Coinbase, the leading cryptocurrency exchange in the United States, has reported impressive financial results for the first quarter of the year. The company generated a remarkable revenue of $1.6 billion, representing a substantial 72% increase compared to the previous quarter. In addition, Coinbase disclosed a net income of $1.18 billion, or $4.40 per share.
The outstanding performance can be attributed to a surge in transactions resulting from the overall uptrend in the cryptocurrency market and a favorable change in accounting rules related to cryptocurrencies. Consumer transaction revenue experienced a doubling effect, reaching $935.2 million, with volume soaring by over 93% to $56 billion.
Institutional trading witnessed even more significant growth, with revenue surging by 133% to $85.4 million compared to the previous quarter, while volume more than doubled to $256 billion. Bitcoin played a prominent role in both consumer and institutional transactions, accounting for one-third of the activity.
These figures greatly exceeded analysts’ predictions and surpassed expectations. However, following the announcement, Coinbase’s shares experienced a slight decline in after-hours trading, after initially rising nearly 9% to approximately $229 earlier in the day. It is worth noting that 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. The company’s Q1 EBITDA reached an impressive $1 billion, surpassing the total for the entire previous year.
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 10 spot exchange-traded funds by the Securities and Exchange Commission.
However, Coinbase’s transaction expenses also grew significantly, increasing by 73% to $217 million. Looking ahead to Q2, the company estimates its overall expenses to be as high as $890 million, primarily driven by the costs associated with higher trading volumes.
Overall, Coinbase’s impressive Q1 financial results reflect the company’s strong position in the cryptocurrency market and its ability to capitalize on market opportunities.