Coinbase Reports 10% Revenue Decline, Acquires Deribit for $2.9 Billion

Coinbase, a prominent cryptocurrency exchange, reported a 10% decline in total revenue for the first quarter of 2025, amounting to $2 billion. This figure fell short of industry estimates by 4.1%, primarily due to a slowdown in trading activity across the market. The company's net income plummeted by 95% from a near-record $1.29 billion in the fourth quarter to $66 million, largely due to a $596 million paper loss on its crypto holdings.

Despite the significant drop in net income, Coinbase's earnings per share of $1.94 managed to exceed the consensus estimate of $1.85 for the quarter. The firm's transaction revenue decreased by 18.9% quarter-over-quarter to $1.26 billion, reflecting a 10.5% dip in trading volumes to $393 billion. This decline in trading volumes was partly attributed to a double-digit drop in the crypto market cap, influenced by factors such as the Trump administration’s tariffs.

In contrast to the first quarter, the fourth quarter of 2024 saw a surge in market prices, partly driven by the election win of US President Donald Trump in November. Coinbase's subscription and services revenue, however, rose by 8.9% to $698.1 million, with stablecoin revenue being the most significant contributor.

Despite the overall decline in revenue and trading volume, Coinbase reported gaining more market share in global spot and derivatives trading. The company also deepened its presence in emerging markets such as Argentina and India through "critical registrations." On the regulatory front, Coinbase celebrated the dismissal of its lawsuit with the US securities regulator, describing it as a "major judicial win for balanced, innovation-friendly regulation, and our efforts to make crypto mainstream."

On May 8, Coinbase announced its acquisition of Deribit, a major crypto derivatives platform, for $2.9 billion. This acquisition is the largest corporate deal in the industry to date and significantly expands Coinbase's footprint in the crypto derivatives market. Deribit facilitated over $1 trillion in trading volume in 2024 and has around $30 billion of current open interest. The deal positions Coinbase as the "global leader" in crypto derivatives trading.

This strategic move comes as Coinbase continues to navigate the challenges posed by the volatile cryptocurrency market. The acquisition of Deribit is expected to bolster Coinbase's international presence and institutional offerings, further solidifying its position as a leader in the industry. Despite the earnings miss, Coinbase remains optimistic about its future prospects, focusing on expanding its service offerings and strengthening its market position.