Coinbase posted a major first-quarter beat late Thursday, driven by bitcoin's start-of-the-year boom and renewed interest in cryptocurrencies. Meanwhile, bitcoin rebounded after falling on Wednesday to a key pressure point for institutional investors. Cryptocurrency prices and spot bitcoin ETFs jumped on bitcoin's advance. Coinbase stock eased Friday.
Coinbase reported earnings of $4.40 per share, up from a loss of 34 cents per share the same quarter a year prior. Total revenue leapt to $1.64 billion, up 111% year over year and increasing 72% from last quarter.
Analysts polled by FactSet expected Coinbase to report earnings of $1.15 per share on a 76% revenue spike to $1.36 billion.
Transaction revenue bolted 187% higher year over year to $1.08 billion, also doubling from Q4. Consumer transaction revenue swelled to $935.2 million, up from $468.9 million in the fourth quarter and $392.2 million for Q1 last year. Institutional transaction revenue bolted to $85.4 million, vaulting nearly 133% from the fourth quarter and massively increasing from the $22.3 million recorded last year.
Subscription and services revenue jumped 41% to $511 million, compared to the company's prior estimates of $410 million to $480 million and analyst estimates of $458 million. The revenue spike was primarily driven by Coinbase's blockchain rewards, which more than doubled to $150.9 million.
Coinbase saw a major boost in custodial fee revenue, largely due to higher crypto prices. The exchange is also serving as the custodian for a majority of the U.S. spot bitcoin ETFs that launched in January.
Coinbase's custodial fee revenue leapt 90% to $32.3 million, compared to FactSet estimates of $31 million. It recorded $19.7 million in custodial fee revenue for its fourth-quarter ending in December.
Overall trading volume for the quarter was $312 billion, up 104% from Q4.
The company said it generated more than $300 million in total transaction revenue in April. Coinbase guided Q2 subscription and services revenue to range from $525 million to $600 million.
FactSet predicts Q2 earnings of 94 cents per share on 82% revenue growth to $1.29 billion. Analysts expect subscription and services revenue for the quarter will jump 45% to $489 million.
Mixed Analyst Response
Analysts broadly said the quarter was very strong for Coinbase early Friday, but the company outlook generated mixed views.
Canaccord in a research note said the quarter underscored the company's ability to gain market share in hot and cool crypto market environments. The firm raised its price target to $280 from $240 and maintained a buy rating on the shares, the Fly reported.
H.C. Wainwright said the recent crypto pullback and regulatory overhang could provide downward pressure on COIN shares in the near-term, but the firm is bullish in the medium-term after the strong revenue and earnings beat. H.C. Wainwright raised its price target by $15 to $315 and kept a buy rating on the stock.
Mizuho and Goldman Sachs were a bit more bearish.
Goldman noted that higher retail take rates, or transaction revenue, drove outperformance for the quarter. However, Goldman said the risk-reward for Coinbase stock will largely be a reflection of volatility in crypto prices going forward, without a long-term plan in the broader crypto market. Goldman lowered its price target on Coinbase stock to $255 from $295 and maintained a neutral rating on the shares.
The strong Q1 report was unsurprising due to bitcoin's rally and volatile crypto prices this year, Mizuho wrote. But the $300 million in April transaction revenue implies a Q2 run-rate 16% lower than Q1 levels. Coinbase's alt coin staking services have climbed to 45% of total revenue from 32% a year ago. However, the SEC sued Coinbase in 2023 over the staking services, alleging they violated securities laws. A federal judge in late March denied Coinbase's motion to dismiss the suit. Mizuho kept an underweight rating and $145 price target on Coinbase stock.
Coinbase Stock
Coinbase stock pared its decline to 2.5% Friday after falling 5% premarket. Shares leapt 8.9% during Thursday trade leading up to results.
COIN stock has retreated about 21% from its March 25 peak of 283.48, which marked its highest level since December 2021. Still, Coinbase stock rallied more than 28% in 2024.
Meanwhile, bitcoin jumped above $62,400 by Friday evening, marking more than a 5% gain over the last 24 hours. Bitcoin surged 3% on Thursday. The world's largest crypto is in another correction that began at the end of March and continued through the April 19 halving event, digital asset analytics firm 10x Research reported. Bitcoin has fallen about 15% from its March 14 record high $73,798. Still, bitcoin leapt 49% so far this year.
Other crypto-related stocks climbed to end the week as bitcoin rebounded.
Marathon Digital jumped 2.6% Friday after spiking 6.2% Thursday. Riot Platforms rose 1% Friday after rallying more than 6% in early trade, adding to its 4.9% gain Thursday. Hut 8 climbed 1.4% Friday after its 2% advance Thursday.
CleanSpark pared gains to 1.3% Friday following its 8% rally in the morning. Shares rose 1.9% Thursday and ended a streak of five consecutive daily declines.
The U.S. spot bitcoin ETFs, including the iShares Bitcoin Trust, ARK 21Shares Bitcoin ETF and Grayscale Bitcoin Trust, swung more than 4.5% higher Friday after surging 4.3% Thursday.
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