Bullish (BLSH) Q3 2025 Earnings Report, Transcript and Summary

Good morning, and thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bullish Global Third Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Michael Fedele, VP of Finance. Please go ahead.

Good morning. Welcome to our third quarter earnings call. I'm Michael Fedele, Vice President of Finance, and I'm joined on today's call by our Chief Executive Officer, Tom Farley; Chief Financial Officer, David Bonanno; and Director of Corporate Development, Liam Foley. This call will contain forward-looking statements, including those relating to our expected performance and business opportunities. These statements are not assurances of future performance. They are subject to risks and uncertainties, and our actual results could differ materially. For more details on these risks, please refer to today's earnings press release and our SEC filings, including our prospectus dated August 12, 2025. We undertake no obligation to update or revise any forward-looking statements. This call will also include a discussion of non-IFRS financial measures. A reconciliation of these measures to the most directly comparable IFRS metrics can be found in our earnings press release and presentation, which also contain additional information regarding non-IFRS financial measures and key performance indicators. I'll now turn the call over to Tom.

Thank you, Michael. Thank you all for joining our call today. I'm Tom Farley, the Chairman and CEO of Bullish. We're pleased to share that Bullish continues to win. For Q3 2025, Bullish reported record adjusted revenue of $76.5 million, record adjusted EBITDA of $28.6 million and record adjusted net income of $13.8 million. As Dave will discuss here shortly and can be seen from the provided guidance, we expect more records coming for 2025 as a whole. In the last 6 weeks, our momentum has only increased. On October 31, we fully launched our options franchise and the early results are encouraging. We also launched our U.S. exchange business and have onboarded marquee customers in the early days. We have signed up many new liquidity services customers here in Q4, including high-profile crypto projects. Our index business is gaining traction with many launches of U.S.-based ETFs and other listed products tied to our benchmarks. Our media business growth has accelerated in Q4, now registering in our weekly and monthly reports as the top crypto news site globally measured by views. I will now share some context on where Bullish sits within the broader crypto ecosystem before moving on to discuss our business successes in greater depth. For several years now, Bullish has intentionally positioned ourselves at the intersection of 3 strong ongoing trends that are driving crypto evolution. One, increasing regulatory clarity with regulations that require infrastructure businesses and their customers to operate in a compliant and responsible fashion. Two, increasing numbers of traditional finance institutions operating in crypto in meaningful ways. And three, growing tokenization of major asset classes on the back of the successful tokenization of the U.S. dollar via stablecoins. We are more convinced than ever that we are on the right path. We are squarely positioned at the center of each of these trends. We are proud of our regulatory footprint and are pleased with the ongoing institutional adoption that we are helping to drive. However, I'd like to expand on this third trend, tokenization. Tokenization refers to the process of turning traditional financial assets into crypto assets. We believe this trend will be the most transformational crypto value proposition of the next decade, and we are positioned to be leaders in this space through our liquidity services platform. In fact, the tokenization trend gave rise to our liquidity services business back in 2023. The first major asset that was successfully tokenized was the U.S. dollar in the form of stablecoins. As dollars were tokenized, stablecoin issuers turned to service providers such as Bullish for help, to help them tokenize the U.S. dollar. We saw a market need for listings, liquidity and visibility as these new tokens bridge the chasm from TradFi to blockchain. We spent most of the years 2022, 2023 and 2024 in build mode to meet these needs, and we call the collection of these products, liquidity services, before tokenization was even the hot word on everyone's lips. Today, for stablecoins, we are writing smart contracts enabling bridging from one layer, one blockchain to another. We are listing stablecoins against many other assets on a compliant and regulated global exchange. We are providing liquidity both on Bullish and on DeFi protocols, and we are marketing these stablecoins through our Consensus and CoinDesk properties. In short, with our liquidity services offering, we have built a tokenization platform, and it has become our fastest-growing business. But that is not what excites us the most. The trend of tokenizing assets other than the U.S. dollar is in the first inning. These tokenization services have the potential to continue scaling meaningfully as more and more assets and asset classes are listed on chain in the years ahead. This includes substantially every major asset class you can think of. We look at the successful tokenization of the dollar, stablecoins as a road map for the future tokenization of these new asset classes. And as a partner for substantially all dollar and euro-backed stablecoins, we've learned the value of developing a rich set of capabilities specifically suited to helping that asset class tokenize. We continue to evolve our services targeted at stablecoins. For example, Bullish now has direct [ mint/burn ] capabilities with nearly every stablecoin issuer and also advanced API orchestration tools that allow seamless movement between fiat and stables, powering our partners' growth. We believe that each new asset class will also require incremental asset-specific capabilities alongside our standard offering of the 3 core services every asset issuer needs to tokenize: listings, liquidity and visibility. With this additional functionality need in mind, we have submitted an application with the SEC to receive regulatory approval as a transfer agent, which will further supplement our tokenization and liquidity services strategy for U.S. securities. We look forward to sharing more of our future plans with you over the months ahead, and we look forward to taking this tokenization journey with you. Now, excitement about our liquidity service platform's potential for future tokenization growth aside, how is it doing right now? Our services continue to be sought after. We're adding new and diversified customers, and our momentum has continued into Q4. In the third quarter, we added a record number of liquidity services partners, and our active partner count is up 100% sequentially. We're on track for another strong quarter in Q4, building on the success of our existing Layer 1 blockchain relationships with market leaders such as Solana, Ripple and TRON. We have further broadened our Layer 1 blockchain relationships that we are supporting with liquidity services, adding 4 additional blockchain ecosystems, Canton, Cardano, Midnight and VeChain to our scope of services since we last spoke. We are also pleased to share that our collaboration with the Solana Foundation continues to develop constructively. In the first quarter of this engagement, Bullish minted more than 80% of our stablecoins on Solana. And Solana's total stablecoin value locked, that is how many dollars are tokenized on Solana, grew by more than 40% during that quarter. Shifting gears to discuss our very successful options trading launch, I'd like to first take a step back and remind everyone why we are so excited about this opportunity for Bullish. Crypto options are the most rapidly growing asset class in this space. They've grown to more than $200 billion in monthly trading volume just last month, up more than 230% from the same period last year. Furthermore, given the complex nature of options as well as the sophisticated user base, we are well positioned to carve out substantial market share in this asset class, and we expect to see that asset class grow by multiples in the coming years. Turning to the specifics of our own progress. Our exchange launched in full and without risk caps at the tail end of October. In just over 2 weeks, we've already traded well over $1 billion of volume. And as of today, we have approximately $1 billion in open interest. Our best day was yesterday, where we traded $240 million, about 4% market share by our definition. I'm really excited by the traction we've attained right out of the gate, and I expect it to become a significant contributor to our financial performance going forward. Look, I've been involved with a lot of these derivatives launches over the years, including very successful ones and a few that I rather not discuss. This one has all the hallmarks of a big winner. Our last earnings call occurred less than 24 hours after we received our prestigious BitLicense. We indicated that receipt of this license marked the final step in enabling U.S. onboarding for prospective Bullish exchange clientele. We also shared that it will take time for these U.S.-based customers to go live given their institutional nature and the typical lengthy onboarding process for these types of customers. But with all that said, we are pleased to share that we've already actively onboarded many new customers, including various retail brokers with millions of customers like Webull and Moomoo, institutional brokers such as Cantor Fitzgerald, a very large crypto custodian and other institutional clients. So things are progressing more quickly than we anticipated just a couple of months ago when we last gathered. Our U.S.-based clientele value our already liquid global order book, which helped us launch without any 0 to 1 or cold start liquidity problems. We are encouraged by our early progress in the U.S. and look forward to continuing to seize market share in the months to come. Outside of the United States, we continue to make steady progress growing our exchange. During the quarter, we've added some of the largest retail brokerages in Europe, the Middle East and Latin America and integrated various crypto-focused hedge funds or asset managers that have already started trading derivatives on our platform. Shifting to information services. Our CoinDesk business continues to perform well, supported by significant accomplishments in our indices business. We are pleased to share that since our last earnings call just 2 months ago, our indices have underpinned an additional 5 of 6 total newly launched U.S.-based exchange-traded crypto products as well as 4 additional global ETPs. During the span, we also won 6 new benchmark switches from competitors and have 2 active ETP filings for the CoinDesk 20 Index. On the CoinDesk Insights or media side, we continue to successfully capture more market share against competitors with our market-leading and accessible crypto content and coindesk.com continues to be a highly sought-after destination for advertising. We have also successfully launched CoinDesk Research, a subscription-based vertical dedicated to delivering high-quality research and analysis. CoinDesk Research also serves as a natural extension and upsell to our liquidity services clientele. The thesis that we can land and expand is proving to be true. There are many examples of existing customers in Q3 and so far in Q4, choosing to take advantage of new Bullish company products and services in addition to their existing products and services. Overall, we continue to win, and we continue to execute on the vision that Dave and I laid out when we first joined Bullish. We're proud of our success to date, and we believe that we're just getting started. We're just getting started on a macro level because tokenization of securities and other real-world assets and the shift of financial market infrastructure has only just begun. And we're just getting started today at Bullish generally because we believe we have or are pursuing the right mix of licenses, technology, talent and experience to be a winner in a world that is rapidly shifting on chain. We will continue to execute with focus, discipline and momentum as we position Bullish for sustained growth in 2026 and beyond. With that, I'll turn the call over to Dave, our CFO, my partner, to review the quarter in more detail.

Thank you, Tom, and good morning, everyone. I'll start by walking through our third quarter results and then provide additional context about our operating performance before sharing our outlook for the fourth quarter. As a reminder, reconciliations of our non-IFRS metrics can be found in the back of today's presentation as well as in our 6-K filing published earlier today. Total adjusted revenue for the third quarter was $76.5 million, up 34% sequentially and 72% year-over-year, exceeding the high end of our guidance. Third quarter SS&O revenue, which includes liquidity services and all CoinDesk-branded products, reached $49.8 million, up over 50% versus 2Q and over 300% versus the prior year's quarter. Through the first 3 quarters of this year, SS&O revenue represents 53% of total adjusted revenue year-to-date compared to 28% for the full year 2024. Adjusted operating expenses for the third quarter were $47.9 million, down 2% from 2Q 2025. Adjusted EBITDA for the third quarter was $28.6 million, up 253% sequentially and 271% year-over-year. And lastly, adjusted third quarter net income was $13.8 million. As our business continues to scale, we are pleased with our cost control and high incremental margins, which we expect to continue into the future. Turning to our current financial performance. Quarter-to-date trading volume through November 17 stands at $126 billion with an average trading spread of 1.7 basis points. Our November month-to-date trading spreads are averaging 1.8 basis points, up from the 1.6 basis points you will have seen in our October monthly metrics. We expect materially higher transaction revenue for the full fourth quarter as compared to the second and third quarters of 2025, driven by higher volatility and increased active trading customers. Turning now to our Q4 guidance. We expect SS&O revenue between $47 million and $53 million and adjusted operating expenses between $48 million and $50 million. We remain confident in the outlook for our financial performance and believe Bullish is well positioned to deliver sustained and profitable growth in the coming quarters. Thank you for joining us today. And with that, I'll turn it back to Tom for closing remarks.

Thank you very much. And as we said last time, thank you very much for your continued attention to Bullish and following along with the story. And we appreciate your time today, and we'll open it up for Q&A.

[Operator Instructions] Your first question comes from the line of Ken Worthington with JPMorgan.

I wanted to focus on liquidity services. So maybe starting, you mentioned that the number of stablecoins doubled this quarter. About how many stablecoins are you servicing? And then also, you mentioned previously that the pipeline of non-stablecoin tokens was starting to dominate that pipeline. How do the economics look for non-stablecoin tokens compared to stablecoins? And then I'll wrap the follow-up in here, too. Coinbase launched a service related to ICOs. To what extent does that compete with your non-stablecoin promotion business?

Thanks, Ken. Good to hear from you. I was probably doing my thing where I'm speaking too fast. The -- just to clarify your question, actually, the liquidity services figures, high level that I quoted refer to all liquidity services customers. That is to say we are not saying we doubled our stablecoin customers. In fact, off the top of my head, my guess is that we did not double the number of our stablecoin customers. We doubled the overall. So inclusive of, for example, the 4 Layer 1 blockchains that I described as well as stablecoin issuers. So -- but just to answer maybe the thrust of your question regardless, we continue to add stablecoin customers, which is consistent with our going-in thesis, I think not too dissimilar from your own, that with the GENIUS Act, we will continue to see growth in the number of stablecoin issuers. And what we're seeing is the new issuers need those 3 tokenization or liquidity services products as much as everyone else, the listing, liquidity and visibility. But what's perhaps even more exciting is we're proving the product market fit for these services extends far beyond stablecoin issuers. And so during the quarter, we saw more of a, quite frankly, even mix among kind of 3 broad categories, which are stablecoin issuers, Layer 1 blockchains and then third, just token crypto project issuers. So in other words, not a Layer 1 or a stablecoin, and we're seeing more of a blend. Just to touch on that, I'll let Dave kind of clarify if I butchered any of those figures and coming back to you, Ken. And then on the ICO platform, like where we've really focused is the highest quality crypto platforms, and that's consistent with our kind of reason for being, which is servicing the institutional customers. By and large, they're less interested in the tail of crypto. They're more interested in $1 billion or at least $0.5 billion market cap and up crypto projects. And so, so far, what you described at a competitor versus where we're focusing are just kind of fundamentally 2 different kind of fields of inquiry. So we're kind of focused on sticking to our knitting, building out our liquidity services in our core market and really enjoying the ride as our TAM expands in real time.

Yes, Ken, to your question about the stablecoin liquidity service agreements. As we mentioned before, we are partnered with basically every stablecoin out there, except for USDT currently. I believe that count is about 9 or 10 total stablecoins, both euros and dollar-based partners, with regards to the opportunity to further monetize stablecoins versus non-stablecoin partners. In general, we do see the ability to use our partners' assets that are stablecoins to do other revenue-generating activities just given the broad-based utility of stablecoins throughout crypto, DeFi and otherwise. But we are also able to find other opportunities with the nonstable partners. It depends. Each one of these is a little bit bespoke with varying degrees of utility and contract sizes. We're excited about both sides of the pipeline. And both sides of the pipeline are growing, albeit right now with more emphasis on the nonstable portion given the next wave of, say, GENIUS compliance stablecoins has really yet to go live, but we expect a new wave of those to begin late fourth quarter, early first quarter, and we expect to pick up some new significant wins, which we'll talk about early next year.

Your next question comes from the line of Peter Christiansen with Citi.

Tom, David, congrats on the execution momentum here, really impressive stuff here. I want to double-click into the motivation to seek transfer agent capabilities and licensure. Obviously, there's opportunities with some of the coin indices and perhaps even bespoke products. But just curious, how do you think about the competitive landscape or setup for maybe some more commodity type of RWAs out there, single stocks? How are you seeing that competitive setup? And then as a follow-up, I was just curious if you could speak to some of the performance you saw out of the AMM during some of the heightened volatility that we've seen in recent weeks. Obviously, spreads look pretty healthy there. But just curious if there's any other operating metrics that you think are useful for us to consider.

Sure. Good to hear from you, Pete. Two very meaty topics. I'll endeavor to answer the first, and Dave will take the second. I talked a bit in my prepared remarks about this tokenization trend fairly broadly. But I'd like to add a little more context and kind of contour given your question. When you think about stablecoins, they're really just the U.S. dollar, and it's a question, okay, how do I take the U.S. dollar? I'm going to speak in colloquial terms here for maybe people who aren't crypto heads in this all day every day. But you got the U.S. dollar and then how do I take this U.S. dollar and put it on blockchain, so I can use it for commerce. That is the act of tokenizing the U.S. dollar. Well, if you think about the types of people who do it, some are super crypto native, think Tether or Circle and some are less crypto native. I think more recently, you've seen in the news, Western Union, for example. And then some are somewhere in the middle and think of PayPal or others of their hill. And so now those say, okay, I want to take the dollar and I want to tokenize it. They can do some of that -- those necessary tasks all on their own. But some firms look at it and they go, wow, there's a whole lot of expertise here, and I can't do it on my own. And you can think about, okay, how do you get from non-tokenized to tokenized and you can lay out a spectrum of products and services. For example, do you write the actual smart contract to create the tokens or not? Do you write the effectively Excel spreadsheet or Oracle database on the blockchain that tabulates which accounts own which amount of tokens? Or do you go to a vendor for that? Do you go get the state-by-state licenses in the United States or the federal licenses now required under GENIUS? Or do you rent those? So those are all sort of tokenization services, if you will. And we looked at that and we said, we're going to stick to our knitting, and we're going to do those services that we're really good at. And we said we're going to focus on the active listing the token, not just listing the token stand-alone, but listing the token against many other tokens -- listing the token, not just as a spot transaction, but as a perpetual future, a dated future, an options contract, doing it on a compliant regulated exchange, thereby conferring a certain level of respect to those asset issuers. We're going to focus on the liquidity provision, making sure that even in moments of distress, there are bids and offers available for those newly tokenized tokens, if you will, use the same word twice. And then finally, the visibility. We own the premier properties in crypto. There is no debate about that. CoinDesk is #1 for views in the world for crypto news site. CoinDesk is where important institutional people and companies gather twice a year in Asia and the U.S., and we can help these stablecoins and tokens get their message out, okay? That's been our strategy. So now your question is, hey, tell us about this transfer agent element. Well, we're looking at the world, and we're saying, boy, it feels like the next domino to drop here or at least the next enormous domino to drop, there'll be other little tests along the way is the U.S. securities market, whether that be single stocks or fixed income or what have you. And what we've drifted into and stablecoins, our customers have pulled us into it, is we now have a more expansive offering than just the dead simple listing liquidity and visibility. I gave the example of the API orchestration. I gave you the example of the direct mint earn. And I gave you the example of we're now writing those smart contracts ourselves to facilitate bridging from Layer 1 to Layer 1. Well, what the transfer agent license gives you the ability to do is more actively engage with asset issuers who are tokenizing U.S. securities to offer more robust listings, liquidity and visibility, but also some services around the margin, such as writing the actual smart contract for them or tabulating who owns of what security. That is the license you go for in the U.S. under the SEC regime that gives you the freedom to be able to offer those additional services to securities issuers, whether in a tokenized or, frankly, a certificated form. So that gives you a little more of the thinking behind that, Pete. Hopefully, that narrative -- it was a long one. Hopefully, it wasn't too boring, but gives you a sense of where we're headed.

And regarding dealer...

Go ahead.

No, you're playing the arms dealer side, right?

Yes. We just want to be helpful in this tokenization wave. We think it's huge, Pete. Just one more quick anecdote, Dave is going to punch me. But we went out and we started this tokenization effort really in earnest, we started building the features in 2022. We productized it in 2023. It really took off in 2024. We called it liquidity services, but it was tokenization. We went in January of 2025 this year. And if you go back, Pete, this around the time we started talking to you and you look at our deck, we talked all about tokenization and there was kind of a big yawn. People just really weren't too excited about it. That's how much has changed in the year 2025. It's the regulatory regime here. It's also just the technologies of the Layer 1s are that much more robust. People have realized it's ready for prime time. People now realize that the benefits of tokenization are real, being able to use those tokens more easily as collateral in a more efficient manner. I'm now speaking on a regular basis to the heads of the very largest banks in the world who are preparing for this wave. And so we've seen this coming. At times, we felt a little crazy because of the looks we were getting across the table, but we've been preparing for it, and we just want to be a part of helping our customers make this leap.

And Pete, with regards to your question around the volatility experience, probably you're referring to mostly October 10, the AMM performance in the -- performance of the exchange in totality, we're really proud and pleased with our performance and the way the technology held up. Every couple of quarters or so, we get really kind of a feature moment to advertise the difference of AMM liquidity versus what we see in other club order books. Way more depth was preserved on our order books during the flash crash on October 10 than you saw in other venues, notably the other offshore venues, where liquidity just absolutely evaporated in major assets like Solana. Our spot prices had far fewer wicks, smaller wicks, our derivative systems had far fewer liquidations than you saw in other venues. And as a whole, we're really proud of the way the system held up. We had a lot of trading revenue that day, and that went noticed by our customers. And I do think that there is a lot of discussion underway in the market more broadly around the way that derivatives and marketing systems and order books function in, say, less regulated venues versus our own.

Just one more comment on that. I remember way back in kind of 2022, I had a launch with one of the most prominent executives at trading firm in our industry. And he said, I suggest you, Tom, as somebody who's been around kind of clearing and derivatives your whole career, go look at how these perpetual futures markets work on these other venues. You'll be appalled. And I did exactly that. I spent a weekend doing a deep dive and came back to our team and said, we will never do that. It is wrong what happens on these markets. What we saw on October 10 is positions were liquidated for fully collateralized accounts. It's a heads, I win, tails, you lose approach from these unregulated venues. And it underscores for you why real institutions are never going to do business there. They're just not. Real institutions need to know when they're hedged, they're hedged. Their position isn't just going to evaporate in the dead of night when they have gains on it on a fully collateralized basis.

Your next question comes from the line of Dan Fannon with Jefferies.

I wanted to follow up on SS&O more broadly. Obviously, a lot of momentum, strong third quarter. But then when we look at the 4Q guide, it is basically flat at the midpoint. So can you talk about that -- squaring that with the kind of longer-term growth opportunity from a revenue perspective and the momentum in the business today versus kind of near-term revenue outlook?

Yes, sure. Thanks, Dan. Great to hear from you. Taking the second part of your question first. We remain very confident in the growth outlook for subscription services and other revenue looking forward. We see the pipeline filling up, new projects coming along. We believe tokenization more broadly is potentially a very large tailwind for that line item. Specifically on the Q4 guide, there are a couple of different cross currents there. I'd say, one, we do continue to experience broad-based growth across pretty much all line items in SS&O in terms of customer wins and new contracts, as Tom has mentioned. Somewhat offsetting that growth would one be seasonality. The fourth quarter is the only quarter this year with 0 events revenue. The third quarter did feature our DC policy event and EDGE conferences. So there was some revenue in the third quarter from events, which will not occur again in the fourth quarter. Additionally, there's a little bit of impact from large price -- downward price movement in the broader digital asset space, which affects partially the indices business, some of our lending business and to a lesser extent, liquidity services, but that is largely offset by the broad-based growth. There's a little bit of a timing element as well, whereas a lot of the new contract signings during the fourth quarter are coming middle end of the quarter versus the third quarter, where we had extreme momentum both in the second quarter leading into the early third quarter. And so when you put all that in the blender, we come out with the guidance you see in front of you today, which is flat to modest growth.

Great. That's very helpful. And then I was hoping you could just provide a little more commentary around the momentum post the BitLicense approval. You talked about a few onboardings. But I guess, could you expand upon those comments and talk about kind of the pipeline and how you see the kind of ramping up of that customer base as we go into, obviously, fourth quarter, but more importantly, into next year?

Yes, sure, Dan. As I said, we've had kind of more early wins and notable early wins than I think we were expecting to be able to reveal to you given that there were only 2 months or 8 weeks between our 2 earnings calls. So some really good early momentum. I would say the other thing that's positive is the pipeline has filled up very, very quickly and has many exciting names who will be known to you and have things like bank or investments in their title and have the potential to really move the needle. I guess the downside is we have seen other than a bunch of early adopters who were quick to sign an agreement, it's hard. Like it's a slog. And I think some of this goes back to FTX, frankly, because we still get questions that are pretty clearly tailored to avoiding an FTX-like situation, where the diligence is just very robust. Hey, let's go through your SOC reports. let's go through your cyber reports. We want to see more working papers in addition to just the publicly available audit. So everything feels good and about on track, and we have some positive upside surprises in terms of the number of big customers who have already signed and have come on board as well as the size of the pipeline, but it's going to take some time.

Your next question comes from the line of Brett Knoblauch with Cantor Fitzgerald.

Tom, I think we're expecting kind of CLARITY Act to get put through the Trump's desk before the end of the year and signed. Could you maybe explain to us what you're expecting that will do to your business, particularly from the liquidity services front?

Sure. And good to hear from you, Brett. I wish this call were Monday and not today. I'll be meeting with 7 or 8 of the 100 U.S. Senators, including many or most of those who are actively involved in, I guess, what was called in the house, the CLARITY Act, but more broadly a market structure bill tomorrow and Friday on the Hill, Brett. So I'll have a lot better sense. I love hearing that the premise of your question was around a bill getting passed this year. You're a bit more optimistic than I am. I am very optimistic that it will get passed because I'm seeing bipartisan support. And I think it will be very helpful for the crypto industry, largely because of preemption, in other words, not having to go to each of the 50 states to get their very particular, in some cases, approvals for operating in the crypto business. I think that will -- that in and of itself will be a boon for infrastructure providers like Bullish. And I think providing the legal certainty, much like it has on the stablecoin side will bring in many institutions and tokenization participants, asset issuers, for example. So getting that done will be great for growth, and I very much would like to see it. And I think it will only be helpful for our business. But I will know a lot more in the next 48 hours. And look, there's a lot to come. I suspect the House Ag will come out with a whole new version of their proposed bill. I suspect that will have to be negotiated with -- I mean, pardon me, Senate Ag, that will have to be negotiated to some extent with Senate Banking. But then ultimately, there will be a conference procedure with the Senate and the House to make sure that we produce a bill that makes sense for our country and for this industry, and we will be a very active participant in that as evidenced by where I'm spending the next 2 days.

Awesome. And then maybe just on the U.S. momentum. It feels like that launch happened a bit sooner than we were expecting and then adoption was much faster than we were expected. Could you maybe pinpoint why it happened so fast and how it's been so good? And kind of what you're expecting, I guess, from the U.S. business, maybe the rest of this year and into next year?

Yes. I'm going to get PTSD while I give you this answer. So we made a couple of faithful decisions over the last couple of years. One of them, I'm totally happy that we did it, and it's ultimately something that I can share with you as an investment thesis, frankly, but it brought us a lot of pain and heartburn. And what we did, Brett, is we said we're going to go get the toughest regulatory approvals in the world for the provision of spot crypto trading as an exchange. All of them. We're going to get Hong Kong. We're going to go to the freaking Germans, the BaFin, known as the toughest, most thorough regulator. We're going to go to the New Yorkers, not only are we going to go to the New Yorkers who are known for being very discerning about handing out BitLicenses, we're going to wait to launch in the U.S. And on top of all that, and we're going to go to the Brits and we're going to get benchmark administration license. And on top of all that, we're not just going to ask them for licenses like every other crypto exchange has asked for, which is, hey, let me operate an exchange within your jurisdictions and let me operate everything within the 4 walls of your country. We're going to go to them and we're going to say, we want to have one global order book where men from Hong Kong's bid offer can interact with Gerhard's offer or offer to sell sitting in Munich or Elaine in New York's bid can interact with Soso's offer in France. And that was very difficult because imagine telling a regulator, especially a particularly provincial regulator that, hey, yes, we'll onboard in your regime and we'll hold the customer funds in your regime, but we need to be able to operate a single global order book. And so it took us probably 2 years longer than it would have, maybe you could say should have, if we had taken the shortcut approach, which is what nearly every other crypto exchange has done. But the benefit finally is accruing to us, which is when we get that BitLicense and we "open for business," all it really means is these customers have been knocking on our door for 2 years, we can just say, okay, you're cool, come on in, we've approved you. We've done the KYC/AML. We'll hold your funds in the U.S. We'll onboard you in the U.S. But the liquidity is right there. You can trade tomorrow and interact with all of our customers all around the world. So that's what enabled us to kind of get into business so quickly and which -- and the reason why it may look a little different than what you're used to from others.

Your next question comes from the line of Brian Bedell with Deutsche Bank.

Congrats on the good momentum here. Maybe just talk about another angle on the U.S. traction. Dave, you quoted some pretty good metrics for trading volume so far in 4Q. We typically think of a lot of the onboarding here is contributing to SS&O. But can you talk about the new customer momentum contributing organically to the trading volume outlook? And is that something that has the potential to grow even faster than SS&O just from the U.S. angle alone?

Yes. So thanks for the question. The -- our user counts across the board are continuously hitting new all-time highs. So that is definitely beneficial. This is for trading customers. That is definitely beneficial to the trading volumes. It's always difficult to disaggregate the attribution of more customers versus volatility price or our own internal pricing changes. But when you put them all together, we are certainly realizing more trading revenues, more trading volumes per unit volatility than we have in the past. It is good to see a little bit of fallback in the market. It does bring to light the diversified revenue streams we have with exceptionally strong transaction revenue that we've had so far in the first half of here in the fourth quarter. We continue to believe that over the course of 2026, the U.S. will become a major contributor to that. We're also extremely pleased with the launch of options. We expect options to be a major contributor to our transaction revenues next year. And we're pleased with the overall momentum we've seen on the exchange trading side. And a lot of that is around cross-sells, our liquidity services, our ability to trade in and out of different stablecoins and our laser focus on institutions, the products and services that they need are all paying off.

Yes. And just to add one element to that. Options -- I don't want to oversell it because we're still single-digit market share. But the early days have been a bit of a revelation. And what we're realizing is a couple of things. One, it's all organic from a product perspective. Obviously, we didn't have options when we gathered 2 months ago. So when I say we did $240 million yesterday, that's all organic, of course. But it's also organic to a great extent, in a customer sense. The options customer base is quite different than the linear customer base, so like the spot customer base. So that's been really good in bringing new customers on to the platform, which is exciting. But then more broadly, we're realizing there's a real need in the market for an options exchange that allows customers in a single account to be able to trade spot and perps and data futures and options on a liquid compliant exchange with portfolio margining. And it feels like we hit the market just right on this one. So I'm excited. Stay tuned.

Yes, that's great news. And then just on the incremental margins, Dave, you referenced obviously high incremental margins. Fair to say that it's higher on the trading side than the SS&O side or not necessarily the case?

Probably, I'd say that's fair to say on the SS&O side, you do have the events business, which is our only line item that features any meaningful variable costs. So in total, probably a bit more on the trading side. You'll notice incremental margins in the third quarter were actually above 100%. That was due to more advertising spend in the second quarter for an event than there was in the third quarter. If you look at the guidance and the kind of current run rate of the transaction revenues for the fourth quarter, you can pencil out not quite over 100% incremental operating margins, but definitely well north of 80%. And we continue to look forward to demonstrating the operating leverage in the business to demonstrating the benefits of the diversified revenue streams and having that begin to play through in hopefully a more volatile environment than we got in the second and third quarters of this year. Hopefully, that persists into 2026, and we look forward to posting more earnings, higher margins and demonstrating that operating leverage that we've been talking about.

[Operator Instructions] The next question comes from the line of Chris Brendler with Rosenblatt.

Congrats on the results as well. Maybe a little bit of an education for me, but I just wanted to ask about the monthly metrics on the spread side. I would have thought the options business would have been higher than spot. And so a function of it's early? Or am I just not thinking about that correctly? And then the other question would just be the negative spread in perpetual futures in October. I imagine that's volatility related. Just give me a little color there on what drove the negative spread, so much larger negative spread in October for perpetual futures.

Yes, sure. So on the options side, early days, we continue, as we do with all the products to experiment with our pricing. And as I've mentioned before, we are always solving for maximizing our total adjusted transaction revenue per unit of volatility. That's across all of the products. The products do tend to work together. And so we've seen benefits from changing prices in certain products with the volumes or maybe revenues we get out of other products. So still early days on the spreads with regards to options, but we look forward to updating you on that as we go. And that is also why we report the monthly exchange metrics so everyone can keep track in essentially real time along with us. With regards to the perpetual futures spread in October, yes, the volatility was largely the driver behind the negative spread there. Zooming out, though, we continue to make good progress on perpetual futures. We do hope that the ramping up of the options activity will filter down into perpetuals as well, and we can kind of move that into positive territory here going forward. It will be variable. It will be somewhat volatility dependent, but we're pleased with the progress, and we look forward to making more progress on perpetual futures.

Your next question comes from the line of Rayna Kumar with Oppenheimer.

This is Guru on for Rayna. With options now officially live on the platform, can you maybe just help us understand the potential capital efficiencies that you'd now be able to offer through greater cross-margining capabilities? And also going forward, given the role that tokenized assets can play here and just improving collateral management, do you see any specific near-term opportunities, perhaps just expanding your relationship with Circle beyond USDC and into USYC? Or just any other tokenized money market product, right? And if I can squeeze another one in directly in relation to the prior question. With options revenue likely becoming material in early '26, when can we actually expect perhaps revenue to turn positive?

Thank you, boy, a lot there. So in terms of options, one of the benefits that we have, along with that one global order book is one matching engine. And so when you look across the other exchanges, both regulated and unregulated that offer options, they tend to have different matching engines for different jurisdictions. They have a different matching engine for options than they do for perps. In one very notable case, they have a different matching engine for spot and a different matching engine for perps and a different matching engine for options. And so it's very difficult to then aggregate trades and positions back into a single global account. For us, we've always just focused on building simply. We have a single matching engine. We allow customers in a single account to place all of their derivatives transactions as well as their spot transactions and the corresponding collateral that arises from those spot transactions and a single global order book. And so what that enables us to do is just put our thinking cap on and have smart, sensible margining where we capture from each customer the lowest possible margin we can, but no less. So for example, if a customer has sold Bitcoin calls, but they hold Bitcoin collateral, you can take that account and you can provide a reasonable margin. If a customer owns a highly correlated crypto asset and they have sold short another highly correlated crypto asset, you can provide some offset, not a total offset, but some offset. This is the sort of thing -- look, it's not simple, and it's not made for an easy sound bite, but providing that portfolio margining is kind of the lifeblood of the options trading community. That's what they need, and that's why they've rallied to us. I was joking with a colleague yesterday, an old colleague of mine, and he was pointing out that the old company we worked at had just been approved for a new VAR-based margining system that had been in the works for 12 years. So that gives you a sense of how complex this can be. But the beauty for us is we were able to start with something very efficient, which is what's leading to this early success, and it will only become more efficient over time as we have a chance to evolve it.

And regarding your question around tokenization, money markets as collateral, et cetera, we continue to follow the customers and the customer demand. We see tokenization of a variety of different assets opening up new opportunities for us, both across liquidity services and the exchange as collateral trading pairs and otherwise. So we think with hopefully, the passage of the market infrastructure bill as well, a lot of new opportunities will come out of tokenization that touch many parts of our business. With regards to perpetual futures, we're not providing any specific guidance on transaction revenues. That's not something we've been doing. However, again, we do provide the monthly exchange data so that you can follow along at home in basically real time. And as I said earlier, we continue to see progress in that line item. We think 2026 will be a better year than 2025, which was notably better than 2024. But stay tuned and continue to watch the monthly metrics for updates on all of the transaction revenue line items.

Your next question comes from the line of Joseph Vafi with Canaccord.

Great progress. Just one quick one for me here on the spot spreads. I know there was some incremental pricing power in Q2. Maybe we just kind of drill down on that just a little bit more and some of the efforts there and what you're seeing in the spot market in Q3 and early Q4.

Yes. Thanks, Joe. The progress there has been -- yes, I think we touched on this in the last call. The second quarter, we spent a good amount of time iterating on our pricing structure in general. It was also a particularly low volatility environment. Those 2 things combined to create what were we hope to be anomalously low spreads during the quarter. You've clearly seen them rebound quite strongly off the lows seen in say, May and June type time frame. Again, we continue to optimize for total adjusted transaction revenue per unit volatility. We feel pretty good with where we are today. But there's always changes going on within the market, within our customer base, within volatility. And so we'll continue to experiment and spread with the spreads. Higher spreads are not necessarily always what we're targeting. We're targeting higher adjusted transaction revenue. There may be circumstances where slightly lower spreads lead to more volume, which more than offsets the decrease in spreads. But I think where we are today represents a reasonably good baseline moving forward. Although, again, I will reiterate, it's a very dynamic situation in the market, and we will continue to make changes to optimize for total adjusted transaction revenue.

I just want to highlight, we do have to stop right at the opening bell. And I know there's a couple of other people in the queue, and we will make sure to circle back and get to you after this call and also make sure that we call on you early on the next call.

Your next question comes from the line of Bill Papanastasiou with KBW.

Just a quick one for me. Now that you've successfully secured the BitLicense and have expanded into the U.S., I'm just curious what's next? Are there any remaining geographies that you're looking to tackle and secure a Tier 1 license? Or will the focus remain on consolidating existing markets into the global order book?

Yes, that great question. Not really. I'll just highlight the U.K. still has not propagated any legislation around crypto trading, and that will come at some point. But no, we have the Asia band, the Europe band and now the U.S. band. There will be incremental spot licenses we will look to pick up, but it's frankly not even noteworthy enough to discuss on this call other than the U.K. But this is a continuing game of licenses. And it's not just for spot, but for derivatives and our index business as well. And so it's like we have full-time staff. This is all they do. And they'll just constantly be gathering licenses, and we'll be sharing those with you. But the big ones geographically are covered. So I just want to jump in because I know Gautam and Owen and Ed, you guys are in queue. Sincere apologies. If I were less verbose, we would have gotten through it all. If I could answer all the questions like Dave. And we'll make sure that we get to you guys early next time, and we'll also circle back over the next 24, 48 hours and have discussions with each of you individually. And finally, I just want to say thank you all again for following along with the Bullish story and look forward to 3 months from now being able to tell you about everything we've accomplished in the meantime. Much appreciated.

Ladies and gentlemen, that concludes the question-and-answer session and today's conference call. We would like to thank you all for your participation. You may now disconnect your lines. Have a pleasant day, everyone.