Coinbase Revenue Rises 24% But Profit Drops 94%

Coinbase Global reported a mixed set of results for the first quarter, with revenue climbing but profit sharply down. The company's revenue rose 24% year-on-year to $2 billion, but this figure was down about 10% from the previous quarter and fell short of analyst estimates. Transaction revenue remained a key contributor, increasing 17.3% to $1.26 billion. Meanwhile, revenue from the firm’s growing subscription and services business jumped 37% to $698.1 million. This unit includes offerings such as staking and custodial services, which are less dependent on trading activity.

Net income for the quarter plunged 94% to $66 million, or 24 cents per share, as the firm booked losses related to the declining value of its crypto holdings. Coinbase marks these assets to market each quarter, exposing its earnings to the volatile swings in cryptocurrency prices. On an adjusted basis, the company reported a net income of $526.6 million, or $1.94 per share, compared to $2.53 a year ago. Operating expenses surged 51% to $1.3 billion, driven by heavier marketing spend and losses on held crypto assets.

Despite the earnings miss, the platform logged its second-highest monthly transacting user count in company history. Chief financial officer Alesia Haas said many customers are now engaging with a broader range of services beyond trading. “We are gaining share, we are driving utility,” she said. “We are seeing a healthy maturation of the products.” Coinbase also announced the acquisition of Deribit in a deal valued at $2.9 billion. The move signals the company’s ambition to expand deeper into the crypto derivatives market, a sector where Deribit handled nearly $1.2 trillion in volume last year.

Looking ahead, Coinbase said it expects second-quarter revenue from subscriptions and services to fall between $600 million and $680 million. The company also disclosed that it generated about $240 million in transaction revenue in April. While revenues from Circle’s USDC stablecoin rose 32% sequentially to $298 million, growth was partially tempered by lower average interest rates.

Coinbase's Q1 results reflect a challenging environment for the crypto industry, with market volatility and macroeconomic signals impacting the company's performance. However, the company's focus on expanding its subscription and services business, as well as its acquisition of Deribit, demonstrate its commitment to diversifying its revenue streams and adapting to changing market conditions. Despite the decline in profit, Coinbase's revenue growth and increasing user base indicate that the company is still well-positioned to capitalize on the growing demand for digital assets.