Coinbase, the largest cryptocurrency exchange in the United States, has reported impressive financial results for the first quarter of the year. The company generated a revenue of $1.6 billion, representing a significant 72% increase compared to the previous quarter. Additionally, Coinbase disclosed a net income of $1.18 billion, which translates to $4.40 per share.
This outstanding performance can be attributed to a surge in transactions resulting from the overall positive trend in the cryptocurrency market, as well as favorable changes in accounting rules related to cryptocurrencies. The consumer transaction revenue doubled, reaching $935.2 million, with volume skyrocketing by over 93% to $56 billion.
Institutional trading experienced even more substantial growth, with revenue surging by 133% to $85.4 million compared to the previous quarter, and volume more than doubling to $256 billion. Bitcoin played a significant role in both consumer and institutional transactions, accounting for one-third of the activity.
These figures exceeded analysts’ predictions, which estimated a revenue of $1.34 billion and a net income of $1.09 per share. As a result, Coinbase’s shares initially rose nearly 9% to around $229 but experienced a slight decline in after-hours trading. It is worth noting that just a year ago, the shares traded at a mere $51.
During the first quarter of the previous year, Coinbase reported losses of $78.9 million (or 34 cents per share). However, this year’s Q1 results were exceptional, with Coinbase’s EBITDA reaching an impressive $1 billion, surpassing the total for the entire previous year.
While the quarterly results were impressive, it is important to note that the exceptional revenue figures were partly boosted by a one-time $737 million paper gain resulting from new accounting rules. These rules allow crypto firms to record price increases in their balance sheets.
In a letter to shareholders, Coinbase highlighted its progress towards its 2024 priorities of driving revenue, utility, and regulatory clarity. The company emphasized its increased market share in U.S. spot and derivatives, achieving all-time highs on Coinbase Prime, and witnessing a significant increase in USDC market capitalization.
Coinbase’s Ethereum layer-2 chain, Base, generated $56.1 million in revenue during the first quarter. Base outperformed Ethereum in terms of transaction volume, and developer activity on the network increased by an impressive 800%. Additionally, Coinbase acquired a minority stake in Circle, the issuer of stablecoin USDC, which experienced a 30% growth in market capitalization in Q1.
While Coinbase has diversified its revenue streams with Base and USDC, the recent gains were primarily driven by favorable market conditions. For example, during this quarter, the price of Bitcoin rose by 57% and reached an all-time high of $73,000 due to the approval of over $50 billion flowing into 10 spot exchange-traded funds by the Securities and Exchange Commission on January 11.
However, Coinbase’s transaction expenses also grew significantly, increasing by 73% to $217 million. Looking ahead to Q2, the company expects its overall expenses to be as high as $890 million, primarily due to the elevated costs associated with higher trading volumes, including customer support and infrastructure expenses.
