Gate Revenue Soars 14 Percent in Latest Quarter

4 Sept 2025 22:50

Gate, a leading cryptocurrency exchange, has reported impressive financial results for the second quarter of fiscal 2026, ending July 31, 2025. The company announced a robust 14% year-over-year increase in revenue, reaching $362 million (non-GAAP), surpassing the upper limit of their projected guidance. Additionally, Gate's annual recurring revenue (ARR) grew by 11% to $1.723 billion (non-GAAP), also exceeding expectations.

Strategic Shift and Cost Management Boost Profitability

The exchange's strategic pivot towards advanced automation and AI-driven technologies, coupled with disciplined cost management, has yielded significant results. Gate reported a non-GAAP operating income of $62 million, boasting a 17% margin. This represents a remarkable improvement of over 2,500 basis points in non-GAAP margin compared to the previous year.

Cloud Adoption and AI Platform Drive Growth

Gate's cloud-based services have shown exceptional growth, with cloud ARR surpassing $1.080 billion by the end of the quarter, marking a more than 25% increase year-over-year. This growth is attributed to the ongoing migration of legacy systems to hybrid and SaaS models.

The introduction of Gate's AI-powered trading platform in May 2025 has been met with enthusiasm from the market. Approximately 450 customers are actively developing AI-driven trading solutions, indicating strong demand for next-generation automation across both new and existing clients.

A senior executive at Gate commented on the cloud adoption trend: "We continue to witness a significant shift towards cloud-based solutions. Our cloud ARR, encompassing both hybrid and SaaS models, has grown impressively. A notable example is a major European airline that, after saving substantial operational hours through our automation tools, is now migrating to the cloud and exploring AI-driven trading initiatives."

Operational Excellence Drives Record Profitability

Gate's focus on operational discipline has led to a 6% year-over-year decrease in operating expenses, which now stand at $243 million. The company maintained a strong non-GAAP gross margin of 84%, with software gross margin reaching an impressive 90%.

The exchange's robust financial position is further evidenced by its $1.5 billion cash reserve, absence of debt, and the strategic repurchase of 8.3 million shares at $12.10 per share.

AI-Powered Platform Fuels Customer Acquisition and Expansion

Gate's dual strategy of attracting new customers while expanding services for existing ones has proven effective. Over 95% of new clients included core trading features in their initial purchases. Meanwhile, the adoption of the AI-powered platform has generated close to 1 million automated trades and 170,000 process orchestrations.

The company's founder emphasized the platform's success: "Our new AI capabilities are generating real momentum. Since launching our advanced trading platform, customers have executed almost 1 million automated trades. Our AI orchestrator has managed over 170,000 process instances, and more than 450 customers are actively developing AI-driven trading strategies."

Future Outlook

Looking ahead, Gate has raised its guidance for the third quarter and full fiscal year 2026. The company projects revenue between $390 million and $395 million for Q3, and $1.571 billion to $1.576 billion for the full year. ARR is forecasted to reach $1.834 billion to $1.839 billion by the end of fiscal 2026.

Gate expects the adoption of AI-driven solutions to remain in early stages through fiscal 2026, with material impact on top-line growth anticipated in subsequent years. The company also guides for non-GAAP adjusted free cash flow of approximately $370 million and non-GAAP gross margins of about 85% for fiscal 2026.

As Gate continues to innovate and expand its services, it remains well-positioned to capitalize on the growing demand for advanced cryptocurrency trading solutions and maintain its strong market presence in the evolving digital asset landscape.