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FollowingRevenue growth failed to mask a sharp decline in profits
Kraken's parent company's revenue growth last quarter masked a sharp decline in operating profit. Payward achieved adjusted revenue of $508 million in the second quarter, a year-on-year increase of 17%, but adjusted EBITDA fell to $23 million from approximately $80 million in the same period last year.
On the surface, revenue growth of 17% was quite solid, but profits fell by more than 70% from a year earlier. This divergence is the focus of exchange investors and operators. Total trading volume on the platform fell to US$310 billion during the quarter, while the number of fund accounts increased by 42% to a record 6.6 million. More users hold balances on Kraken, but transaction activity that generates fee revenue has not kept pace with user growth.
Revenue structure changes faster than profit growth
Asset and other income has accounted for 60% of total revenue, up from 55% in the same period last year. This category covers balance-linked recurring services rather than transaction traffic. Such revenue may be more stable than trading revenue, but second-quarter results suggest its profitability is not enough to compensate for weak trading volume. For an exchange that once relied on trading volume to earn huge operating profits, with $508 million in revenue corresponding to $23 million in adjusted EBITDA, margins are already quite slim.
The transition to balance-related products is in line with general trends across the exchange industry. Various trading platforms have expanded custody, pledge and revenue services to reduce dependence on spot trading income. This shift is not only reflected in the exchange's income statement.
Weekly tokenization data shows that real-world assets and on-chain revenue products are becoming an increasingly important part of the cryptocurrency revenue model. Rather than simply charging more fees, exchanges try to hold assets for a long time so they can make profits repeatedly.
Similar demand also appears in pledge intensive assets. When the inflow of institutional pledged funds increases, the value shifts from price-based transactions to recurring gains. Institutional pledge demand has become a significant force in specific ecosystems, and platforms are adjusting product team layouts around this change.
