Gemini Cuts Quarterly Loss, but Trading Volume Plunges 73%

Crypto exchange Gemini narrowed its third-quarter net loss to $58.6 million from $159.5 million a year earlier, as cuts to staffing and marketing helped bring spending down.

Revenue still fell 19% to $40.9 million. Spot trading volume dropped 73% year over year to $4.5 billion, although it recovered 18% from the previous quarter.

Staff and Marketing Cuts Bring Expenses Down

Operating expenses fell 30% year over year to $119.9 million, marking a third consecutive quarterly decline. Sales and marketing spending dropped 75% to $8.3 million, while salaries and compensation fell 32% to $56.4 million.

Employee costs excluding stock-based compensation were $23.7 million, down 36% from a year earlier. Gemini linked those savings to its February workforce reduction.

Gemini cut roughly $51.5 million from operating expenses compared with a year earlier, more than five times the $9.7 million decline in revenue.

Lower interest costs and the absence of last year’s loan valuation charges also helped narrow the net loss, with non-operating items improving by $60.3 million year over year.

CEO Tyler Winklevoss put spending discipline at the center of the results released on Nov. 12:

“Operating expenses declined for a third consecutive quarter, and as we invest in growth, we intend to stay disciplined about where those dollars go.”

The operating loss nevertheless widened slightly from $76.9 million in the second quarter to $79 million. Lower revenue and higher stock-based compensation outweighed reductions elsewhere in the cost base.

Results on crypto assets and related-party crypto loans swung from a $25 million second-quarter loss to a $25.7 million gain.

Institutional Trading Improves as Retail Activity Weakens

Exchange revenue fell 47% year over year to $13.4 million. Retail trading generated about $9.9 million, down 56%, while institutional exchange revenue increased 36% to approximately $3.5 million.

The quarterly rebound was also uneven. Institutional volume rose 26% from the previous quarter to $3.9 billion, while retail volume fell 14% to $600 million.

Gemini attributed the increase in institutional activity partly to Zcash trading and expanded affiliated market-making. About $1.2 billion, or 26%, of quarterly spot volume involved external customers trading with its affiliated market maker.

Credit Cards Grow, but Services Have Yet to Offset Trading Weakness

Credit-card revenue rose 82% year over year to $15.5 million, while staking revenue fell 29% to $4.2 million. Services revenue increased 7% to $21.3 million.

The card business also recorded a $9.2 million provision for expected credit losses, up from $2.8 million a year earlier but down from $16.1 million in the second quarter.

Services revenue plus interest income totaled $23.3 million, almost unchanged from $23.4 million a year earlier. Together, they accounted for 59% of net revenue, which excludes corporate interest and other income.

That larger share reflects a shrinking trading business as well as growth in cards. Taken together, services and interest income had not yet delivered the overall increase needed to make up for weaker exchange revenue.

Prediction-market revenue, meanwhile, grew 52% from the previous quarter to about $800,000. That still represented roughly 2% of total revenue, leaving the newer business small beside Gemini’s established operations.

Management is scheduled to discuss the results for the quarter ended Sept. 30 on an earnings call at 13:30 UTC on Nov. 13.