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Coinbase Q1 Earnings Beat with $1.64B Revenue, Legal Woes Persist

Coinbase Q1 earnings soar to $4.40 per share, revenue hits $1.64B, outstripping forecasts amid crypto market surge.

By Alex P. Chase

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5/2, 16:49 EDT
Coinbase Global, Inc.
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Key Takeaway

  • Coinbase's Q1 earnings at $4.40 per share and revenue of $1.64 billion surpassed expectations, reflecting a strong market for cryptocurrencies.
  • Transaction revenue nearly tripled to $1.07 billion, boosted by Bitcoin's price surge and partnerships with U.S. spot Bitcoin ETFs.
  • Insider selling reached a high of $383 million amid legal battles with the SEC, posing challenges despite financial success.

Coinbase Surpasses Expectations

Coinbase Global Inc. has significantly outperformed analysts' forecasts in its first-quarter earnings, showcasing a robust financial performance amidst a favorable cryptocurrency market environment. The company reported earnings of $4.40 per share, far exceeding the $1.09 average analyst estimate from LSEG. This marks a notable turnaround from the previous year's loss of $78.9 million, or 34 cents per share. Revenue also saw a substantial increase, reaching $1.64 billion against the expected $1.34 billion. This improvement in revenue and profit includes a $650 million mark-to-market gain on crypto assets, reflecting the impact of the company's adoption of updated accounting standards.

Trading Volume and Revenue Growth

The resurgence in cryptocurrency prices, particularly Bitcoin, which hit a new all-time high above $73,000 in March, has significantly contributed to Coinbase's transaction revenue growth. Consumer transaction revenue alone amounted to $935 million for the quarter, marking an increase of over 100% from the previous year. Total transaction revenue nearly tripled to $1.07 billion. The introduction of U.S. spot Bitcoin exchange-traded funds (ETFs), many of which have partnered with Coinbase for custody services, has attracted institutional investors and contributed to more than $50 billion by the end of the first quarter. This influx of institutional investors and the partnership with new U.S. spot bitcoin ETFs have been pivotal in driving the company's trading volume and revenue growth.

Insider Selling and Market Challenges

Despite the positive earnings report, Coinbase faces several challenges, including a significant amount of insider selling and ongoing legal battles with the SEC. Insiders, including four C-suite members, sold $383 million of the company's shares in the first quarter, marking the highest amount of insider selling since its Nasdaq listing in 2021. The company is also engaged in a legal fight with the SEC over claims of unregistered sales of securities, which adds a layer of uncertainty to its future prospects. Additionally, Coinbase is contending with new competition from platforms like Crypto.com, which has regained market share in recent months.