Economy 03-05-2024 15:25 20 Views

Coinbase Reports Impressive Q1 Revenue of $1.6 Billion, Up 72% Quarter-on-Quarter

Coinbase has reported a remarkable revenue of $1.6 billion in the first quarter of the year, representing a substantial 72% increase compared to the previous quarter. 

The largest cryptocurrency exchange in the United States also disclosed a net income of $1.18 billion ($4.40 per share). 

The impressive performance was driven by a surge in transactions resulting from the overall uptrend in the cryptocurrency market and a favorable change in accounting rules related to cryptocurrencies.

Coinbase Transaction Revenue Doubles

Consumer transaction revenue experienced a doubling effect, reaching $935.2 million, with volume soaring by over 93% to $56 billion. 

Institutional trading witnessed even more significant growth, with revenue surging by 133% to $85.4 million compared to the previous quarter, while volume more than doubled to $256 billion. 

Bitcoin played a prominent role in both consumer and institutional transactions, accounting for one-third of the activity.

These figures, which surpassed analysts’ predictions of $1.34 billion in revenue and net income of $1.09 per share, greatly exceeded expectations. 

Coinbase crushed it in Q1 2024

– Revenue: $1.6B (+72% vs Q4)
– Opex: $0.9B (+5% vs Q4)
– Net Income: $1.2B (+331% vs Q4)
– Adj. EBITDA: $1.0B (+213% vs Q4)
– Cash: $7.1B (+24% vs Q4)
– 2x USDC on platform vs Q4
– 8x Base developers vs Q4

— Ryan Rasmussen (@RasterlyRock) May 2, 2024

Following the announcement, Coinbase’s shares experienced a slight decline in after-hours trading, having initially risen nearly 9% to approximately $229 earlier in the day. 

It is worth noting that a year ago, the shares traded at a mere $51.

It is worth noting that during the first quarter of the previous year, Coinbase reported losses of $78.9 million (or 34 cents per share).

Moreover, Coinbase’s Q1 EBITDA (earnings before interest, taxes, depreciation, and amortization) reached an impressive $1 billion, surpassing the total for the entire previous year. 

While the quarterly results were overall strong, the exceptional revenue figures were partly boosted by a one-time $737 million paper gain resulting from new accounting rules that allow crypto firms to record price increases in their balance sheets.

US Market Share Increased

In a letter to shareholders accompanying the quarterly report, Coinbase highlighted the progress made towards its 2024 priorities of driving revenue, utility, and regulatory clarity.

The company emphasized its increased market share in U.S. spot and derivatives, achieving all-time highs on Coinbase Prime, and witnessing a significant increase in USDC market capitalization.

Coinbase’s Ethereum layer-2 chain, Base, launched in August, generated $56.1 million in revenue during the first quarter. 

Base outperformed Ethereum in terms of transaction volume, and developer activity on the network increased by an impressive 800%. 

Additionally, Coinbase acquired a minority stake in Circle, the issuer of stablecoin USDC, which experienced a 30% growth in market capitalization in Q1. 

As a result, Coinbase’s subscriptions and services revenue increased by one-third, including a 15% boost in stablecoin revenue.

While Coinbase has diversified its revenue streams with Base and USDC, the recent gains were primarily driven by favorable market conditions. 

For example, during this quarter, the price of Bitcoin rose by 57% and reached an all-time high of $73,000 due to over $50 billion flowing into 10 spot exchange-traded funds approved by the Securities and Exchange Commission on January 11.

However, Coinbase’s transaction expenses also grew significantly, increasing by 73% to $217 million. 

Looking ahead to Q2, the company estimates its overall expenses to be as high as $890 million, primarily driven by the elevated costs associated with higher trading volumes, including customer support and infrastructure expenses.

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