Gemini shares jump after 42% Q1 revenue gain, Winklevoss buy

Gemini Space Station’s shares rose about 15% in after-hours trading after the company reported first-quarter revenue of $50 million, up 42% from a year earlier, and after Winklevoss Capital purchased Class A shares worth $100 million settled in bitcoin. The shares traded as high as just under $7 before pulling back to about $6.05 in after-hours quotes.

Winklevoss Capital bought 7,142,857 Class A shares at $14 per share. The $14 price was more than 2.5 times Gemini’s closing price of $4.92 the prior Wednesday. The company described the purchase as a vote of confidence.

For the quarter ended March 31, total revenue was $50 million. Services revenue and interest income rose 122% to $24.5 million, accounting for 49% of the top line versus 31% a year earlier. Credit card revenue increased nearly 300% to $14.7 million as cumulative cardholders exceeded 123,700 over the trailing four quarters.

Spot trading revenue fell 27% to $17.2 million as quarterly spot volumes dropped to $6.3 billion from $13.5 billion a year earlier. Monthly transacting users reached 589,000, up 17% year over year.

Operating expenses rose 73% to $144.5 million, including $24.2 million in stock-based compensation, $6.5 million in severance tied to a first-quarter reduction in force, and higher credit card processing costs. Adjusted EBITDA improved modestly to negative $59.9 million, and the company reported a net loss of $109 million for the quarter.

Cash and cash equivalents were $215.6 million at quarter end, down from $252.2 million at year-end. That cash figure did not include the bitcoin-funded capital injection that settled in May. Management scheduled an earnings call for May 15 to discuss the results and outlook.

The company received approval from the Commodity Futures Trading Commission on April 29 as a Derivatives Clearing Organization, which allows it to handle settlement and risk management internally for an expanded derivatives offering and an in-house predictions market. Management said the capital infusion supports Gemini’s shift from a crypto exchange to a broader market services provider.

The announcement quoted Tyler Winklevoss, Gemini’s CEO: ‘We believe the market has significantly undervalued Gemini, and that this investment will allow us to set up the company for its next phase of growth.’