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01/11 20:29
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
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.
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.
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.
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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