Coinbase Profit Surges in Crypto Exchange's First Report as Public Company -- Update
By Paul Vigna
Coinbase Global Inc.'s profit surged in the first quarter,
driven by a manic rally in bitcoin and other digital assets, the
cryptocurrency exchange said in its first earnings report as a
It earned $771 million, or $3.05 a share, in the quarter, up
from $32 million a year earlier. Total revenue surged to $1.8
billion from $191 million. The top and bottom-line figures
represent records for the company, which was founded in 2012 and is
the largest bitcoin exchange in the U.S.
In early April, the company projected earnings of $730 million
to $800 million on revenue of $1.8 billion.
Coinbase's revenue and profit have largely been driven by the
explosion in the popularity of bitcoin and other digital
currencies. The price of bitcoin rose to nearly $59,000 by the end
of the first quarter, from about $7,300 at the beginning of 2020.
It hit a record high of $64,802 on April 14 -- the same day
Coinbase went public.
Those outsize gains attracted a new crowd of buyers. Some were
high-profile hedge-fund managers like Paul Tudor Jones and Stanley
Druckenmiller and companies like MicroStrategy Inc., Square Inc.
and Tesla Inc. Others were individual investors and day traders,
introduced to crypto through trading apps like Coinbase and
Coinbase's stock price has struggled since its debut. It opened
at $381 following the company's direct listing and has since fallen
steadily. On Thursday, shares closed down 6.5% at $265.10.
"The first-quarter results reflect the strength of the crypto
price cycle," Chief Financial Officer Alesia Haas said in an
interview. The company saw increased interest from both individual
and institutional customers, she said.
At the end of the first quarter, the company had 56 million
verified users, up from 34 million a year earlier. Active users, a
group the company calls "monthly transacting users," rose to 6.1
million from 1.3 million.
Total trading volume was $335 billion. Assets on the company's
platform rose exponentially, to $223 million from $17 million a
year ago and $90 million in the fourth quarter.
The company was cautious about the rest of the year, noting in a
letter to shareholders that the crypto market is "inherently
unpredictable." Its trading volume and active users are driven
"potentially materially" by changes in bitcoin's price and the
The company said for the second quarter it expects its key
business metrics to meet or exceed the first quarter. It noted that
the number of active users have continued to increase and at the
current pace, total trading volume would match or slightly exceed
the first quarter.
The bitcoin rally has driven awareness of Coinbase itself. Its
app recently has been one of the top downloads on Apple's app
store. The company has been actively marketing as well and plans to
substantially increase those efforts this year, it said.
By one metric, institutional clients have become Coinbase's
largest. Of $335 billion in trading volume, $215 billion came from
institutional clients and $120 billion came from individuals.
Ms. Haas said the company is courting new institutional clients,
with expectations that as those relationships grow, the company
will persuade them to use more products and services. Indeed, part
of Coinbase's long-term strategy involves generating more revenue
from non-trading services, like custody and payments.
"We're in a bit of a land-and-expand mode," she said.
Yet, the company makes most of its revenue in transaction fees
from individual investors. Transaction-fee revenue from those
clients totaled $1.46 billion in the quarter, compared to $85
million from institutional clients.
Coinbase lists 109 digital assets on its exchange, but two of
them -- bitcoin and ether -- comprise more than half of its trading
volume. Bitcoin comprised 39% of its trading volume in the quarter
and ether 21%.
The company added seven assets for trading in the quarter, and
expects to add more in the coming quarters. Ms. Haas said the heavy
concentration in bitcoin and ether trading, though, isn't a
"We are happy," she said.
Write to Paul Vigna at email@example.com
(END) Dow Jones Newswires
May 13, 2021 16:39 ET (20:39 GMT)
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