Gemini's first earnings report as a public company failed to impress investors. The crypto exchange posted a deeper-than-expected quarterly loss, sending its stock lower in after-hours trading on Monday.
The company recorded a net loss of $159.5 million for the third quarter. Management attributed the decline to IPO-related costs, higher marketing expenses, and rising stock-based compensation. Earnings translated to an adjusted loss of $1.81 per share, missing analysts’ estimates of a $0.82 loss.
GEMI shares dropped as much as 12% in after-hours trading after closing at $16.84 during regular hours. After the bell, the stock fell 6% to $15.80, extending a downturn that has halved its value since September’s debut. Gemini’s market capitalization now stands near $1.98 billion.
Revenue Growth Overshadowed by Rising Expenses
In the third quarter, Gemini’s revenue increased by 52% to $49.8 million. The outcome barely exceeded $47.4 million. Operating costs increased to $171.4 million despite higher sales, surpassing revenue and adding to the growing losses.
Transaction revenue increased 26% to $26.3 million, while services revenue surged about 110% to $19.9 million. The gains reflected improved trading activity and expanding staking and custody operations.
Trading volume climbed 45% from the prior quarter to $16.4 billion. Institutional activity accounted for nearly half of the growth. Gemini said its credit-card business was a major contributor. It surpassed 100,000 active accounts and generated $350 million in quarterly spending, more than double the previous period.
“This was our strongest quarter of user acquisition in over three years,” the company noted in its shareholder letter.
Gemini also highlighted the success of its services division, which currently accounts for nearly 40% of total revenue. Services made up less than 30% a year ago, indicating a better balance between trading and non-trading revenue sources.
Expansion Continues Despite Market Pressure
Gemini expanded its global footprint during the quarter. The firm secured a MiCA license in Europe in August and launched operations in Australia in October. It also rolled out a self-custody wallet for individual users, part of its broader strategy to enhance customer flexibility and security.
Additionally, Gemini repaid existing debt and opened a $150 million credit facility for its card receivables to strengthen liquidity. The company forecast full-year services and interest revenue of between $60 million and $70 million. This is supported by growth in its credit card and staking products.
The exchange is also exploring new markets. Earlier this month, Gemini filed to launch a prediction-markets platform. The platform seeks regulatory approval to offer event-based contracts tied to sports or political outcomes.
However, investor sentiment is still cautious. Losses keep growing despite increased transaction volumes and revenue growth. Analysts point to the imbalance between sales and expenses as a major challenge for the exchange in the short term.
By the end of trading, Gemini’s shares remained under pressure, reflecting concerns about profitability amid its expansion push. Despite operational gains, the exchange faces a difficult path toward turning revenue growth into sustained earnings.