On Tuesday (November 11), the American cryptocurrency exchange Gemini announced its first quarterly report since going public. The report showed that the company's revenue significantly increased in the third quarter, but due to rising marketing and compensation expenses, the net loss widened to $159.5 million. The continued widening of losses dampened investor sentiment, and after the news was released, the company's stock price fell over 6% in after-hours trading.
Specifically, Gemini's revenue in the third quarter was $50.6 million, more than doubling from $24.5 million in the same period last year, but the net loss was $159.5 million, further widening from a loss of $90.2 million in the second quarter.
In a letter to shareholders, Gemini explained that both its trading and service businesses achieved significant growth in the third quarter. Trading revenue increased by 26% quarter-over-quarter to $26.3 million; service revenue grew by 111% to $19.9 million, mainly due to increased usage of the Gemini credit card, staking, and custody services. The company's operating expenses in Q3 doubled compared to the same period last year, reaching $171.4 million, with salaries and compensation expenses rising to $82.5 million; sales and marketing expenses also increased to $32.9 million; adjusted EBITDA was negative $52.4 million.
The company stated: "The increase in operating expenses this quarter primarily reflects higher marketing and user reward investments, as well as increased equity incentive costs due to our transition to a public company. Aside from these factors, our investment spending trends are consistent with our goal of expanding the platform's scale."
In addition, Gemini recorded mixed results in crypto-related assets: the digital asset segment generated approximately $106.8 million in revenue, but it incurred a loss of $83.1 million in related-party crypto lending activities.
From the performance of the financial report, Gemini still needs to find a balance between revenue growth and cost control. As competition in the crypto market intensifies and regulatory requirements tighten, if the company cannot achieve a profitability turning point in the medium term, its stock price may continue to be under pressure. However, from the perspective of business structure adjustment and the increase in service revenue proportion, Gemini is striving to shift from a single trading revenue model to a diversified and sustainable operating path.
In August this year, Gemini officially obtained the EU MiCA license, which means the company can conduct compliant crypto business within the EU, paving the way for its expansion into the European market. Gemini pointed out in a statement that this license will "significantly expand the potential market size," laying the foundation for attracting institutional clients and retail investors in Europe.
However, the regulatory landscape in the European market remains complex. Regulatory agencies in multiple countries, including France, Italy, and Austria, expressed concerns earlier this year about the "passport mechanism" of MiCA, fearing that it could lead to cross-border regulatory conflicts or undermine national financial regulatory authority.
In the Asian market, Gemini is also taking frequent actions. In October, the company announced its official entry into the Australian market and registered a local subsidiary, "Gemini Intergalactic Australia." Gemini stated that the cryptocurrency asset adoption rate in Australia has exceeded 30%, with strong institutional investment demand, making this market a "key growth point" in its global strategy. Through localized teams and compliance framework construction, Gemini hopes to replicate its success in the U.S. market in Australia, offering a diversified product portfolio that includes trading, staking, custody, and credit card services.
In addition to geographic expansion, Gemini is also actively developing innovative businesses such as prediction markets, aiming to create a "crypto super application" that integrates trading, payment, credit, and prediction functions.
Company co-founder Cameron Winklevoss said during the earnings call: "We are an on-chain company, and this is our core area. Soon, users will be able to hold tokenized dollars (stablecoins), tokenized stocks, and digital goods in the same application."
The security blockchain company OneSafe pointed out that if Gemini can successfully launch the super application, it is expected to optimize processes such as corporate compensation distribution and improve operational efficiency. However, OneSafe also reminded that regulatory compliance is a key aspect: "The development of crypto compensation and related businesses must strictly adhere to regulations, which not only helps reduce operational risks but also helps build employee trust."
Despite Gemini's impressive revenue data in the third quarter, it still appears relatively small compared to its peers. Data shows that its quarterly revenue is only about 2% of Coinbase's revenue during the same period, with Coinbase reporting approximately $1.87 billion in revenue for the third quarter, a year-over-year increase of about 55%; another U.S. competitor, Kraken, also reported a year-over-year revenue increase of about 114%, with third-quarter revenue reaching $648 million.
Analyst John Todaro from Needham & Company pointed out: "Although Gemini has opened new paths in credit card and service businesses, its overall scale still lags far behind major competitors. If it cannot expand its user base and revenue sources, its valuation and profit expectations will continue to be suppressed."
After the release of this financial report, Needham maintained a "buy" rating for the company but lowered the target price from $42 to $35, a decrease of about 16.7%. Securities analysis firm Rosenblatt Securities also maintained a "buy" rating, adjusting the target price from $30 to $26.
Gemini's closing price overnight was $16.84, far below the 52-week high of $45.89, with a cumulative decline of over 47% in the past six months.
In addition to strategic layout, Gemini's executives have also strengthened political participation this year. In August, the founding brothers donated over 188 bitcoins to the pro-Trump super political action committee Digital Freedom Fund and attended several high-dollar donor events hosted by the president, including gatherings at the newly established White House ballroom.
Analysts believe that this political relationship may have some impact on Gemini's efforts to promote new financial products that require government approval, helping it seek policy support in a complex regulatory environment, but it also increases market concerns about its regulatory dependence.
Related: Visa pilots stablecoin payment services for U.S. businesses providing fiat currency funding
Original article: “Gemini's First Post-IPO Quarterly Report 'Dampens Spirits': Nearly $160 Million Loss, Stock Hits Record Low”
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