Coinbase Misses Q1 Revenue Expectations, Eyes Growth with Deribit Deal
2min read Coinbase delivered a mixed set of first-quarter 2025 earnings results, highlighting both the resilience of its platform and the volatility inherent in the cryptocurrency market. While total revenue of $2.03 billion fell short of Wall Street's $2.12 billion estimate, investor sentiment may prove more forgiving thanks to strengthening crypto prices and a bullish outlook for its core services. Notably, the firm reported adjusted EPS of $1.94, slightly below the $2.09 consensus, and $930 million in adjusted EBITDA. Even as trading volumes dipped from the fourth quarter, coinbase gained share in both spot and derivatives markets, signaling operational momentum.
Transaction revenue reached $1.3 billion, down 19% quarter-over-quarter, reflecting reduced consumer and institutional activity. Consumer trading volume fell 17% to $78.1 billion, while institutional trading volume dropped 9% to $315 billion. Notably, trading volumes in Q4 had been boosted by political optimism following Trump's election. While Q1 saw Bitcoin hit all-time highs in January, volatility driven by tariff uncertainty later in the quarter muted activity, and that trend spilled into early Q2. Coinbase's April transaction revenue came in at $240 million, down from the prior monthly pace.
Subscription and services revenue increased 9% sequentially to $698 million, underpinned by a 32% rise in stablecoin revenue, which reached $298 million. USDC, the company’s key stablecoin, reached a $60 billion market cap with $12.3 billion held in Coinbase accounts. Coinbase One continued to attract users with its zero-fee trading, staking perks, and new premium offerings. However, blockchain rewards revenue fell 9% to $197 million, mainly due to weaker ETH and SOL prices and some unstaking early in the quarter. The company expects Q2 subscription and services revenue to be $600-$680 million.
Key macro themes influencing the results include ongoing regulatory uncertainty and the global implications of U.S. tariff policy. While crypto asset volatility increased early in the quarter, risk appetite faltered in April, aligning with broader market softness. Additionally, Coinbase saw strong derivatives volume of $803.6 billion and continued global expansion, including new registrations in Argentina and India. The recent announcement of a $2.9 billion acquisition of Deribit, a major crypto derivatives exchange, suggests an aggressive push into international derivatives and enhanced revenue diversification.
Operating expenses rose 7% quarter-over-quarter to $1.3 billion, reflecting increased marketing, USDC rewards, and customer support costs. Technology, G&A, and sales and marketing expenses were up 4%, totaling $997 million. Coinbase ended the quarter with $9.9 billion in U.S. dollar resources and 3,959 full-time employees, up 5% from the prior quarter. Management noted that while variable expenses will trend lower in Q2, headcount growth is likely to accelerate modestly.
On the platform side, Coinbase emphasized the continued success of Base, its L2 solution, with 16% quarter-over-quarter growth in transaction volume. The number of transactions rose while average revenue per transaction fell, reflecting growing utility and scale. Additionally, the company highlighted innovation in crypto lending, the growth of Coinbase One Premium, and enhanced trading infrastructure including upgrades to margin and custody services.
Looking ahead, Coinbase reaffirmed its commitment to refining product offerings and scaling the infrastructure needed for future crypto adoption. It expects Q2 transaction expenses to fall in the mid-teens as a percentage of net revenue, and tech/admin expenses to range between $700-$750 million. Sales and marketing spend is forecast between $215-$315 million, with performance marketing tied closely to market volatility and USDC balances. With ETH and SOL prices already tracking 25-36% below Q1 levels, Coinbase acknowledges some pressure on blockchain rewards but remains confident in stablecoin-driven resilience.
Despite missing top-line expectations, Coinbase's report underscores its ability to navigate challenging market conditions while investing in longer-term strategic growth. The Deribit deal, momentum in subscription services, and the strengthening crypto tape could all help offset immediate revenue softness. Shares slipped modestly post-earnings, but the broader crypto rebound and signs of operational leverage may keep bullish investors engaged in the quarters ahead.
