Coinbase, a pioneer in the cryptocurrency exchange space, made waves with its first-quarter earnings report, showcasing impressive financial results that reflected the growing prominence of digital currencies like Bitcoin. Despite an initial dip in Coinbase’s stock price following the earnings release, the company’s robust performance underscored the burgeoning interest and adoption of cryptocurrencies across global markets.
In terms of earnings, Coinbase delivered an outstanding performance, reporting earnings of $4.40 per share, a significant improvement from the loss of 34 cents per share recorded in the same quarter of the previous year. Total revenue surged to $1.64 billion, marking an extraordinary 111% year-over-year increase and a substantial 72% jump from the previous quarter. These figures surpassed analysts’ expectations, with FactSet consensus estimates projecting earnings of $1.15 per share on revenue of $1.36 billion.
The standout metric in Coinbase’s earnings report was its transaction revenue, which witnessed a remarkable surge of 187% year-over-year, reaching $1.08 billion. This surge was fueled by robust growth in both consumer and institutional transaction revenue, which reached $935.2 million and $85.4 million, respectively. Additionally, subscription and services revenue experienced healthy growth, jumping 41% to $511 million, primarily driven by Coinbase’s blockchain rewards program, which more than doubled to $150.9 million. While stablecoin revenue saw a slight decrease to $197.3 million for the quarter, the overall revenue performance was impressive.
A noteworthy highlight was the substantial boost in Coinbase’s custodial fee revenue, driven by higher cryptocurrency prices and the company’s role as custodian for a majority of the U.S. spot bitcoin ETFs launched in January. Coinbase’s custodial fee revenue surged 90% to $32.3 million, significantly surpassing FactSet estimates.
Looking ahead, Coinbase provided an optimistic outlook for the second quarter, expecting subscription and services revenue to range from $525 million to $600 million. FactSet predicts earnings of 94 cents per share on revenue growth of 82% to $1.29 billion for Q2, with analysts forecasting a 45% increase in subscription and services revenue to $489 million.
Despite the initial post-earnings dip, Coinbase stock has demonstrated resilience, rallying nearly 28% year-to-date through Thursday’s close, albeit down about 20% from its peak in March. The rebound in Bitcoin prices, climbing more than 3% over the last 24 hours to surpass $59,000, contributed to the positive sentiment in the cryptocurrency market. This resurgence also benefited other crypto-related stocks, including Marathon Digital, Riot Platforms, Hut 8, and CleanSpark, all of which experienced gains on Thursday.
As Bitcoin continues to navigate through its correction phase, with a decline of nearly 20% from its March peak, investors are closely monitoring market dynamics and the broader cryptocurrency landscape. The resilience of Coinbase and its robust earnings performance underscore the growing mainstream adoption and interest in digital assets, positioning the company for further growth and expansion in the evolving crypto ecosystem.