Coinbase, the leading cryptocurrency exchange in the United States, has recently reported its earnings for the first quarter of 2024. The numbers are truly remarkable, with the company posting a total revenue of $1.6 billion, a substantial 72% increase from the previous quarter. This outstanding performance can be attributed to the surge in cryptocurrency prices and the introduction of spot Bitcoin ETFs in the U.S.
One of the standout figures in the earnings report is Coinbase’s net income, which reached an impressive $1.18 billion, translating to $4.40 per share. The company also achieved $1 billion in adjusted EBITDA in Q1, a significant improvement from the $977.5 million reported in 2023. Coinbase credited part of its net income to $737 million in pre-tax unrealized gains on crypto assets. The firm closed the quarter with $7.1 billion in capital, including $1.1 billion in net cash raised through the sale of 2030 convertible notes.
Consumer transaction revenue doubled to $935.2 million, with transaction volume growing by 93% to $56 billion. Institutional interest also saw a significant uptick, with transaction revenue reaching $85 million, a 133% increase quarter on quarter. Coinbase Prime trading volume soared by 105% to $256 billion, surpassing the U.S. spot market. Bitcoin played a crucial role in transactions, accounting for a third of consumer and institutional activity.
Coinbase’s custodial services revenue experienced a 64% surge to $32 million, driven by the launch of spot Bitcoin ETFs earlier in the year. The company serves as the custodian for eight out of the eleven newly launched products, resulting in assets under custody reaching $171 billion by the end of the quarter. Additionally, Base, Coinbase’s Ethereum layer 2 chain, generated $56.1 million in revenue since its launch in August, boasting double the transaction volume of Ethereum.
During Q1, Coinbase acquired a minority stake in Circle, the issuer of USDC stablecoin, leading to a 30% increase in market capitalization. This move also bolstered subscriptions and services revenue by a third, including a 15% growth in stablecoin revenue. Despite diversification efforts with Base and USDC, Coinbase’s success in the recent quarter was primarily influenced by favorable market conditions, including Bitcoin’s price hike of 57% to an all-time high of $73,000.
While Coinbase has achieved remarkable success in Q1, the company also faces challenges ahead. Transaction expenses increased by 73% to $217 million, and with higher trading volumes expected in Q2, the company anticipates even higher costs, possibly reaching $890 million. Managing these expenses while sustaining growth will be a key focus for Coinbase moving forward.
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