Gemini (GEMI) Q2 2026 earnings review
Services Eclipse Exchange Revenue Amid Deep Crypto Slump
Gemini's pivot to a 'super app' is bearing fruit as services revenue—led by the credit card and staking—overtook traditional exchange transaction revenue for the first time. Total revenue grew 37% YoY to $45.5 million despite a 66% collapse in trading volume ($3.8B vs $11.3B a year ago). However, profitability remains elusive. Operating expenses dropped 15% sequentially reflecting successful Q1 restructuring, but a massive $16.1 million provision for credit card fraud completely undermined this progress, pushing Adjusted EBITDA down to $(74.0) million.
🐂 Bull Case
Services revenue and interest income jumped 117% YoY. Credit card revenue exploded by 231% YoY to $16.2M. Gemini is successfully proving it can generate meaningful revenue even when crypto trading evaporates.
Operating loss improved 18% sequentially to $(76.9) million. Total operating expenses declined 15% sequentially, validating the impact of the Q1 ~30% headcount reduction and international market exits.
🐻 Bear Case
A 'discrete' $4.1M fraud reserve identified in Q1 mutated into a $16.1M provision for credit losses in Q2 as the cohort aged into delinquency. This wipes out a massive ~7% of the total $219.6M managed receivable portfolio in a single quarter.
Exchange revenue plummeted 38% YoY to $12.5M as total trading volume evaporated to just $3.8 billion (down from $13.5B in 25Q1). Assets on platform dropped to $8.4B from $18.2B a year ago.
⚖️ Verdict: 🔴
Bearish. The successful diversification into services is highly impressive, but it is entirely overshadowed by catastrophic risk management in the credit card portfolio. A 7% portfolio charge-off for fraud in one quarter, combined with a collapsing core exchange business, leaves the company highly vulnerable.
Key Themes
Credit Card Revenue Acceleration
The Gemini Credit Card is now the engine of the company. Revenue surged 231% YoY to $16.2M, officially surpassing Exchange Revenue ($12.5M) as the largest single top-line contributor. The portfolio of managed receivables grew to $219.6M, up from $93.5M a year ago, solidifying the shift from transaction fees to recurring interest and interchange income.
Catastrophic Fraud Escalation
In Q1, management flagged a 'discrete' $4.1M fraud reserve, assuring it was contained. In Q2, transaction losses spiked to $20.1M, driven by a $16.1M provision for credit losses tied directly to that same Q1 origination cohort. This signals a severe failure in initial underwriting and identity verification, wiping out the equivalent of an entire quarter's credit card revenue in a single blow.
Operating Leverage Realized
Cost discipline is working. Operating expenses fell 15% sequentially to $122.4M. Sales and marketing collapsed 45% YoY to $8.8M, with discretionary marketing acquisition spend effectively dialed to zero ($0.1M). Excluding $20.3M in stock-based compensation, core salaries and compensation declined 20% YoY, proving the Q1 restructuring was structural, not temporary.
Crypto Engagement is Evaporating
The macro crypto winter is eroding Gemini's foundation. Total trading volume fell to $3.8 billion—a staggering deceleration from $6.3B in Q1, and miles away from the $16.4B peak in Q3 2025. This caused exchange revenue to drop 38% YoY to $12.5M, forcing the company to rely entirely on its new ventures to maintain growth.
Financial Super App Launches
The product roadmap hit major milestones with the July 2026 launch of 0% commission U.S. stock trading and the August 2026 activation of the in-house derivatives clearinghouse (DCO). Along with Prediction Markets setting monthly volume records (225M contracts since launch), Gemini is actively decoupling from pure spot crypto.
Other KPIs
Worsened from $(51.9) million in Q2 2025, despite the 19% YoY improvement in Net Loss. Management explicitly attributed the Adjusted EBITDA decline to market-driven realized and unrealized losses on Bitcoin received during the founders' $100M May 2026 private placement, highlighting how deeply the balance sheet remains exposed to crypto price volatility.
Up 11% YoY from Q2 2025, but representing a slight sequential deceleration from the 589,000 reported in Q1 2026. This metric shows the user base is stabilizing through ecosystem cross-selling, even as core trading volumes plummet.
Reversing off peak. While up significantly from $0.6M a year ago, OTC revenue decelerated sequentially from the $6.3M posted in Q1 2026. This validates management's prior warning that institutional OTC demand remains 'episodic' and lumpy in nature.
Guidance
Stable. In Q1, management provided a full-year framework for Tech and G&A. For the six months ended June 30, 2026, combined Tech ($40.8M) and G&A ($42.3M) totaled $83.1M. This places the company squarely on track to hit the lower end of their annual guidance, confirming strong execution on cost controls.
Stable. Six-month SBC reached $44.5M ($24.2M in Q1 + $20.3M in Q2). The company is tracking below the stated annual guidance range, signaling that post-IPO equity compensation costs are normalizing and dropping sequentially.
Key Questions
Credit Card Fraud Controls
The $16.1M provision for credit card fraud represents over 7% of total managed receivables. Can you detail the specific failure in Q1 identity verification, and what technical guardrails have been deployed to guarantee the remaining $219.6M portfolio is fully scrubbed of similar risks?
Cannibalization Risk from Equities
With crypto spot trading volume plunging to just $3.8 billion, do you anticipate that the introduction of zero-commission U.S. stock trading will cannibalize your remaining crypto liquidity, and what is the expected floor for exchange revenue?
Balance Sheet Volatility
Adjusted EBITDA was materially dragged down by mark-to-market losses on Bitcoin from the recent $100M capital injection. Is the company considering hedging strategies or liquidating a portion of its crypto treasury to protect operating runway?