A smartphone with the Coinbase logo displayed and a representation of cryptocurrencies is placed on a keyboard in this illustration taken June 8, 2023.
Dado Ruvic | Reuters
Coinbase announced better-than-expected revenue in its first-quarter earnings report on Thursday. The stock was trading down about 4% in extended trading.
Here are the company’s results, compared to the LSEG analyst consensus.
- Earnings: $4.40 per share. This may not compare to the average analyst estimate of $1.09.
- Income: $1.64 billion against $1.34 billion expected
Coinbase, the leading marketplace in the United States for buying and selling digital tokens, reported net profit of $1.18 billion, or $4.40 per share, compared with a loss of $78.9 million. dollars a year ago, a loss of 34 cents per share. In February, the company reported its first profit in two years.
The quarter’s profit includes a $650 million mark-to-market gain on crypto assets held for investment as part of the company’s adoption of updated accounting standards.
Consumer transaction revenue was $935 million for the quarter, up more than 100% a year earlier. Total transaction revenue nearly tripled in the quarter to $1.07 billion.
Transaction revenue has consistently been a key revenue driver, with subscription and services revenue bringing in $511 million for the quarter.
Coinbase shares soared nearly 9% on Thursday before the report was released and have surged about 32% this year after rising nearly fivefold in 2023. The stock tends to benefit from big gains in 2023. bitcoin as major cryptocurrency rallies lead to increased trading volumes and demand for other services.
During the first quarter, Bitcoin hit a new all-time high above $73,000 in March, and Ethereum, the second-largest digital asset, underwent its first major upgrade in over a year.
The sector has also seen an influx of institutional investors since the SEC approved a series of new bitcoin spot exchange-traded funds in the United States. Many ETFs have partnered with Coinbase as their custodial partner. By the end of the first quarter, the funds had collectively brought in more than $50 billion.
Cumulative net inflows peaked on April 8, according to analysts at Raymond James, and have declined since then, alongside a skid in bitcoin.
“Bitcoin’s price peaked as the pace of inflows moderated and has declined slightly since mid-March,” Raymond James analysts wrote in a note this week. “Indeed, transaction volumes on the Coinbase platform have declined significantly compared to levels at the beginning of March.”
Coinbase also remains mired in a legal battle with the SEC. In March, a judge ruled that the regulator’s claim that the crypto exchange engaged in unregistered securities sales could be heard by a jury at trial.
Another potential obstacle is new competition from Crypto.com, which has regained market share in recent months.
Insider selling
Several Coinbase insiders, including four members of the C-suite, collectively sold $383 million worth of company stock during the first quarter, according to analysts at Raymond James. This is more than double the amount sold in the fourth quarter of 2023 and the highest number of insider sales since the company listed on Nasdaq in 2021.
Raymond James noted that the biggest seller was co-founder and board member Fred Ehrsam, who brought in $129 million for his shares.
— CNBC’s Michael Bloom and Kate Rooney contributed to this report.
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