Coinbase reported better-than-expected sales in its first-quarter earnings report on Thursday. The stock was trading about 2% lower in prolonged trading.
Here's how the corporate performed in comparison with LSEG's analyst consensus.
- Merits: $4.40 per share. That is probably not comparable to the common analyst estimate of $1.09.
- Revenue: $1.64 billion versus expected $1.34 billion
Coinbase, the first U.S. marketplace for purchasing and selling digital tokens, reported net income of $1.18 billion, or $4.40 per share, compared with a lack of $78.9 million, or 34 cents per share last 12 months. In February, the corporate reported its first profit in two years.
The quarterly profit features a mark-to-market gain of $650 million on crypto assets held as investments in reference to the corporate's adoption of updated accounting standards.
Consumer transaction revenue was $935 million within the quarter, up well over 100%. from the identical period last 12 months. Total transaction revenue nearly tripled to $1.08 billion within the quarter.
Transaction revenue has historically been a key revenue driver, with subscription and services revenue bringing in $511 million within the quarter.
Coinbase shares rose nearly 9% on Thursday ahead of the report and are up about 32% year-to-date after surging nearly five-fold in 2023. The stock tends to learn from big gains within the 12 months Bitcoin as large cryptocurrency rallies result in increased trading volume and demand for other services.
In the primary quarter, Bitcoin hit a brand new all-time high of over $73,000 in March and Ethereum, the second-largest digital asset, saw its first major appreciation in over a 12 months.
The industry has also seen an influx of institutional investors because the Securities and Exchange Commission approved a series of recent U.S. spot Bitcoin exchange-traded funds. Many of the exchange-traded funds have worked with Coinbase as their custody partner. By the top of the primary quarter, the funds had collectively raised greater than $50 billion.
According to analysts at Raymond James, cumulative net inflows peaked on April 8 and have since declined together with a decline in Bitcoin.
“Bitcoin’s price peaked as the pace of inflows slowed and has declined slightly since mid-March,” Raymond James analysts wrote in a note this week. “In fact, trading volume on Coinbase’s platform is down significantly compared to early March levels.”
Coinbase can be still involved in a legal dispute with the SEC. In March, a judge ruled that the regulator's claim that the crypto exchange was engaging in unregistered securities sales could possibly be heard by a jury in court.
Another potential headwind is recent competition from Crypto.com, which has regained market share in recent months.
Insider selling
According to analysts at Raymond James, several insiders at Coinbase, including 4 members of the C-suite, collectively sold $383 million price of company stock in the primary quarter. This was greater than double the quantity sold within the fourth quarter of 2023 and the most important amount of insider selling because the company listed on the Nasdaq stock exchange in 2021.
Raymond James noted that the largest seller was co-founder and board member Fred Ehrsam, who raised $129 million for his shares.
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