Kraken owner Payward posts sharp Q3 drop, but shows a Q2 rebound

What the results show

Payward's third quarter landed well below last year's as the crypto slump persisted. Adjusted EBITDA came in at $60 million, a 67% drop from the same period in 2023.

The shareholder letter seen by Bloomberg also put total platform margin at $487 million, down 12% year on year. Platform transaction volume was $353 billion, a 30% decline over the same stretch.

Where things moved since Q2

Quarter over quarter, the picture brightened. Adjusted EBITDA rose 163% from the second quarter and total platform margin increased 12%.

Crypto's bellwether, Bitcoin, rose about 40% between mid August and early October, but later pulled back as inflation fears resurfaced and as uncertainty over how the US midterm elections might affect the industry grew. Many exchanges rely heavily on trading fees, and weaker prices often mean lighter activity.

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Business shifts and wider industry context

Payward is pushing beyond trading by expanding into tokenized stocks and, in the US, plans to offer onchain perpetual futures to clients, pending regulatory approval. In October, it agreed to acquire Saldo Bank and said Kraken plans to launch in the UAE after full approval from regulators in Dubai.

The company plans to expand into prediction markets and introduce its own token, but offered no timetable. Earlier this year it cut about 150 roles, citing the use of artificial intelligence to boost efficiency. Bloomberg has reported that its long anticipated IPO may not arrive until next year.

Peers posted mixed third quarter outcomes. Gemini Space Station said revenue fell 19% from a year earlier but that its losses narrowed, while Coinbase reported a 35% drop in revenue but said it had become profitable again. A broad swath of exchanges has cut headcount and other costs during the slump.

What this means for your portfolio

The bottom line: Payward's core earnings still swing with crypto prices, but funded accounts are growing and new lines like tokenized stocks and futures are in the pipeline. If you have exposure tied to exchange activity, keep an eye on how trading volumes track prices and how quickly these diversification plays come online.

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