Coinbase Global (COIN 4.23%), a digital currency platform facilitating crypto trading, surpassed expectations with its first-quarter earnings release on May 2. It eclipsed analysts' forecasts for revenue and earnings per share (EPS), showcasing not just a significant year-over-year revenue growth but also a noteworthy increase in net income and adjusted EBITDA. This performance sets a positive tone for the year.
| Metric | Q1 2024 Results | Analyst Estimates | Q1 2023 Results | Change (YOY) |
|---|---|---|---|---|
| Total revenue | $1.637 billion | $1.36 billion | $772 million | 120% |
| EPS | $4.84 | $1.15 | ($0.34) | N/A |
| Net Income | $1.176 billion | N/A | ($79 million) | N/A |
| Adjusted EBITDA | $1.014 billion | N/A | $286.6 million | 254% |
Data source: Company results from company. Analyst estimates from FactSet.
Coinbase at a glance
Coinbase Global has made a mark by offering a secure platform for buying, selling, transferring, and storing digital currency. Its business thrives on cryptocurrency transactions and providing financial infrastructure for the crypto economy. Over recent periods, Coinbase has focused on broadening its products, such as Coinbase One, which now has more than 400,000 paying members. In the quarter, Coinbase noted its trading volume came from Bitcoin (33%), Ethereum (13%), USDT (11%), and a mix of other crypto (43%). The Ethereum percentage dropped 46% over the year-ago quarter, while USDT surged from a not meaningful percent. Bitcoin rose 3%.
The framework of Coinbase's success revolves around innovation, market adaptability, regulatory engagement, and the volume of crypto trading. Striving for regulatory clarity and expanding globally while introducing diversified crypto products encapsulates the company's forward-looking strategy.
Quarter highlights
This quarter, Coinbase Global announced significant achievements, including revenue that more than doubled year over year and a remarkable recovery in net income from a loss in the prior-year quarter. The strategic expansion of products, such as derivatives trading and the successful adoption of Coinbase One, played a critical role in this performance. Another highlight is the more than 30% increase in USDC market cap in the quarter. USDC is a stablecoin launched in 2018 that is "fully collateralized by US dollars and supported by Coinbase and Circle."
Frankly, the numbers speak volumes. A leap from a negative EPS to a robust $4.84 showcases exceptional profitability turnaround. Substantial growth in subscriptions and service revenue demonstrates an effective diversification strategy, mitigating risks associated with volatile trading revenues. Regulatory progress, notably in litigations with the SEC, underscores Coinbase's commitment to compliant operations amid a challenging regulatory landscape.
Dedicated efforts in product innovation, including the launch of new trading options, underpin Coinbase's competitive stance. Alongside, its engagement in advocacy for crypto-friendly policies indicates a strategic approach to shaping a favorable regulatory environment.
Looking ahead
Expectations for Q2 2024 project a bullish outlook for subscription and services revenue, anticipated to be in the range of $525 million to $600 million. This optimism is slightly tempered by expected increases in operating expenses, including for customer support due to increased trading volume and for sales and marketing expenses.
The focal points for current and prospective Coinbase investors include monitoring the company's ability to sustain growth in subscription revenues, its adaptations to the evolving regulatory environment, and the continuous push for innovation in a fiercely competitive market.
