Gemini (GEMI) Q3 2026 earnings review
Gemini cuts its operating losses, but card balances shrink
Gemini's cost cuts are shrinking its operating losses, but its credit card business has started contracting alongside crypto trading. Total revenue fell 19% from a year ago as spot trading volume dropped 73%. Chief executive Tyler Winklevoss pointed to a third straight drop in operating expenses, and cash payroll beat what the full-year plan pointed to by our math.
| Total revenue | $40.9M -19% from a year ago |
|---|---|
| Operating loss, excluding one-offs | -$39.0M narrowed 42% from a year ago |
| Credit card loan balances | $202.2M -8% from last quarter |
| Full-year marketing spend outlook | Cut to 7–10% of revenue from 10–15% |
⚖️ Verdict: 🔴 Bearish
The story got worse because the credit card portfolio that was compensating for weak trading turned down after marketing cuts. Card loan balances fell 8% from last quarter as bad-debt write-offs reached $11.5 million, while third-quarter operating cash burn hit $61 million by our math, leaving $194 million in unrestricted cash. The good news: lower payroll and marketing costs narrowed the operating loss excluding one-offs for a fourth straight quarter.
The question now is whether the card portfolio and new prediction markets can grow without turning heavy marketing spending back on. Either organic demand and outside broker partnerships lift volume, or revenue keeps sliding against last fourth quarter's peak while cash drains. Fourth-quarter card balances and cash levels will tell.
🐂 Bull Case
Layoffs and Marketing Cuts Narrowed the Operating Loss
"Operating expenses declined for a third consecutive quarter, and as we invest in growth, we intend to stay disciplined about where those dollars go," chief executive Tyler Winklevoss said. Gemini has been shrinking its cost base since February, when it cut jobs and began shutting down operations in Europe and Australia.
- Total operating expenses: $119.9 million, down 30% from a year ago and 2% from last quarter
- Sales and marketing: down 44.8 percentage points of revenue from a year ago, to $8.3 million
- Salaries and compensation: down 25.1 percentage points of revenue from a year ago, to $56.4 million
- Full-time staff: 397 employees, down from 410 last quarter and 682 at the peak
Those cuts reduced the operating loss excluding one-offs by 42% from a year ago to $39.0 million,even though revenue fell 19% over the same period. Cash pay excluding stock awards dropped 15% from last quarter to $23.7 million, beating the quarterly pace implied by the company's full-year plan.
What to watch: fourth-quarter cash pay excluding stock awards. By our math, the unchanged full-year outlook leaves up to $29.9 million for the fourth quarter, so a reading near $24 million would show the lower payroll is permanent.
Prediction Markets Add a Clearinghouse and Broker Partner
"Gemini 2.0 is our bet that the platforms that last will be the ones that own the regulated infrastructure underneath," president Cameron Winklevoss said. Rather than relying on outside partners, the crypto exchange operator built its own federally licensed exchange and clearinghouse for event contracts, which let users bet on outcomes in finance, economics and sports.
In August, the in-house clearinghouse began settling every prediction trade on the platform, and Gemini signed a non-binding letter of intent to become the exclusive venue for crypto event contracts for customers of brokerage technology provider Apex Fintech Solutions. Prediction revenue rose 52% from last quarter to $0.8 million, and October daily traders rose about 50% above the third-quarter average.
What to watch: whether the Apex letter of intent turns into a signed contract and fourth-quarter prediction revenue exceeds $1 million. At 2% of total sales today, the business needs outside brokers to move the company's top line.
🐻 Bear Case
The Credit Card Growth Engine Is Shrinking
Gemini highlights that services and interest income held at 59% of net revenue, up from 47% a year ago, as proof that its credit card diversifies the business away from volatile trading fees. While card revenue of $15.5 million is up 82% from a year ago and card profit before bad-debt expense rose 6% from last quarter to $5.8 million, the card portfolio shrank this quarter.
- Card loan balances: $202.2 million, down $17.4 million from last quarter after stalling in the first half
- Card purchase volume and active cardholders: down 10% and 4% from last quarter
- Card bad-debt charge-offs: $11.5 million, up from $3.4 million last quarter
- Card net loss after bad-debt provisions: $3.4 million, the fifth consecutive quarterly loss
That drop happened because Gemini cut customer acquisition marketing by 97% from a year ago to $0.7 million. Meanwhile, loans 30 or more days past due excluding fraud rose to 3.4% from 3.3% last quarter due to "the seasoning of accounts added during the rapid portfolio growth in the second half of 2025", while total charge-offs jumped "primarily reflecting accelerated charge-offs of accounts associated with the previously disclosed first-quarter fraud event".
What to watch: fourth-quarter card loan balances and bad-debt provisions. If balances keep falling once the company laps last fourth quarter's $16.0 million card revenue peak, the main source of revenue diversification will shrink.
Retail Traders Pulled Back while Internal Trades Lifted Volume
Spot crypto trading volume on Gemini's exchange fell 73% from a year ago to $4.5 billion, pulling exchange revenue down 47% to $13.4 million. Compared with last quarter, volume rose 18% and exchange revenue grew 7%, which the company said was "supported by increased institutional Zcash activity and expanded affiliated market-making".
The underlying mix weakened because retail traders pay the highest fees and kept leaving. Retail trading volume fell another 14% from last quarter to $0.6 billion, down 67% from a year ago, pushing retail exchange revenue down 10% from last quarter to $9.9 million. Moreover, $1.2 billion — or 26% of total spot volume — came from trades where Gemini's own market-making arm was on one side of the trade, which cut the average fee earned per dollar traded from 0.33% last quarter to 0.30% by our math.
What to watch: fourth-quarter retail trading volume against last fourth quarter's $1.6 billion. Without a recovery in individual trading, total revenue will fall further against last year's $60.3 million fourth-quarter peak.
Cash Burn Drains Unrestricted Cash Below $200 Million
Gemini reported that its loss before interest, taxes, depreciation and stock pay narrowed to $11.6 million from $74.0 million last quarter. However, that figure includes a $25.7 million net paper gain on crypto holdings and related-party loans; without that market swing, the loss was $37.3 million by our math.
Actual cash outflows widened during the quarter. Operating activities used $166.9 million in the first nine months of 2026, up from $105.9 million in the first half, which means the third quarter burned $61.0 million of operating cash by our math. Unrestricted cash sits at $194.1 million, while related-party crypto loans owed to the founders' fund rose from $258.8 million in June to $367.2 million as crypto prices rose.
What to watch: year-end unrestricted cash and operating cash flow. At a $61 million quarterly burn rate, the cash balance covers barely three quarters of operations without selling more shares or borrowing from the founders.
Risks this quarter didn't answer
Several standing regulatory, legal and growth questions received no update in the third-quarter earnings release or presentation.
- US perpetual futures approval: presentation footnotes state perpetual contracts are still not available and remain subject to Commodity Futures Trading Commission approval.
- New York Attorney General petition and shareholder lawsuits: the release mentions regulatory litigation only in boilerplate risk factors, with no status update in the quarterly commentary.
- User growth target: the medium-term target of 20–25% annual growth in monthly transacting users remained absent as monthly users fell 2% from a year ago.
- New credit card sign-ups: listed as a key metric in the release definitions, but the quarterly sign-up count was omitted from the presentation tables.
👓 Other Themes
AI Agents Can Now Pull Market Data via Gemini's Server
In October, the company launched a Model Context Protocol server — software that lets outside artificial intelligence assistants connect to its exchange — on platforms including Anthropic and OpenAI. Users can ask those AI tools to pull real-time market data and research from a single account covering crypto, stocks and prediction contracts, alongside a rebuilt software toolkit for automated trading.
💲 Other KPIs
Assets held for customers in custody, staking and trading accounts rebounded 60% from $8.4 billion last quarter as crypto prices rose, after falling for three straight quarters. Compared with a year ago, assets remain down 37% from $21.3 billion due to lower coin prices and institutional custody withdrawals.
Active users generating revenue in the last 30 days of the quarter slipped 1% from last quarter and 2% from a year ago. It is the third consecutive quarterly drop from the peak of 601,000 users at the end of 2025, following the pause in marketing spend and international exits.
Share count rose 5.9% from last quarter and more than fivefold from 23.9 million a year ago, when the initial public offering closed late in the period. The higher share count reflect May's 7.1 million share sale to the founders' fund and ongoing employee stock awards.
🔮 Guidance
Unchanged. The crypto firm still plans to cut cash employee pay by 15% to 20% from 2025's $140.9 million, excluding layoff charges. By our math, after spending $86.4 million in the first nine months, the middle of that range leaves $29.9 million for the fourth quarter — above the third quarter's $23.7 million run rate.
Cut at the top end. Management trimmed the upper limit of full-year equity pay by $10 million, lowering the middle of the range to $102.5 million. After July's annual bonus grants pushed third-quarter stock pay to $32.7 million, the revised outlook leaves $25.3 million for the fourth quarter by our math.
Raised at the bottom end. The US exchange group lifted the floor of its combined technology and overhead budget by $5 million, moving the middle of the range to $165 million after cutting the top end by $20 million last quarter. By our math, that leaves $42.5 million for the fourth quarter, up from $39.4 million in the third.
Cut. It lowered its direct marketing target from 10–15% of revenue to 7–10%, dependent on market conditions. Through the first nine months, direct marketing totaled $8.5 million, or 6.2% of total revenue by our math, after spending just $0.7 million in the third quarter.
❓ Key Questions
Why did credit card loan balances shrink 8% this quarter?
Managed card receivables dropped by $17.4 million to $202.2 million while charge-offs jumped to $11.5 million. Investors need to know how much of the balance decline came from writing off the first-quarter fraud accounts versus existing cardholders spending less, and what quarterly card sign-ups were.
What fees does Gemini earn when its own market maker trades?
Trades involving the company's affiliated market maker accounted for $1.2 billion, or 26% of spot volume in the third quarter. Management has not disclosed how much revenue those internal counterparty trades generate compared with trades between two external customers.
What drove the $61 million operating cash burn in Q3?
Operating loss excluding one-offs narrowed to $39.0 million, yet operating cash burn for the quarter was $61.0 million by our math. Investors need a breakdown of the working-capital outflows and net crypto purchases inside operating cash flow.
What is the status of the New York prediction-market lawsuit?
The company is pitching its prediction exchange to outside brokers like Apex Fintech Solutions, but the release gave no update on the New York Attorney General's petition alleging unlicensed gambling or the timeline for federal approval of US perpetual futures.