Crypto exchange Kraken posted a massive 114% YoY Q3 revenue jump, signaling strong momentum ahead of a potential public listing.
The crypto exchange Kraken reported exceptionally strong financial metrics for its third quarter. The platform generated a total revenue of $648 million. This figure represents a dramatic 114% year-over-year increase. This solid performance shows that the exchange sector is performing well.
Trading Volumes and Custody Assets Drive Record Growth
Specifically, the platform had mass operational success. Total trading volume hit a whopping $561.9 billion in Q3. In addition, this high activity was reflected in asset growth. Assets held in the platform increased substantially to $59.3 billion. In fact, this was an 89% increase from its previous year.
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Moreover, customer acquisition continued at a fast rate. The amount of funded accounts increased dramatically by 46%. Therefore, the service capabilities of Kraken now support an estimated 5.2 million active funded accounts. This widespread account growth forms the basis of continued investor confidence in the platform.
The company, officially called Payward Inc., defines revenue in a very different manner. As a result, the method of calculating revenue is defined as the gross revenue on the accounting principle of Generally Accepted Accounting Principles minus some trading costs. Thus, this accounting method does not resemble some of the main competitors, such as Coinbase.
In fact, the company had a major turnaround in profitability. The adjusted earnings were $178.6 million for the quarter. Conversely, the same metric was slightly negative last year. This was a major and welcome improvement for investors.
The adjusted earnings figure excludes certain one-time charges. In addition, non-cash items are also not included in this calculation. Therefore, this metric is aimed at reflecting recurring profitability better. Ultimately, this enables investors to get a clear view of the underlying business health.
Kraken Eyes IPO After Record Q3 Revenue
Subsequently, disciplined cost management played an important role in the results. Specifically, analysts credit operational efficiency for the solid earnings. Therefore, Kraken handled the cost structure well. Thus, this enabled better revenues to turn into strong earnings.
Despite the volatility in the market, it was able to get this high profitability for the firm. Indeed, variable market liquidity often poses a problem for exchange earnings. Similarly, variable custody flows may have a significant impact on financial results. Nevertheless, Kraken kept up its conversion rate.
In addition, the product range of the company was diversified strategically. Fee changes for various products helped boost the revenue. Previously, the business was mainly into basic spot trading. However, its current offerings are much broader.
As a result, this outstanding performance of Q3 substantially enhances Kraken’s market position. The exchange is currently on its way to a possible IPO. If Kraken does go through, it will join the ranks of other publicly listed crypto firms. For example, rival Coinbase is already publicly traded on a major exchange.
In addition, competitor earnings are closely watched by the market. Coinbase is about to report its third-quarter earnings soon. Analysts anticipate the publicly traded exchange to see very good revenue growth. Thus, this shows a positive impact on the overall health of this industry for Kraken in terms of public market prospects.
However, levels of activity in the markets are still variable. Therefore, flows of custody may definitely impact future financial results. The bottom line is that Kraken’s trajectory is dependent on a sustained market momentum. This quarter validates the exchange’s capacity to take advantage of market activities.
