The largest U.S. cryptocurrency exchange posted first-quarter revenue of $1.6 billion, a 72% increase quarter on quarter. Reported net income for Coinbase was $1.18 billion (or $4.40 per share) and was fueled by a boost in transactions, thanks to the wider crypto market’s upswing, and by a favorable change to crypto accounting rules.
Consumer transaction revenue doubled from the previous quarter, reaching $935.2 million, and volume was up over 93%, to $56 billion. Meanwhile, institutional trading saw even greater increases, with revenue up 133% from the previous quarter, to $85.4 million, and more than doubling in volume to $256 billion. Bitcoin made up a third of both consumer and institutional transactions.
The figures, according to MSNBC, wildly beat analysts’ predictions of $1.34 billion in revenue and net income of $1.09 per share. Shares were down slightly in after-hours trading after gaining almost 9% to nearly $229 earlier on Thursday. A year ago, they traded for barely $51.
To put the earnings into greater perspective, during the first quarter of last year, the company reported losses of $78.9 million (or 34 cents a share). Moreover, this Q1, Coinbase’s EBITDA(earnings before interest, taxes, depreciation, and amortization) was $1 billion—a number greater than all of last year. While the overall quarterly results were very strong, the outsize revenue figures was boosted by a one-time $737 million paper gain that came about because new accounting rules let crypto firms record increases in crypto prices to their balance sheet.
“We made meaningful progress against our 2024 priorities of driving revenue, utility, and regulatory clarity,” the company wrote in a letter to shareholders that accompanied the quarterly report. “Our market share in U.S. spot and derivatives increased, we reached all-time highs on Coinbase Prime, and USDC market capitalization increased.”
Following its launch in August, Base, the company’s Ethereum layer-2 chain from which Coinbase collects fees, brought in $56.1 million. It also saw twice as many transactions as Ethereum, and developer activity on the network was up by 800%. That same month, Coinbase also announced it was getting a minority stake in Circle, the issuer of stablecoin USDC, which grew by 30% in market capitalization in Q1. As a result, Coinbase’s subscriptions and services revenue were up by a third, which included a 15% increase in stablecoin revenue.
While Coinbase may have diversified its revenue streams with Base and USDC, most of the recent gains are the result of favorable market conditions. For instance, during this quarter, the price of Bitcoin increased by 57%, reaching an all-time high of $73,000, owing to more than $50 billion entering 10 spot exchange-traded funds that were approved on Jan. 11 by the Securities and Exchange Commission.
However, the company’s transaction expenses grew by 73%, to $217 million. Looking forward to Q2, the company estimates its overall expenses to be as high as $890 million, driven primarily by the elevated expenses associated with higher trading volumes, such as customer support and infrastructure costs, the company said in the report.
