Gemini Space Station, Inc. Class A Common Stock Q2 FY2026 earnings call

• Strategic Transformation (Gemini 2.0) • Q2 2026 was the first full quarter operating under the new Gemini 2.0 strategy, which shifted from overreliance on spot crypto trading to a diversified multi-product financial super app, with a leaner cost base and improved expense discipline. • Management prioritized building regulated infrastructure and new products over aggressive customer acquisition during the current crypto bear market, a decision they confirm was strategically correct. • The first phase of Gemini's transformation is largely complete; the focus is now shifting to distribution, scaling adoption, and growing revenue while maintaining cost discipline.

• Regulated Infrastructure Milestones • Received a DCO license from the CFTC in April 2026, launched the in-house derivatives clearinghouse and began settling own prediction market contracts post-Q2 end, keeping transaction economics in-house. • Filed an FCM application with the CFTC in June 2026; Gemini now holds a rare combination of U.S. regulated derivatives licenses built in-house, avoiding large acquisition costs. • The full regulated derivatives stack is ready to support U.S. crypto perpetual futures once remaining approvals are granted, as the product and technology are already live for customers in Singapore.

• Product Expansion • Expanded tradable markets to over 5,000 across crypto, event predictions, U.S. equities, and ETFs (up from fewer than 100 a year prior), with commission-free U.S. equities and ETFs launched in July 2026. • For prediction markets (identified as the largest near-term growth opportunity): tripled the number of contracted market makers, launched 3 new maker/taker incentive programs, upgraded API infrastructure, launched AI-powered personalized insights and a rebuilt category-specific interface; event contract trading volume rose 93% quarter-over-quarter. • Upgraded mobile advanced trading, expanded margin trading assets, and continued improvements to developer/API capabilities for programmatic and agentic traders.

• Operational Improvements • Completed cost restructuring: headcount ended Q2 at ~402, down 40% from the Q3 2025 peak; total operating expenses declined 15% sequentially, with the full benefit of Q1 restructuring now reflected in results. • Multi-product monthly transacting users nearly doubled year-over-year, indicating improved engagement with the expanded platform.

Total net revenue was $43.7 million, up 33% year-over-year. Transaction revenue totaled $17.8 million, down 15% year-over-year and 26% sequentially. Exchange revenue (core spot crypto trading) was $12.5 million, down 38% year-over-year, accounting for 28.6% of total net revenue. OTC revenue was $4.7 million, up 671% year-over-year, accounting for 10.8% of total net revenue. Prediction markets transaction revenue (net of rebates) was $0.5 million, up 18% sequentially, accounting for 1.1% of total net revenue. Services revenue and interest income was $26 million, up 117% year-over-year, and represented 59% of total net revenue (up from 50% in Q1 2026). Within services revenue: Credit card revenue was $16.2 million, up 231% year-over-year and 10% sequentially, accounting for 37.1% of total net revenue; Staking revenue was $4 million, up 88% sequentially and 50% year-over-year, accounting for 9.2% of total net revenue; Advisory fee revenue was $2.7 million (flat from prior quarters), accounting for 6.2% of total net revenue; Custodial fee revenue was $0.6 million, down 67% year-over-year and sequentially, accounting for 1.4% of total net revenue; Interest income was $2.4 million (flat sequentially). Total operating expenses were $122.4 million, down 15% sequentially; net loss was $107.7 million, an improvement of 19% year-over-year.

• Management does not provide formal full-year revenue guidance at this time, as new product initiatives remain in early monetization stages, and ramp pace is uncertain due to the early-stage business lines and volatile broader crypto/macro environment.
• Full-year cash compensation (excluding stock-based compensation and restructuring charges) is still expected to decline 15% to 20% relative to 2025 levels, maintaining prior guidance.
• Full-year stock-based compensation is still expected to total $100 million to $115 billion, maintaining prior guidance.
• Full-year technology and general & administrative expenses guidance is narrowed to a range of $155 million to $170 million, revised from the prior broader range.
• Full-year marketing spend guidance is maintained at 10% to 15% of revenue (excluding rewards and promotions). Q2 2026 marketing spend was intentionally well below this range to prioritize product and infrastructure investment, but marketing spend will increase in the second half of 2026 while remaining within the full-year guidance range.

• Persistent crypto bear market conditions: Bitcoin ended Q2 below $60,000, down from ~$117,000 in September 2025, leading to steep declines in spot crypto trading volumes, platform asset valuations, and reduced customer demand for crypto-related products such as the Gemini credit card.
• Concentrated identity fraud incident: A Q1 2026 credit card origination cohort had significant uncaught identity fraud, leading to a $20.1 million transaction loss in Q2 2026 (up from $3.6 million in the prior year) as the reserve for expected credit losses was updated under CECL accounting rules.
• Regulatory risk: Launch of U.S. crypto perpetual futures is contingent on receiving remaining CFTC approvals, with no guaranteed timeline for regulatory clearance.
• Early-stage monetization risk: Most new product lines (prediction markets, equities, perpetual futures) are in early stages of growth and have not yet meaningfully contributed to profitability, with uncertain ramp timelines.
• Competitive risk: Prediction markets and crypto perpetual futures face aggressive competition from larger incumbents with bigger existing customer bases and established liquidity advantages.

Q: Analysts asked for clarification on Q2 2026's elevated credit loss provision: what is the credit performance outside the fraud cohort, how did the fraud assessment change from Q1, and is another large provision from this cohort expected? / A: Management confirmed the elevated provision is concentrated entirely to one specific Q1 origination cohort from the identity fraud event, not broad-based portfolio deterioration. More affected accounts were identified as the cohort matured through delinquency cycles in Q2, leading to the updated CECL reserve. Outside the fraud cohort, delinquency only increased modestly from 2.8% to 3.3%, in line with normal seasoning of a young portfolio. Management has strengthened fraud controls, and expects future provisions will reflect underlying portfolio credit performance rather than this one-time event.

Q: Goldman Sachs asked what competitive advantages Gemini has in prediction markets against larger competitors with bigger customer bases, and how Gemini will scale. / A: Management noted Gemini is building a diversified super app, not a standalone prediction product, enabling cross-pollination with its existing customer base. For example, 50% of prediction traders on Gemini also hold a Gemini credit card. Gemini also built the full regulated exchange and clearing infrastructure in-house, giving full control over operations and enabling future distribution partnerships to grow the marketplace flywheel.

Q: Morgan Stanley asked about the timeline, gating factors, and competitive positioning for U.S. crypto perpetual futures after CFTC regulatory approval. / A: The required regulatory approvals (a DCO margining amendment and FCM approval) are already in process with the CFTC, and management expects approvals could come in 2026. The product and technology are already complete and live for offshore customers in Singapore, so Gemini is ready to launch immediately after receiving approvals. Management noted U.S. crypto perps are an entirely new market (all volume is currently offshore), so it is very early days with massive unmet demand, and competition is not yet established.

Q: Evercore asked if Gemini credit card MTU declines will persist in the crypto bear market, and if new products can reverse this trend. / A: Management acknowledged crypto rewards card demand is cyclical, and growth slowed naturally as crypto prices fell, so Q2 2026 intentionally shifted focus to portfolio maturation and fraud control rather than aggressive growth. Management added they plan to expand reward options to include stock rewards, tying the card into the super app strategy. The broader diversified product offering allows Gemini to retain customers even when crypto demand is soft, supporting organic long-term card growth.

Q: Needham asked about early equities launch results and Q3 2026 trading trends, including prediction market activity. / A: Equities launched only five weeks prior, so it is too early to draw firm conclusions, and it is not expected to be a material 2026 revenue contributor. Long-term, equities add value by deepening customer relationships and supporting cross-sell. Q3 2026 spot crypto volumes have been weaker than Q2, in line with broader market trends, but prediction markets hit new monthly volume highs in July, led by crypto (especially Bitcoin) prediction contracts, showing activity is expanding beyond one-off event trading.