Gemini Posts $159.5M Q3 Loss Despite 52% Revenue Growth

Gemini’s first financial report since going public delivered sobering news to investors, with the company posting a net loss of $159.5 million for the third quarter. The loss translated to an adjusted $1.81 per share, significantly missing the consensus estimate of an $0.82 loss according to MarketBeat data. This substantial earnings miss triggered immediate market reaction, with GEMI shares falling as much as 12% in post-market trading, extending a selloff that has halved the company’s stock price since its September debut.

The financial results revealed a concerning gap between revenue growth and operational costs. While net revenue climbed 52% from the previous quarter to $49.8 million, slightly exceeding the $47.4 million consensus estimate compiled by Yahoo Finance, operating expenses ballooned to $171.4 million. This created a stark imbalance where expenses were more than three times revenue, driving the substantial quarterly loss and raising questions about the company’s path to profitability.

Despite the disappointing bottom line, Gemini demonstrated meaningful revenue momentum across multiple business segments. Transaction revenue increased 26% to $26.3 million, while services revenue surged 111% to $19.9 million, reflecting stronger contributions from staking, custody, and the company’s expanding credit-card business. Trading volume reached $16.4 billion, marking the highest level in several years and driven largely by increased institutional activity.

The company’s credit card business emerged as a particular bright spot, surpassing 100,000 open accounts and generating more than $350 million in quarterly spend—more than double the previous period’s performance. In their shareholder letter, Gemini management noted that “together, these results were a reflection of our strongest quarter of user acquisition in over three years,” indicating underlying business strength despite the financial losses.

However, the revenue growth was overshadowed by significant expense increases driven by IPO-related compensation, heavier marketing spend, and a jump in stock-based compensation. The $171.4 million in operating expenses represented a substantial burden that current revenue levels cannot support, creating the fundamental challenge that concerned investors and drove the stock decline.

Investor sentiment turned sharply negative following the earnings release, with GEMI shares falling to $15.80 in after-hours trading after closing at $16.84 during regular trading. The stock traded between $16.11 and $17.23 intraday, ending with a market capitalization of approximately $1.98 billion before the after-hours decline. Google Finance data shows the selloff continues a troubling trend that has seen the stock lose half its value since the company’s September market debut.

The market reaction reflects broader concerns about Gemini’s ability to compete effectively in the crowded cryptocurrency exchange space. Despite its revenue growth, the company remains a fraction of major rival Coinbase’s size, which often posts net revenue of several hundred million to more than $1 billion per quarter. This scale disadvantage compounds the challenge of achieving profitability while investing in growth initiatives.

Looking forward, Gemini has filed to launch a prediction-markets business, seeking regulatory approval to list event contracts tied to outcomes such as sports results or political elections. This diversification effort represents part of the company’s strategy to build additional revenue streams beyond its core exchange business, though the timing of regulatory approval and market impact remains uncertain.