Coinbase posted lower-than-expected first-quarter results as crypto prices fell, weighing on one of the company’s biggest revenue streams – digital asset trading.
Here is the way Coinbase made for its quarter ended March 31, compared with Wall Street’s expectations, based on a survey of LSEG analysts:
- Earnings per share: $1.49 loss vs. 27 cent expected profit
- Net worth: $1.41 billion versus $1.52 billion expected
Coinbase shares were down 4% in after-hours trading.
The company, which operates the largest cryptocurrency marketplace in the US, posted revenue of $755.8 million versus the $805.2 million expected by analysts. Subscriptions came in at $583.5 million versus the estimated $619.3 million.
A sharp decline
Investors were looking for a big drop in trading volume given the fall in crypto prices at the beginning of the year. Bitcoin rose 12% in March, but posted a 22% decline in the first quarter.
Coinbase’s revenue is often distorted by accounting rules that require it to value its largest cryptocurrency based on any price at the end of a quarter, causing reported revenue to fluctuate wildly even when no assets are traded.
Best known for its cryptocurrency trading platform, Coinbase is trying to diversify its revenue streams through subscription businesses and services, including income from stablecoins and staking.
Stablecoin revenue reached $305 million, up from $274 million last year, driven by the growth of the USDC stablecoin market and the all-time high rate of USDC held in Coinbase products.
Crypto’s era of easy moonshots and hype-driven returns is ending as exchanges increasingly shift to diversified trading income, derived from speculative markets and tokenized real-world assets, rather than relying on more speculative investments.
“We’re trying to diversify what people can trade so that as markets change, as different behaviors change, we’ll always have something that people want to trade,” Coinbase chief financial officer Alesia Haas told CNBC. “That diversification will help reduce some of the volatility we’ve seen in pure crypto-only trading.”
Investors are looking for signs that Coinbase can still make money when crypto trading bounces back. Central to that effort is Coinbase’s success in strengthening non-transactional businesses to break the cycle of transaction costs during a recession.
Without crypto
While the top and bottom results missed expectations, Coinbase saw promising growth in its various offerings, including event contracts and support for trading of crypto derivatives and real-world tokenized assets.
The company recorded nearly $4.2 billion in derivatives trading revenue for the first quarter, a 169% increase over the same period last year. Despite this year’s decline in crypto prices, the exchange gained share in both exchange and derivatives trading worldwide, reaching a record high of 8.6% of the crypto trading market share.
Coinbase also predicts that its prediction market business will see $100 million in annual revenue by the end of this year. The business unit was launched in late January, in partnership with Kalshi.
The move away from crypto underscores Coinbase’s effort to create an “everything exchange” — a move introduced last year by CEO Brian Armstrong to make the company less dependent on trading tokens like bitcoin, ether and XRP.
Investors tuned in during Coinbase’s management call with analysts at 5:30 pm ET Thursday for updates on the trading platform’s lines and operating discipline following this week’s announcement that the company will cut about 14% of its workforce, or 700 jobs. Coinbase identified the layoffs as part of a broader, AI-driven restructuring effort, and cited the crypto downturn as a catalyst.
The job cuts underscored Wall Street’s expectations that subdued trading conditions could continue into the second quarter.
Read Coinbase’s full shareholder slide deck here.
Correction: This story has been updated to reflect that the CEO of Coinbase is Brian Armstrong. An earlier version misspelled his name.
