Coinbase reported better-than-expected revenue in its first-quarter earnings report on Thursday. The stock was trading about 4% lower in extended trading. The company’s earnings came in at $4.40 per share, significantly higher than the $1.09 average analyst estimate. Revenue also surpassed expectations at $1.64 billion compared to the $1.34 billion expected. Coinbase, known as the primary marketplace in the U.S. for buying and selling digital tokens, reported a net income of $1.18 billion, a marked improvement from the year-ago loss. The company also reported a $650 million mark-to-market gain on crypto assets held for investment.
The first quarter showed a significant increase in consumer transaction revenue, reaching $935 million, up well over 100% from the previous year. Total transaction revenue nearly tripled to $1.07 billion, with subscription and services revenue adding $511 million. Coinbase’s shares climbed nearly 9% ahead of the report and have risen around 32% this year, following a substantial increase in 2023. The company’s stock is known to benefit from surges in bitcoin, as seen with the recent rally where bitcoin hit a new all-time high above $73,000 in March.
One key development in the market has been the approval of new U.S. spot bitcoin exchange-traded funds by the SEC, attracting institutional investors. These funds, some of which have collaborated with Coinbase as their custody partner, have collectively amassed over $50 billion by the end of the first quarter. Despite this positive trend, there have been decreases in net inflows since an April peak, coinciding with a decline in bitcoin prices.
Legal challenges persist for Coinbase, with an ongoing legal battle with the SEC over allegations of engaging in unregistered securities sales. Additionally, the company faces new competition from Crypto.com, which has been regaining market share in recent months. Moreover, multiple insiders at Coinbase, including top executives, collectively sold $383 million worth of shares in the first quarter, the most significant amount of insider selling since the company’s Nasdaq listing in 2021.
Insider selling
Raymond James analysts reported that various insiders at Coinbase, including members of the C-suite, sold a total of $383 million of the company’s shares in the first quarter. The amount sold was more than double the previous quarter and marked the highest level of insider selling since the company went public. Co-founder and board member Fred Ehrsam emerged as the top seller, generating $129 million from his share sales.
— good’s Michael Bloom and Kate Rooney contributed to this report.
