Coinbase has emerged from a period of sluggish performance with a strong first quarter in 2024. The company exceeded analyst expectations to report a surge in its revenue and net income, marking a significant turnaround from its previous year’s losses.
During the first quarter, Coinbase witnessed a surge in revenue, surpassing $1.58 billion, which exceeded the estimated $1.32 billion. This figure moved past the average analyst estimate of $1.32 billion. Additionally, the company reported a net income of $1.17 billion, or $4.40 per share, marking a stark contrast from the loss of $79 million, or 34 cents per share, recorded in the previous year. Coinbase’s first-quarter profit marks a significant milestone for the company, signaling a departure from the prolonged period of losses, aka the “crypto winter” which saw the prices of popular cryptocurrencies dropping like flies.
This strong growth is unsurprising, given that the first quarter of 2024 witnessed a revitalization of the cryptocurrency market. Bitcoin, the world’s leading digital currency, scaled new heights, reaching a record price above $73,000 in March. This uptrend was fueled by several factors, including growing institutional adoption and the long-awaited debut of Bitcoin ETFs in January. The world’s largest cryptocurrency is currently priced at $59,626.30. Despite reporting better-than-expected revenue and profit figures, Coinbase’s stock experienced a modest decline of about 2% in extended trading following the earnings announcement. The world’s leading crypto exchange is currently trading at $228.85.
Coinbase capitalized on this market momentum, ensuring that its core consumer business experienced a phenomenal 99% increase in revenue from transactions, exceeding $935 million compared to the previous quarter. This comes alongside a corresponding growth in trading volume on the platform, which climbed by 93%. Notably, this growth surpassed the overall expansion observed in the broader US spot market for cryptocurrencies. Furthermore, more and more institutional investors have embraced cryptocurrencies during the first quarter of the year. Coinbase Prime witnessed a remarkable 105% growth in trading volume, reaching a staggering $256 billion. This surge in activity mirrored a 133% increase in revenue generated from institutional transactions, which reached $85 million.
The positive developments in the cryptocurrency market translated into a substantial financial turnaround for Coinbase. The company reported a net income of $1.2 billion in Q1, a dramatic reversal compared to the $79 million loss it incurred in the same period last year, alongside $737 million in pre-tax unrealized gains on crypto assets held by Coinbase. Additionally, Coinbase generated over $1 billion in adjusted EBITDA. Furthermore, the company reported generating over $300 million in transaction revenue in April, and currently anticipates subscription and services revenue in Q2 to fall within a range of $525-600 million. “It’s a complex quarter, because it’s an accounting change, people need to digest what the impact is,” Coinbase Chief Financial Officer Alesia Haas, commented on the matter.
