Coinbase posted better-than-expected revenue in its first-quarter earnings report, with revenue totaling $1.64 billion compared to an expected $1.34 billion. The company also reported a net income of $1.18 billion, or $4.40 per share, a significant improvement from the previous year’s loss of $78.9 million, or 34 cents per share. This profit includes a $650 million gain on crypto assets held for investment as a result of updated accounting standards. Consumer transaction revenue for the quarter was $935 million, up over 100% from the year before, with total transaction revenue nearly tripling to $1.08 billion. Subscription and services revenue also contributed $511 million for the quarter.
Coinbase’s shares climbed nearly 9% ahead of the earnings report and have risen around 32% year-to-date after a strong performance in 2023. The company’s stock typically benefits from large gains in popular cryptocurrencies like bitcoin, which can lead to increased trading volumes and demand for other services. During the first quarter, bitcoin reached a new all-time high above $73,000 in March, and Ethereum underwent a significant upgrade. The industry has also seen increased institutional investor interest following the SEC’s approval of new U.S. spot bitcoin exchange-traded funds, many of which have selected Coinbase as their custody partner, collectively bringing in over $50 billion by the end of the first quarter.
However, Coinbase has faced challenges including a legal battle with the SEC over allegations of unregistered securities sales. A judge ruled in March that the case could proceed to trial. Additionally, the company is facing heightened competition from Crypto.com, which has regained market share in recent months. Insider selling has also been a concern, with multiple executives selling a combined $383 million worth of company shares in the first quarter, more than double the amount sold in the previous quarter. Co-founder Fred Ehrsam was the largest seller, netting $129 million from his sales.
Despite these challenges, Coinbase’s performance in the first quarter demonstrates strong growth and profitability. The company’s ability to generate significant revenue from consumer transactions, subscriptions, and services, as well as its role as a trusted custodian for institutional investors, positions it well for continued success in the evolving cryptocurrency market. Investors will be closely monitoring regulatory developments, competition, and insider selling activity to gauge Coinbase’s future performance and sustainability in the rapidly changing landscape of digital assets and blockchain technology.
