Coinbase Heads Into Q1 Earnings With Crashing Volumes, Layoffs, and an 81% EPS Drop

Key Takeaways

Coinbase is heading into earnings with crypto trading volumes crushed, revenue expected to fall around 25%, and EPS projected to sink 81% year-over-year.
The exchange just announced 700 layoffs as it scrambles to cut costs and adapt to weaker market conditions.
The broader crypto market had a brutal Q1, with Bitcoin down roughly 23% and funding activity drying up across the industry.

Coinbase, the largest crypto exchange in the US, reports Q1 2026 earnings after the bell on May 7, and expectations are pretty rough.

Trading activity cooled hard after crypto’s euphoric 2025 run, retail traders disappeared, and volatility dried up for much of the quarter.

Now, Wall Street expects Coinbase to report a steep drop in revenue and profits, alongside shrinking margins and weaker trading volumes.

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Coinbase’s Core Problem: Fewer People Trading Crypto

Coinbase still lives and dies by trading activity, and Q1 didn’t deliver.

Wall Street estimates transaction revenue, the heart of Coinbase’s business, will fall roughly 25% to 34%, landing somewhere between $837 million and $949 million.

The main reason is simple: trading volumes collapsed.

Analysts estimate that overall volumes dropped more than 40% during the quarter as both retail and institutional traders stepped back from the market.

Coinbase’s subscription and services business held up better, but even that segment is expected to slip around 9% to 11% to roughly $617 million–$633 million.

That side of the business — powered by USDC rewards, staking, blockchain rewards, and Coinbase One subscriptions — has become increasingly important for the company.

But right now, it still isn’t large enough to fully offset the weakness in trading fees.

Profitability also took a hit.

Adjusted EBITDA is expected to fall more than 50% to around $455 million, with margins shrinking sharply from last year’s 45.7% level.

To be fair, this isn’t just a Coinbase issue. The entire crypto industry slowed down in Q1.

But the quarter also highlights a reality investors already know: Coinbase remains heavily tied to overall market sentiment despite years of diversification efforts.

The big question heading into earnings is whether recurring revenue streams can eventually stabilize the business during weaker crypto cycles.

Coinbase Is Cutting Costs Fast

Coinbase clearly saw the slowdown coming.

On May 5, just days before earnings, the company announced it would cut around 14% of its workforce — roughly 700 employees — as part of a broader restructuring effort.

CEO Brian Armstrong framed the move as both a response to crypto volatility and part of a push to streamline the company for the AI era.

The plan includes flattening management layers, shrinking teams, and shifting toward smaller “player-coach” structures designed to move faster internally.

The layoffs are expected to cost Coinbase around $50–60 million in severance.

At the same time, the company is still trying to expand beyond spot crypto trading.

Coinbase continues investing heavily in derivatives, international markets, stock and ETF trading, USDC payments, and its broader “Everything Exchange” vision.

Those businesses may become meaningful long-term growth drivers, but in the near term, Coinbase still depends heavily on retail trading activity — and that activity largely disappeared in Q1.

Q1 Was Ugly for the Entire Crypto Market

Coinbase’s weak quarter didn’t happen in isolation.

The entire crypto market struggled through one of its weakest starts to a year in recent memory.

Bitcoin fell roughly 23% during Q1, sliding from around $87,000 at the start of the year to near $66,000 by quarter-end. Ether performed even worse, dropping about 41%.

Meanwhile, total crypto market capitalization fell more than 20%, briefly slipping below $2.5 trillion.

Trading activity across global exchanges cratered nearly 48% from late-2025 highs as speculation cooled off.

Even spot Bitcoin ETFs, which had been one of crypto’s strongest narratives last year, saw net outflows of $500 million to $800 million during the quarter.

Investors rotated back toward traditional markets, gold, and safer assets amid geopolitical tensions, trade uncertainty, and shifting expectations around interest rates.

Crypto funding activity also dried up.

Venture capital slowed, fundraising became more difficult, and many projects struggled to attract new liquidity.

That broader backdrop matters because exchanges like Coinbase tend to amplify whatever the market is already doing.

When crypto enters a risk-on frenzy, exchanges print money. When markets cool down, revenue can disappear fast.

Is There Any Bullish Angle?

Despite the ugly setup, Coinbase still has a few bright spots heading into earnings.

USDC adoption continues growing, international expansion remains active, and newer products like prediction markets and potential banking services could eventually open entirely new revenue streams.

Investors will also be listening closely for signs that April’s crypto rebound carried into Q2.

The stock has already priced in a lot of bad news, so even modestly positive guidance could trigger relief among investors who expect the worst.

On the flip side, another weak outlook would reinforce what many crypto traders already know: exchange businesses remain brutally cyclical, no matter how diversified they try to become.