- May 4, 2024
- Posted by: [email protected]
- Category:
Coinbase has revealed staggering financial results for the first quarter of the year, reporting a remarkable revenue of $1.6 billion, which marks a substantial 72% surge compared to the previous quarter. As the largest cryptocurrency exchange in the United States, Coinbase also disclosed a net income of $1.18 billion, translating to $4.40 per share.
This outstanding performance was fueled by a surge in transactions attributed to the overall uptrend in the cryptocurrency market, along with favorable changes in accounting rules pertaining to cryptocurrencies. Consumer transaction revenue experienced a twofold increase, reaching $935.2 million, with volume skyrocketing by over 93% to $56 billion. Institutional trading witnessed even more significant growth, with revenue soaring by 133% to $85.4 million compared to the prior quarter, while volume more than doubled to $256 billion. Notably, Bitcoin played a pivotal role in both consumer and institutional transactions, constituting one-third of the activity.
The reported figures surpassed analysts’ predictions of $1.34 billion in revenue and net income of $1.09 per share, significantly exceeding expectations. Despite the impressive results, Coinbase’s shares experienced a slight decline in after-hours trading, following an initial rise of nearly 9% to approximately $229 earlier in the day. It is noteworthy that a year ago, the shares were trading at a mere $51.
Coinbase lost $78.9 million (or 34 cents per share) in the first quarter of last year. Moreover, Coinbase’s Q1 EBITDA (earnings before interest, taxes, depreciation, and amortization) reached an impressive $1 billion, surpassing the total for the entire previous year.
While the quarterly results were robust overall, the exceptional revenue figures were partly boosted by a one-time $737 million paper gain resulting from new accounting rules allowing crypto firms to record price increases in their balance sheets. In a letter to shareholders accompanying the quarterly report, Coinbase highlighted progress made towards its 2024 priorities of driving revenue, utility, and regulatory clarity.
The company emphasized its increased market share in U.S. spot and derivatives, achieving all-time highs on Coinbase Prime, and witnessing a substantial increase in USDC market capitalization. Coinbase’s Ethereum layer-2 chain, Base, generated $56.1 million in revenue during the first quarter, outperforming Ethereum in terms of transaction volume, with developer activity on the network witnessing an impressive 800% increase.
Coinbase acquired a minority stake in Circle, the issuer of stablecoin USDC, which experienced a 30% growth in market capitalization in Q1. As a result, Coinbase’s subscriptions and services revenue increased by one-third, including a 15% boost in stablecoin revenue. While Coinbase diversified its revenue streams with Base and USDC, the recent gains were primarily driven by favorable market conditions. For instance, during this quarter, the price of Bitcoin rose by 57% and reached an all-time high of $73,000 due to over $50 billion flowing into 10 spot exchange-traded funds approved by the Securities and Exchange Commission on January 11.
However, Coinbase’s transaction expenses also grew significantly, increasing by 73% to $217 million. Looking ahead to Q2, the company estimates its overall expenses to be as high as $890 million, primarily driven by the elevated costs associated with higher trading volumes, including customer support and infrastructure expenses.
