• Coinbase reported better-than-expected revenue of $1.64 billion in Q1 2024, driven by a surge in crypto trading volumes amid a bitcoin rally earlier in the year.
• The company’s net income was $1.18 billion or $4.40 per share, compared to a loss of $789 million a year ago, boosted by a $650 million gain on crypto assets held.
• Coinbase shares climbed around 32% year-to-date through Thursday, benefiting from the bitcoin rally, though the stock fell 4% in extended trading after the earnings report.
Coinbase, the largest cryptocurrency exchange in the US, reported better-than-expected first quarter earnings on Thursday. The company benefited from a surge in bitcoin prices earlier this year, which drove increased trading volumes and demand for Coinbase’s services.
Financial Results Beat Expectations
Coinbase reported revenue of $1.64 billion, easily surpassing the $1.34 billion analysts had forecast. Earnings came in at $4.40 per share, compared to average analyst estimates of $1.09 per share.
The company generated substantial gains from its holdings of crypto assets, which were marked higher following the adoption of new accounting rules. This resulted in net income of $1.18 billion for the quarter.
Trading Revenue Soars
A key factor driving Coinbase’s performance was a massive jump in transaction revenue, which came in at $1.08 billion – nearly triple the year ago period. This was fueled by a spike in trading volumes as crypto prices rallied.
Consumer transaction revenue rose to $935 million, more than double last year’s level. Meanwhile, subscription and services revenue reached $511 million.
Bitcoin Rally Boosts Volumes
During the quarter, bitcoin hit a new all-time high above $73,000. Ethereum, the second largest cryptocurrency, also saw renewed interest from traders.
The price gains led to heightened trading activity on Coinbase’s platform. In addition, the SEC’s approval of several bitcoin ETFs brought an influx of institutional assets onto Coinbase’s custody and trading services.
Outlook Tempered By Lower Crypto Prices
While Coinbase’s quarterly results were strong, its outlook is somewhat clouded by the recent pullback in crypto prices. Bitcoin and ethereum have drifted lower since mid-March, which could weigh on trading volumes going forward.
In addition, Coinbase faces stiffening competition from rivals like Crypto.com. It also continues to battle the SEC in an ongoing legal dispute over securities regulation.
Insider Stock Sales Pick Up
Multiple Coinbase insiders, including senior executives, sold significant amounts of stock during the first quarter. The heavy insider selling, totaling $383 million, could signal reduced confidence in valuations at current levels.
Despite near-term challenges, Coinbase remains well positioned to capitalize on the ongoing growth of the crypto economy. However, its reliance on trading activity makes results highly dependent on often-volatile digital asset prices.
