Gemini jumps after Q1 revenue gains, $100M Winklevoss stake

Gemini’s Nasdaq-listed shares climbed about 15% to $6.05 in after-hours trading after the crypto exchange reported first-quarter revenue of $50 million, up 42% from a year earlier, and disclosed a $100 million strategic investment from Winklevoss Capital.

Winklevoss Capital bought 7,142,857 Class A shares at $14 each and settled the purchase in bitcoin. The $14 per-share price was more than 2.5 times Gemini’s $4.92 closing price the prior day. The company announcement included a comment from Tyler Winklevoss: “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.”

For the quarter ended March 31, Gemini narrowed its net loss to $109 million. Total operating expenses rose 73% to $144.5 million, which included $24.2 million in stock-based compensation, $6.5 million in severance related to a reduction in force, and higher credit card processing costs. Adjusted EBITDA improved slightly but remained negative $59.9 million.

Cash and cash equivalents were $215.6 million at quarter end, down from $252.2 million at year-end. The bitcoin-funded capital injection from Winklevoss Capital settled in May.

Revenue composition shifted from spot trading toward services and interest. Services revenue and interest income increased 122% year over year to $24.5 million, accounting for 49% of total revenue versus 31% in the year-ago quarter. Credit card revenue rose nearly 300% to $14.7 million as cumulative cardholders passed 123,700 over the trailing four quarters. Spot trading revenue declined 27% to $17.2 million on quarterly trading volumes of $6.3 billion, down from $13.5 billion a year earlier. Monthly transacting users rose 17% year over year to 589,000.

On April 29, Gemini received a Derivatives Clearing Organization license from the Commodity Futures Trading Commission, which allows the platform to handle settlement and risk internally for an expanded derivatives offering and its in-house predictions market.

Shares briefly approached $7 on the combined earnings and investment news before some profit-taking. Management scheduled an earnings call for May 15 to discuss the quarter and the company’s outlook.

Gemini stated the capital infusion and regulatory clearance would support expanded product offerings and internal clearing capabilities as it grows beyond a pure crypto exchange.