Bitcoin
Coinbase (COIN) Profits in Q1 2024
- Earnings: $4.40 per share. This may not be comparable to the average analyst estimate of $1.09.
- Revenue: $1.64 billion against expected US$ 1.34 billion
Coinbase, the leading U.S. marketplace for buying and selling digital tokens, reported net profit of $1.18 billion, or $4.40 per share, compared with a year-ago loss of $78.9 million , or 34 cents per share. In Februarythe company reported its first profit in two years.
Earnings for the quarter include a mark-to-market gain of $650 million in crypto assets held for investment in connection with the company’s adoption of updated accounting standards.
Consumer transaction revenue was $935 million in the quarter, an increase of well over 100% of the previous year period. Total transaction revenue nearly tripled in the quarter to $1.08 billion.
Transaction revenue has historically been the main revenue driver, with subscription and services revenue generating $511 million in the quarter.
Coinbase shares were up nearly 9% on Thursday ahead of the report and have jumped about 32% year-to-date after rising nearly fivefold in 2023. The stock tends to benefit from big gains in Bitcoin as large rallies in cryptocurrency lead to increased trading volumes and demand for other services.
During the first quarter, bitcoin reached a new all-time high above $73,000 in March, and ethereum, the second-largest digital asset, underwent its first major upgrade in over a year.
The industry has also seen an influx of institutional investors since the Securities and Exchange Commission approved a series of new spot bitcoin exchange-traded funds in the US. Many of the exchange-traded funds have partnered with Coinbase as a custodial partner. By the end of the first quarter, the funds had collectively raised more than $50 billion.
Cumulative net inflows peaked on April 8, according to analysts at Raymond James, and have fallen since then, along with a slide in bitcoin.
“Bitcoin price peaked as the pace of inflows moderated and has declined modestly since mid-March,” Raymond James analysts wrote in a note this week. “In fact, trading volumes on the Coinbase platform are down sharply from early March levels.”
Coinbase also remains embroiled in a legal fight with the SEC. In MarchA judge ruled that the regulator’s claim that the crypto exchange was involved in unregistered securities sales could be heard by a jury at trial.
Another potential obstacle is new competition from Crypto.com, which has regained market share in recent months.
Several Coinbase insiders, including four senior members, collectively sold $383 million worth of the company’s shares during the first quarter, according to analysts at Raymond James. This was more than double the amount sold in Q4 2023 and the largest amount of insider sales since the company listed on the Nasdaq Stock Exchange in 2021.
Raymond James noted that the biggest seller was co-founder and board member Fred Ehrsam, who netted $129 million for his shares.
— CNBC’s Michael Bloom and Kate Rooney contributed to this report.