Gemini Space Station, Inc. (GEMI) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary and Q&A session indicate strong growth in transaction revenue and card business, along with strategic product development like the super app and credit card expansion. Despite increased expenses due to IPO-related costs, the optimistic guidance for user growth and low card losses suggest positive market sentiment. The ongoing Nasdaq partnership, though early, adds potential upside. These factors contribute to a 'Positive' sentiment, likely resulting in a 2% to 8% stock price increase over the next two weeks.

Key Financial Performance

Trading Volumes Trading volumes reached $16.4 billion, a multiyear quarterly high, primarily driven by expanding institutional activity and deeper engagement across the platform. This represents a 45% increase quarter-over-quarter, with institutional volumes rising 49% to $14.6 billion and retail volumes growing 20% to $1.8 billion.

Gemini Credit Card Transaction Volume The Gemini Credit Card delivered record performance, surpassing 100,000 open accounts and more than $350 million in quarterly transaction volume, more than doubling quarter-over-quarter. This growth was driven by new card features and increased user engagement.

Net Revenue Net revenue for the third quarter was $49.8 million, up 52% quarter-over-quarter. Growth was driven by stronger trading activity, increased user engagement across credit card products, and exchange activities, including staking and custody.

Credit Card Revenue Credit card revenue was $8.5 million, up $3.7 million from the prior quarter, driven by continued user growth and higher spend per active cardholder.

Staking Revenue Staking revenue increased $3.2 million to $5.9 million, reflecting the first full quarter of Solana staking in the U.S., an increase in staked assets, and underlying price appreciation.

Services Revenue Services revenue, including credit card, staking, and custody, accounted for $19.9 million, up from less than 30% of total revenue a year prior to nearly 40% in Q3. This growth was driven by the adoption of the Gemini Card and staking products.

Operating Expenses Total operating expenses for the quarter were $171.4 million, up $72.7 million sequentially. The increase was primarily driven by IPO-related stock-based compensation, increased marketing spend, and other nonrecurring items.

Compensation and Headcount Expenses Compensation and headcount expenses were $82.5 million, up $45.7 million from Q2, with $44 million of the increase tied to IPO equity awards.

Sales and Marketing Expenses Sales and marketing expenses were $32.9 million, up $16.8 million from last quarter, driven by higher marketing and brand spend and elevated card activity.

Transaction Revenue Transaction revenue was $26.3 million, up 26% from last quarter, driven by higher user engagement and improving market conditions.

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Operating Highlights

Gemini Credit Card: Delivered record performance with over 100,000 open accounts and $350 million in quarterly transaction volume, more than doubling quarter-over-quarter. Introduced new features including XRP and Solana editions with auto-staking rewards.

Gemini Wallet: Launched as a self-custody smart wallet for crypto users and developers, enabling seamless asset management across onchain applications.

Tokenized Stocks: Rolled out to EU customers under MiFID license, providing regulated access to traditional financial assets onchain.

Global Expansion: Launched operations in Australia and secured MiCA license in Europe, enabling staking, derivatives, and tokenized stocks across the EU. Continued engagement with Singapore's Monetary Authority for full MPI license.

Trading Volumes: Achieved $16.4 billion in trading volumes, a multiyear quarterly high, with institutional volumes up 49% and retail volumes up 20% quarter-over-quarter.

Revenue Diversification: Services revenue, including credit card, custody, and staking, accounted for nearly 40% of total revenue, up from less than 30% a year prior.

Capital Efficiency: Established a $150 million credit facility to finance credit card receivables, improving liquidity and scalability.

Regulatory Trust: Focused on operating under clear, regulated frameworks to build trust and open doors in new markets.

Onchain Economy: Expanded onchain capabilities with products like Gemini Wallet and Solana staking, reinforcing its role as a bridge to the onchain economy.

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Risk or Challenges

Regulatory Compliance: Gemini's operations are heavily reliant on obtaining and maintaining regulatory licenses in various jurisdictions. Any failure to secure or retain these licenses, such as the ongoing engagement with the Monetary Authority of Singapore for a full MPI license, could hinder their ability to operate in key markets.

Market Competition: The crypto and financial technology sectors are highly competitive. Gemini faces significant pressure from both established players and new entrants, which could impact its market share and profitability.

Economic Uncertainty: Economic fluctuations and uncertainties could affect trading volumes, user engagement, and overall financial performance, especially given the volatility of the cryptocurrency market.

Operational Costs: The company has seen a significant increase in operating expenses, including compensation, marketing, and transaction-related costs. This could strain profitability if revenue growth does not keep pace.

Credit Risk: The growth of the Gemini Credit Card program introduces credit risk, as evidenced by the increase in credit losses and provisions for credit losses.

Liquidity and Funding: Gemini's reliance on debt and credit facilities, such as the $150 million credit facility for credit card receivables, could pose liquidity risks if market conditions change or if the company faces challenges in managing its debt obligations.

Technological and Security Risks: As a crypto platform, Gemini is exposed to risks related to cybersecurity, technological failures, and the need for continuous investment in infrastructure to ensure scalability and reliability.

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Guidance & Outlook

Future growth and market opportunity: Gemini is focused on becoming a globally integrated super app that connects traditional finance and crypto. The company sees significant opportunities as financial markets move on-chain and crypto reshapes how money is transacted and stored.

Global expansion: Gemini plans to expand its regulated global footprint, having recently launched in Australia and secured a MiCA license in Europe. The company is also working to convert its in-principle approval in Singapore to a full MPI license.

Credit card growth: The Gemini Credit Card is expected to continue driving customer acquisition and engagement. The company plans to expand card features and adoption, with credit card revenue projected to grow as a major revenue stream.

On-chain economy participation: Gemini aims to strengthen its role in the on-chain economy by introducing new products like the Gemini Wallet and Solana staking. The company is also working on prediction markets and expanding multi-network support.

Revenue growth: Services revenue, including credit card, staking, and custody, is expected to reach $60 million to $70 million in fiscal 2025. The company anticipates a 20%-25% compound growth rate in monthly transacting users over the medium term.

Marketing and operational investments: Gemini plans to increase marketing expenses to $45 million to $60 million in fiscal 2025 to drive user growth and brand equity. Technology and G&A expenses are expected to total $140 million to $155 million for fiscal 2025.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you shed light on the new product road map and the super app that you're planning?

A:Cameron Winklevoss explained that they are building a super app to integrate tokenized dollars, equities, and digital commodities into one app. They launched a self-custodial smart wallet and tokenized equities in Europe. They are also expanding their credit card offerings, including a small business card and co-branded cards. Additionally, they are working on prediction markets and have applied to the CFTC for a Designated Contract Market license.

Q:What is driving the strong growth in the card business, and how is the Solana addition performing?

A:Marshall Beard highlighted that 55% of new U.S. transacting users come through the credit card onboarding funnel. The Solana card launch introduced features like auto-staking rewards, which increased user engagement. Daniel Chen added that the credit card is a significant acquisition vector, and they plan to expand into small business cards to serve underserved markets.

Q:What is the outlook for card losses and fraud, and what steps are being taken to mitigate them?

A:Daniel Chen stated that losses were low this quarter due to disciplined credit underwriting and a denominator effect from new customer onboarding. They are focused on deploying advanced technology to mitigate credit and fraud losses.

Q:What guardrails are in place to ensure strong unit economics while growing market share?

A:Marshall Beard explained that they are acquiring users below their CAC targets and within their payback period. They view marketing spend as a lever to capture users at low costs and can adjust spending as needed.

Q:How do you approach buy vs. build vs. partner for the super app?

A:Cameron Winklevoss stated that they are building the super app themselves as it aligns with their expertise in on-chain features.

Q:What are the drivers of the medium-term 20%-25% monthly transacting user guidance?

A:Daniel Chen mentioned that growth is driven by acquiring new customers through the exchange and credit card, increasing engagement with existing customers, and introducing features like auto-staking. They aim to acquire customers within their CAC target and increase platform engagement.

Q:What is the status of the Nasdaq partnership and its revenue potential?

A:Marshall Beard stated that discussions are ongoing, and they are working with Nasdaq clients on new products. However, it is still early in the partnership.

Q:What is driving institutional volume growth on the exchange?

A:Marshall Beard attributed the growth to their infrastructure, strategic fee rates, and efforts by the sales and business development team to engage with trading firms.

Q:What caused the increase in Ethereum trading volume relative to Bitcoin?

A:Marshall Beard explained that the increase was due to price appreciation and not changes in customer profiles or segments.

Q:How do you plan to stay competitive in the credit card space as competition increases?

A:Tyler Winklevoss stated that competition validates their approach. They plan to expand offerings with co-branded cards and small business cards. Cameron Winklevoss added that their card has no annual fee, making it accessible and attractive.

Q:What is the trend for credit card growth as a lead engine for the exchange?

A:Marshall Beard noted that credit card growth remains strong and is a significant acquisition tool. They are seeing similar acquisition trends in Q4 and plan to continue focusing on this product.

Q:Have there been any pricing changes in staking or the card business?

A:Marshall Beard confirmed that staking take rates increased from 15% to 25%, while credit card take rates have not seen material changes.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the Nasdaq partnership's revenue potential, stating only that discussions are ongoing and it is still early in the process.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

GEMI Transcript

Gemini Space Station, Inc. (GEMI) Q3 2025 Earnings Call Transcript

Positive11-10

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