Toronto-based WonderFi cut more than a third of its staff following its acquisition of rivals Coinsquare and CoinSmart as part of an effort to extend the once-struggling crypto-trading platform operator’s runway during a prolonged downturn, according to its first consolidated results since the deal closed in July. Here’s what you need to know:

The background: The rare triple merger came at a crossroads for crypto-trading platforms, which were hit hard by the collapse of Bahamas-based FTX in November 2022. Concerned about contagion and what other platforms might turn out to be fraudulent or secretly insolvent, crypto holders pulled their assets off such platforms at a record rate. 

Coinsquare and CoinSmart accepted an all-share acquisition offer from WonderFi despite the fact that days before announcing the merger in April, the company had released financial statements that included a warning from its auditor noting “the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern”—in other words, to stay in business without running out of cash.

The turnaround: Adding Coinsquare and CoinSmart to its portfolio helped WonderFi increase its revenue to $9.9 million in the third quarter of 2023, compared to $3.3 million the same period last year. WonderFi’s net loss widened to just over $10 million, up from $8.5 million the previous year, but acquisition costs accounted for about half of the loss. Crucially, those acquisitions increased the company’s cash and equivalents to about $25 million, up from just over $10 million in the fourth quarter of 2022, when auditors expressed concern about how quickly the company was burning through its reserves. The market reacted positively—WonderFi’s shares closed up 12 per cent Monday on the Toronto Stock Exchange.

The layoffs: WonderFi has taken advantage of the merger to cut costs, reducing its headcount by more than a third from 148 to 93 people, according to a management discussion and analysis released Monday. In an interview with The Logic, CEO Dean Skurka said “it was important to be quick and decisive” about layoff decisions and that the company doesn’t anticipate any additional material cuts. “We certainly feel strongly about the team we have in place,” he said.

The next steps: The crypto market has continued to improve since the period covered by WonderFi’s third-quarter earnings. Daily retail trading volumes at Bitbuy and Coinsquare are up 53 per cent so far in November compared to October, which Skurka said he’s taking as “a very encouraging sign that this rally is sustainable.” WonderFi was cash-flow positive in October and the company expects to report positive adjusted EBITDA—an alternative measure of a company’s financial performance that leaves out interest, taxes, depreciation and amortization—in the fourth quarter. “We’re happy with the results, but it’s really just a starting point,” Skurka said.