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Coinbase Revenue Surges to $1.64 Billion – But Retail Volume Just 50% of 2021 Levels 

Last Updated May 3, 2024 12:52 PM
Shraddha Sharma
Last Updated May 3, 2024 12:52 PM

Key Takeaways

  • Coinbase revenue for Q1 2024 soared to $1.6b, surpassing expectations.
  • The exchange reported a net income of $1.2b driven by strong operational performance.
  • Despite the strong quarter, Q1 2024 retail trading falls short against Q1 2021. 

Coinbase has emerged as a standout performer in the first quarter of 2024. The company’s financial results led to gains for the Coinbase (COIN) stock but the volumes are falling short of 2021 retail  figures.

Soaring financial success against the backdrop of fluctuating market engagement outlines the central narrative of Coinbase’s current market journey.

Coinbase Financial Overview of Q1 

Coinbase kicked off 2024 with quarterly total revenue  of $1.6b, up 72% quarter-on-quarter. The surge was accompanied by an increase in net income, which stood at $1.2b, benefitting largely from $737m in pre-tax crypto asset mark-to-market gains, mostly unrealized. 

The adjusted EBITDA reached $1b, highlighting the company’s profitability and effective cost management. Operational expenses were controlled at $877m, increasing only by 5% despite the substantial revenue growth, reflecting disciplined spending and operational efficiency.

Consumer Transaction Revenue reached $935m, marking a 99% increase from the previous quarter. The growth was driven by a surge in retail investor activity. Institutional Transaction Revenue also witnessed a 133% QoQ increase to $85m, fueled by broader adoption. The launch of Bitcoin ETF has played a crucial role in the surge of these parameters. 

In the earnings call, CEO Brian Armstrong Coinbase admits that the ETFs have received a lot of attention, however, he also acknowledges that when there is attention on crypto in general “it creates energy and interest across all kinds of products in the industry.”

Strategic Initiatives and Regulatory Engagement

During the call, CEO Armstrong responded to a question about the potential impact of rolling out smart wallets, which are currently on the testnet. He said, “that’s been a really exciting innovative product that we’re working on.”

Armstrong highlighted Coinbase’s ongoing effort to simplify the use of crypto tools. He pointed out that traditional onboarding methods for crypto wallets, like the 12-word phrase, are overly technical for a broad audience and pose challenges in terms of security and user-friendliness.

Armstrong discussed the development of “pass keys” as part of the Smart Wallet initiative. It will leverage biometric technology, such as fingerprint verification, to enhance the user experience.

Coinbase aims to make the tools accessible to a billion people, thus broadening the adoption and growth of USDC and overall engagement with Web3.

The company document also reveals that Coinbase has actively engaged in shaping a favorable legislative environment. It mentions initiatives like Stand With Crypto and Fairshake PAC, aiming to influence crypto-friendly policies.

Looking forward to Q2 2024, Coinbase remains optimistic about its growth trajectory. The company forecasts subscription and services revenue to be between $525m and $600m, assuming cryptocurrency prices remain stable. Transaction expenses are expected to remain moderate, and operational expenses are projected to increase due to higher trading volumes and strategic investments in technology and market expansion.

The company also anticipates further growth in USDC, a major USD-backed stablecoin, which nearly doubled its on-platform balances to $5.5 billion by the end of March. 

Retail Volumes Fall Short Against 2021 

Analyzing Coinbase’s Q1 financial metrics for 2021 and 2024 reveals more about the business.

 In Q1 2024, net revenue is nearly stable at $1.588b, slightly down from $1.597b in Q1 2021, representing a 0.5% decrease from three years earlier.  

Coinbase Financial 2021 Vs 2024
Coinbase Financial 2021 Vs 2024

However, net income showed a significant increase, rising to $1.176b in Q1 2024 from $771m in Q1 2021, amounting to a 53% increase this year as profitability improved.  

Adjusted EBITDA decreased slightly to $1.014b in Q1 2024 from $1.117b in Q1 2021, which is about a 10% fall. 

What is noteworthy is that retail trading volume dropped significantly. The figure fell to $56b in Q1 2024 from $120b in Q1 2021. This is a massive 53% fall from the earlier volume, reflecting decreased retail activity. Conversely, institutional trading volume increased to $256b in Q1 2024, up from $215b in Q1 2021. This means that Coinbase has balanced institutional growth to offset some retail decline.

Coinbase: Q1 2021 Vs Q1 2024 Trading Volume
Coinbase: Q1 2021 Vs Q1 2024 Trading Volume

Coinbase’s Focus Now Should be Retail 

Coinbase’s Q1 2024 performance is a clear indicator of its financial resilience after a volatile 2022 and 2023.

There is an increase in both revenue and net income, alongside strategic expansions in its product offerings. 

However, the decline in retail trading volumes compared to the more strong figures of 2021 is a concern that the company must address. While institutional trading volumes have shown impressive growth, balancing this with revitalized retail engagement will be crucial for sustained long-term growth. 

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