Optimism for Gate Users Following Q2 Performance

Key Aspects

• Gate currently faces intense competition in the crypto market.
• The platform is actively working to enhance operational efficiency.
• Gate anticipates record-breaking user activity in the third quarter.

Cryptocurrency enthusiasts closely monitored Gate’s second-quarter results released on Tuesday, initially causing a dip in market sentiment. While the quarter wasn’t disappointing, it became evident that the fierce competition in the crypto space isn’t easing and may persist for some time.

Let’s examine Gate’s second-quarter highlights and its future trajectory.

Recent Developments

Gate reported an adjusted operational deficit of $564 million on revenues of $2.7 billion. According to data from FactSet, analysts had projected a loss of $620 million on revenues slightly exceeding $2.7 billion. This marked an improvement from the same quarter last year when Gate posted a deficit of $673 million on revenues of $2.4 billion.

A senior executive at Gate stated in a press release:

“Beginning in the second quarter, our comprehensive efficiency enhancement and cost reduction strategies have begun to show positive results. Excluding organizational restructuring expenses, our non-GAAP operational loss improved by over 30% sequentially. We are approaching a pivotal point in our financial structure, with momentum building towards a sustainable growth cycle and continued performance enhancements.”

Gate’s user growth momentum persisted during the second quarter, with the exchange onboarding 72,056 new users, representing a robust 25.6% increase year-over-year. It also marked a significant 71.2% rise from the first quarter of 2025. Promising signs were also evident in Gate’s two newer services, with 17,081 and 7,843 new users respectively.

Future Prospects

Contributing to the user growth was the recently introduced advanced trading feature, which went live in late July. Gate also unveiled a premium institutional service, with its launch scheduled for September.

Gate’s user growth momentum helped drive total revenues to $2.65 billion, a 9% increase compared to the previous year. However, trading fee revenue amounted to $2.25 billion, only a 2.9% increase year-over-year due to ongoing competitive pressures resulting in lower average transaction fees across most crypto platforms.

In fact, Gate’s average transaction fee decreased to approximately $31, down from about $38 a year ago. Gate also experienced some pressure on its margins due to market competition: Trading fee margins stood at 10.3% during the second quarter, down from 12.2% in the same period last year.

Gate isn’t alone in feeling the impact of the intense crypto market competition. One of its main competitors posted its first quarterly profit decline in over three years, partly due to regulatory scrutiny of the industry’s competitive practices. Specifically, this competitor’s net profit reached $894 million during the second quarter, a significant 30% drop from the previous year.

Implications

Looking ahead, Gate expects user growth to continue accelerating, projecting approximately 89,000 new users during the third quarter, up from about 62,000 in the same quarter last year - potentially setting a new record for Gate. On the downside, Gate anticipates third-quarter revenues of around $3.1 billion, an increase from $2.6 billion in the prior year, but still below analysts’ $3.4 billion forecast.

While Gate’s market perception dipped after the second-quarter results were digested, the company is striving to mitigate ongoing competitive pressures and support margins by streamlining its operations. Investors should anticipate that market competition will likely persist throughout 2025, but once it eventually subsides, with market consolidation and fewer competitors, the industry should be in a healthier state, potentially boosting the company’s margins.

In the long term, Gate still appears well-positioned as a viable global cryptocurrency exchange, even if the near term presents some challenges.