A smartphone displaying the Coinbase logo and a representation of cryptocurrencies is placed on a keyboard in this photo taken on June 8, 2023.
Dando Ruvic | Reuters
Coinbase reported better-than-expected revenue in its first-quarter earnings report Thursday. The stock was trading about 2% lower in extended trading.
Here’s how the company did, compared to the analyst consensus from LSEG.
- Profits: $4.40 per share. This may not be comparable to the average analyst estimate of $1.09.
- Income: $1.64 billion versus an expected $1.34 billion
Coinbase, the main U.S. marketplace for buying and selling digital tokens, reported net income of $1.18 billion, or $4.40 per share, compared with a loss of $78.9 million, or 34 cents per share, a year ago. share. In February, the company reported its first earnings in two years.
CNBC later confirmed that Coinbase’s adjusted earnings per share came in at $2.15, compared to LSEG’s estimate of $1.09.
The quarter’s profit includes a $650 million gain on crypto assets held for investment in connection with the company’s adoption of updated accounting standards.
Consumer transaction revenue was $935 million for the quarter, well over 100% from the previous period. Total trading revenue nearly tripled in the quarter to $1.08 billion.
Transaction revenue has historically been the main driver of revenue, with subscription and services revenue bringing in $511 million for the quarter.
Shares of Coinbase rose nearly 9% on Thursday ahead of the report and have jumped about 32% year-to-date after nearly quintupling in 2023. The stock tends to benefit from big gains in bitcoin as major cryptocurrency rallies lead to increased trading volume 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, suffered its first major upgrade in more than a year.
The industry has also seen an influx of institutional investors since the Securities and Exchange Commission approved a series of new US bitcoin exchange-traded funds. Many of the ETFs have partnered with Coinbase as their custodian partner. By the end of the first quarter, the funds had collectively generated more than $50 billion.
Cumulative net inflows peaked on April 8, according to analysts at Raymond James, and have since declined, alongside a slide in bitcoin.
“Bitcoin price peaked as the pace of inflows moderated and is moving modestly lower since mid-March,” Raymond James analysts wrote in a note this week. “Indeed, trading volumes on Coinbase’s platform have declined significantly from early March levels.”
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 headwind is new competition from Crypto.com, which has regained market share in recent months.
Insider selling
Multiple Coinbase insiders, including four members of the C-suite, collectively sold $383 million of the company’s stock in the first quarter, according to Raymond James analysts. This was more than double the amount sold in the fourth quarter of 2023 and the largest amount of insider sales since the company listed on the Nasdaq Stock Exchange in 2021.
Raymond James noted that the biggest seller was co-founder and board member Fred Ehrsam, who earned $129 million for his shares.
— CNBC’s Michael Bloom, Kate Rooney and Robert Hum contributed to this report.