Coinbase on Thursday reported better-than-expected fourth-quarter results and its biggest quarterly revenue in three years, strengthened by a raging postelection rally that pushed crypto prices to new high after new high at the end of last year.
The stock rose 2% in extended trading.
Here’s what the company reported for the fourth quarter compared with what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: $4.68 vs. $1.81 expected
- Revenue: $2.27 billion vs. $1.88 billion expected
Coinbase, which operates the largest U.S. marketplace for buying and selling cryptocurrencies, reported net income of $1.3 billion, or $4.68 per share, compared with $273 million, or $1.04 per share, in the same period a year ago.
It also posted revenue of $2.3 billion, compared with $953.8 million in the same period a year ago. Transaction revenue more than doubled from last year to $1.56 billion, and beat analysts’ estimates of $1.29 billion, according to StreetAccount.
Total trading volume was $439 billion, up 185% year over year. Consumer trading volume rose 224% from the same period a year ago, while institutional trading volume increased 176%.
“The majority of the Y/Y growth in Trading Volume was driven by higher levels of Crypto Asset Volatility — particularly in Q1 and Q4 — as well as higher average crypto asset prices,” the company said in its shareholder letter. “The two primary factors underpinning these stronger macroeconomic factors were the launch of the bitcoin ETF products in Q1’24, and the election of a pro-crypto President and Congress in Q4’24 and the associated expectation of regulatory clarity — both of which resulted in elevated spot crypto trading activity,” the company also said.
Looking ahead
Coinbase reported it has generated $750 million in trading revenue through Feb. 11. Trading revenue is expected to be in the mid- to high teens as a percentage of net revenue for the current quarter.
Coinbase said it is making efforts to diversify its revenue streams away from trading. As of the fourth quarter, trading makes up 68.5% of its total revenue, with most of it coming from retail traders.
Revenue from its subscription and services business, which includes stablecoins, staking, custody and its Coinbase One product, is expected to be between $685 million and $765 million for the current quarter.
Coinbase also expects the USDC stablecoin, which is issued by Circle and has a revenue sharing agreement with Coinbase, to drive a quarter-over-quarter increase in sales and marketing expenses in the first quarter.
Chief Financial Officer Alesia Haas told CNBC that USDC is poised for growth in a post-stablecoin legislation world, with Congress expected to pass a stablecoin bill this year sometime this year.
“We can drive utility in this where we can drive more trading pairs on our own platforms denominated in USDC, which drives the liquidity, and the more liquidity you have in any asset, that drives more adoption,” she said.
CEO Brian Armstrong said on the earnings call that the company has a “stretch goal to make USDC the number 1 stablecoin.”
“USDC has a network effect behind it, and the compliant approach that they’ve taken is going to be really defensible long term,” he said. USDC currently makes up about 26% of the total market cap for stablecoins, behind Tether’s 67%.
