Coinbase (COIN) Q1 2024 Earnings

Coinbase reported better-than-expected revenue in its first-quarter earnings report on Thursday. Shares were trading about 4% lower in extended trading.

Here’s how the company fared compared to the LSEG analyst consensus.

• Earnings: $4.40 per share. This may not be comparable to the average analyst estimate of $1.09.
• Income: $1.64 billion versus the expected $1.34 billion

Coinbase, the main U.S. marketplace for buying and selling digital tokens, reported net income of $1.18 billion, or $4.40 per share, compared with a loss of $78.9 million, or 34 cents per share, a year ago . In February, the company reported its first profit in two years.

Earnings in the quarter included a $650 million market gain on crypto assets held for investment in connection with the company’s adoption of updated accounting standards.

Consumer transaction revenue was $935 million for the quarter, up well over 100% from the period a year earlier. Total transaction revenue nearly tripled in the quarter to $1.08 billion.

Transaction revenue has historically been a major driver of revenue, with subscription and services revenue bringing in $511 million for the quarter.

Shares of Coinbase rose nearly 9% on Thursday ahead of the report and have jumped roughly 32% year to date after jumping nearly fivefold in 2023. The stock typically benefits from big gains in bitcoin as large cryptocurrency rallies lead to increased trading volumes and demand for other services.

In the first quarter, bitcoin hit a new all-time high above $73,000 in March, and ethereum, the second-largest digital asset, saw its first major upgrade in more than a year.

The industry has also seen an influx of institutional investors since the Securities and Exchange Commission approved a range of new exchange-traded spot bitcoin funds in the US. Many exchange-traded funds partner with Coinbase as their custodial partner. By the end of the first quarter, the funds had brought in a total of more than $50 billion.

Cumulative net inflows peaked on April 8, according to analysts at Raymond James, and have since declined, along with bitcoin’s decline.

“Bitcoin price peaked as the pace of inflows slowed, and has been trending downward since mid-March,” analysts at Raymond James wrote in a note this week. “Indeed, trading volumes on the Coinbase platform are down quite a bit from early March levels.”

Coinbase also remains mired in a legal battle with the SEC. In March, a judge ruled that the regulator’s allegation that the crypto exchange engaged in unregistered sales of securities could be heard by a jury at trial.

Another potential headwind is new competition from Crypto.com, which has regained market share in recent months.

Multiple Coinbase insiders, including four members of the C-suite, collectively sold $383 million of the company’s stock in the first quarter, according to analysts at Raymond James. This is more than double the amount sold in the fourth quarter of 2023 and the largest amount of domestic sales since the company was listed on the Nasdaq exchange in 2021.