Gemini Crypto Exchange Sees 52% Revenue Growth in Q3 Despite Share Decline

Summary: Gemini, the cryptocurrency exchange founded by the Winklevoss twins, has reported a remarkable 52% increase in revenue for the third quarter of this year. Despite this growth, the company faced a significant net loss and a decline in its stock price.

Key Takeaways

Gemini's Q3 revenue increased by 52% compared to the previous quarter, amounting to nearly $50 million.
The exchange recorded a net loss of $159.5 million, or $6.67 per share, exceeding analysts' predictions.
Shares of Gemini fell by 12% in post-market trading, reaching an all-time low below $15.
The growth in revenue is attributed to increased transaction volume and the addition of new services.
Operating expenses significantly contributed to the net loss, primarily from stock-based compensation and marketing related to the company's IPO.

Gemini Revenue

Revenue Growth Drivers

Gemini's transaction revenue saw an increase of 26% from the last quarter, totaling $26.3 million. This rise is credited to the introduction of new features and the company's expansion into additional markets. Furthermore, the exchange reported a substantial 111% jump in services revenue, reaching $19.9 million.

According to the New York-based company, this uptick reflects the ongoing diversification of its business model and increased contributions from services like credit card transactions, staking, and custody products. Cameron Winklevoss, the President and Co-Founder of Gemini, mentioned during the earnings call that "the Gemini Credit Card delivered record performance, surpassing 100,000 accounts and achieving over $350 million in quarterly transaction volume—more than doubling the previous quarter."

In August, the exchange also released a self-custody wallet designed to facilitate easier access to Web3 protocols, DeFi platforms, and on-chain applications. Additionally, Gemini is preparing to launch prediction market contracts to compete with existing players such as Kalshi and Polymarket.

Growing Losses

Despite the impressive revenue growth, Gemini recorded a substantial loss of $159.5 million in Q3, with operating expenses more than doubling compared to the same period last year. This loss is largely attributed to stock-based compensation and marketing expenses related to its IPO, resulting in an adjusted EBITDA of negative $52.4 million.

During the earnings call, Marshall Beard, COO of Gemini, stated, “We expect our spending in the coming quarters to be influenced by the performance opportunities we identify in the market.”