 50% more revenue. Valuation remains highly attractive relative to peers, with forward P/S around 0.1x, EV/EBITDA around 2.7x, and forward P/E of about 5x. Bitcoin Depot (BTM), the world's largest operator of Bitcoin ATMs also called Bitcoin Teller Machines or BTMs, has been showing sustainable operational improvements and financial stability. Bitcoin Depot's business model is pretty straightforward, it is basically like an on-ramp and off-ramp physical infrastructure for cash-to-Bitcoin and Bitcoin-to-cash conversions. The company also runs a mobile application, BDCheckout, which enables users to load cash for purchasing at participating retail stores. Bitcoin Depot Q1 results were announced last week, and they were a continuation of the improvements seen in previous quarters. I think the reshuffling of the executive bench earlier this year - a new CFO and a new Chief Legal Officer (bringing experience in legal and compliance strategy to support the company's expansion efforts) - and a stronger push into international markets beyond the U.S. are beginning to yield operational results. Q1 top line came in at $164.2 million, up 19% YoY. The margin also expanded, with adjusted gross margin climbing by 7.7 percentage points to 20.2% from 12.5% in Q1 last year. Adjusted EBITDA more than tripled to $20.3 million, while the company swung to a net income of $12.2 million from a $4.2 million net, the same period last year. Operational cash flow also flipped meaningfully positive at $16.3 million, compared to just $1.3 million last year. This performance couldn't have been announced at a better time than during a market wide recovery and Bitcoin's rally month - in the crypto community they say "Bitcoin loves May" because May has been a historically good month for Bitcoin and crypto. Bitcoin is up 24% on the monthly and BTM is up 112%. Most of the gains BTM has printed (over 70% in a week) have been since earnings were released last week (over 30% upside since earnings). Data by YCharts BTM exhibits some sympathy play with Bitcoin's price movement, meaning when Bitcoin is up, BTM also typically records gains and vice versa. Though, BTM's correlation coefficient with Bitcoin is way more modest compared to that of Bitcoin mining stocks like MARA Holdings ( MARA ) or Riot Platforms ( RIOT ), or that of highly leveraged Bitcoin plays like Strategy ( MSTR ). Bitcoin Depot's transaction volume has historically been and remains decoupled from Bitcoin prices. This could explain why while most Bitcoin miners that have reported Q1 earnings this month faced compressed margins and increased operational cost, Bitcoin Depot's Q1 was surprisingly strong and margin-accretive despite the tariff volatility that rocked the market in Q1. Bitcoin Depot I, however, think this uncorrelation in the financials with Bitcoin price will likely change in the long term if Bitcoin Depot's BTC treasury increases to a material figure, as unrealized gains or losses will be recorded directly on the income statement based on the newly adopted FASB fair value rule. Thus, BTC price will begin to impact headline earnings, even if the core BTM business remains operationally distinct. As of Q1 end, Bitcoin Depot held 94.4 BTC in treasury, amounting to ~$10 million as of today's BTC spot price, of which 83 BTC were acquired in Q1. The company has said resources for BTC purchases for treasury will remain opportunistic. What is Driving Bitcoin Depot's Operational Momentum Bitcoin Depot is shifting focus toward optimizing its existing fleet of BTMs rather than rapidly expanding for expansion's sake. Bitcoin Depot deployed fewer new BTMs in Q1 2025 compared to some prior quarters. 250 new BTMs were deployed in Q1, and this is a sharp drop compared to 2024 where an ample amount of capital was allocated to BTM purchases. By Q2 last year, one of the key announcements was the deployment of 8,000 new BTMs. ...kiosks in year two versus year one, typically see at least 50% growth in terms of revenue versus year one. - CEO Brandon Mintz, during Q1 earnings call Q&A It seems less cash will be going out to buy new BTMs in the interim, as management emphasized that kiosks in their second year of deployment typically generate 50% more revenue than in their first year. And I think the reason for this could be anywhere from new Kiosks becoming indexed over time in Google Maps and third-party locator apps, which increases traffic organically, or it could be location-specific adoption or familiarization dynamics, where over time, more people notice the machine, try it, and then return as repeat users, thereby boosting transaction volume. So Bitcoin Depot's focus will be on maximizing unit economics and throughput of the current fleet (I see OpEx not going down much soon because heavy marketing might be needed to achieve this) rather than expanding the footprint aggressively. And this strategy is even more viable for the company now that operating cash flow has improved greatly to $16.3 million in Q1, and this gives the company potential more internal liquidity to reinvest selectively and strengthen the balance sheet. Data by YCharts Examining Bitcoin Depot's financials, I'd say the only concerns for investors will be the negative equity currently on the balance sheet . MRQ data shows $89.7 million in total assets (of which cash and cash equivalent make up around $35 million) and $94.3 million in total liabilities, resulting in a shareholders' deficit of ~$4.6 million. Q1 interest expense (Bitcoin Depot) Though Bitcoin Depot covered its Q1 interest expense and can comfortably meet its interest obligations from earnings, as EBIT in Q1 was $10.52 million and interest expense for the quarter was $3.07 million, putting the interest coverage ratio at 3.4x. I believe, the over 3x interest coverage ratio shouldn't be an outright comfort signal for investors, considering the negative equity which still reflects a structurally fragile balance sheet. An interest coverage ratio at 3.4x is still solid on its own, but it doesn't fully offset the broader balance sheet risks. How Do We Value BTM Bitcoin Depot currently enjoys way lower valuation multiples compared to other Bitcoin stocks because BTM has long been beaten down among Bitcoin stocks. Seems the market has underappreciated the infrastructural role of the company in the broader crypto economy compared to how the market rewards Bitcoin miners or Bitcoin leverage bets. Seeking Alpha But I'm not taking the low multiples at face value and would strongly consider the multiples from the angle of BTM's fully diluted share count of 124.7 million, which includes over 60 million potentially dilutive securities of public and private placement warrants, earn out shares, and RSUs. If exercised or vested, could nearly double the current outstanding share count of ~64 million. Outstanding share data (Bitcoin Depot) But irrespective of how you adjust the valuation, BTM's P/S ratio will be around 0.18x and forward P/S will be around 0.2x. EV/EBITDA will be around 4.5x, and forward P/E will be around 13x. BTM's multiples are still extremely attractive compared to virtually all other publicly traded Bitcoin companies. Data by YCharts Rating and Takeaway On BTM's current momentum, a Q1 pre-earnings review would have been a better time to recommend a Buy. The stock is already up over 30% since earnings, and I think the initial boost the earnings have given will likely stall a bit here, and upside could be limited in the near term. If BTM reports continued sales, margin, and operating cash flow strength in Q2 (they are guiding for sales growth of mid-single-digits in Q2) and deleveraging progress makes equity become positive on the balance sheet, this will restore more confidence in investors and make BTM ready for a more sustained upside. Considering the upside already seen on the weekly (since earnings), a Hold is the more prudent call here, as we watch how balance sheet repair and operating leverage unfold in Q2.