Tokenization platform Securitize gains 10% postmarket on Q3 results, move into asset-backed finance

Tokenization platform Securitize climbed about 10% postmarket after reporting third quarter growth alongside increased operating expenses, and announcing an expansion into asset-backed finance through a strategic acquisition.

Miami-based Securitize, which made its public market debut in July, operates in the relatively new corner of the crypto equity universe involved in institutional tokenization infrastructure. Tokenized assets on the platform grew 9% in the third quarter, to $4.8 billion, from the same period a year ago. Aggregate transaction volume rose 20% from a year ago, to $4.3 billion. Revenue of $11.5 million was up 28% from last year.

The growth came as bullish sentiment around tokenization gained traction throughout the third quarter, ahead of the Security and Exchange Commission formalizing the long awaited Innovation Exemption on Sept. 17, which created a temporary pathway for trading of certain tokenized stocks and strengthened the regulatory outlook.

Profitability is still meaningfully below year-ago levels, due in part to costs associated with going public over the summer, as well as the scaling up of the tokenization business at an active time for the entire sector, Securitize CEO Carlos Domingo told CNBC in an exclusive interview.

Stronger compliance

Securitize reinforced "certain areas of the company like finance, compliance, legal [and] cybersecurity," which increased corporate costs "compared to a year ago when we were privately held," Domingo said. "We're in in a very good position. The adjusted EBITDA … is improving significantly from previous quarters."

Securitize reported an adjusted EBITDA loss of $2 million, compared with positive adjusted EBITDA of $3.6 million a year ago, better than a $5.5 million loss in the second quarter. The company posted a 183% increase in operating costs and expenses.

Also on Monday, the Securitize board authorized a $50 million share buyback and announced the acquisition of River One, an institutional asset-backed financing platform developing technology to connect stablecoin capital with traditional lending markets. Terms were not disclosed.

Securitize sees an opportunity to modernize the $9 trillion market for asset backed finance by using stablecoins to finance real world assets, generate yield and tokenize investment positions and credit products, Domingo said.

The acquisition also marks an expansion beyond Securitize's core niche markets at a time when tokenization's competitive landscape is growing, with traditional asset managers like BlackRock and Franklin Templeton, and established financial market infrastructure providers like DTCC and Broadridge, entering the industry.

"We have been very active in tokenized funds, treasuries [and] yield … And we've been obviously recently very active in tokenized stocks, so this adds another piece of the puzzle in the emerging tokenization space for us to capture revenue growth."