Coinbase Reports Gigantic Revenue Growth Ahead Of Direct Listing

Crypto exchange Coinbase reported first quarter 2021 earnings, which were higher than the company’s earnings for all of 2020. Net income rose to $ 730 million – $ 800 million from $ 32 million a year earlier.

Cryptocurrency company Coinbase on Tuesday announced its unaudited first quarter 2021 results and outlook for the current year ahead of its direct NASDAQ listing, which is scheduled for April 14.

Amid a sharp rise in cryptocurrency prices, the first quarter of the Coinbase crypto exchange turned out to be the best in its history.

Coinbase’s direct listing has garnered a lot of investor attention as the price of Bitcoin has surged nearly 700% over the past year and Ethereum has risen more than 1,100%. Analysts expect Coinbase to have a market valuation of $ 121.7 billion when it goes public.

Since this is a direct listing, Coinbase does not issue new shares, but rather allows existing shareholders to sell their shares to investors. The company plans to register approximately 115 million Class A common shares, which will be traded under the ticker COIN.

In the first three months of 2021, Coinbase reported the following:

  • Revenues rose nearly ninefold to $ 1.8 billion, up from $ 190.6 million in the same period in 2020.

In the chart below, CNBC showed a sharp rise in Coinbase’s earnings, with data starting in the first quarter of 2019.

In just 2020, Coinbase made a profit of $ 322.3 million, compared with a loss of approximately $ 30 million in 2019.

The growth in income and profits was associated with a jump in cryptocurrency prices, since Coinbase receives income from transaction fees (buying / selling cryptocurrencies), which depend on the value of cryptocurrencies, Coinbase does not charge fees for storing cryptocurrencies.

  • The number of registered users of the crypto exchange was 56 million.

  • The number of monthly transaction users (MTUs) was 6.1 million at the end of the first quarter, up from 2.8 million at the end of 2020.

  • The amount of assets on the platform reached $ 223 billion (of which $ 122 billion in assets – from organizations) compared to $ 90.3 billion at the end of last year. According to Coinbase, this represents 11.3% of the crypto asset market share.

  • Trading volume on Coinbase was $ 335 billion, up from $ 193.1 billion at the end of 2020.

In its press release, the company noted: “MTU, trading volume, and therefore transaction income, fluctuates significantly, depending on the price of bitcoin and the volatility of cryptoassets. This unpredictability in revenue, in turn, affects our profitability from quarter to quarter. ”

Coinbase Prediction for 2021

The cryptocurrency company said it expects significant growth to continue in 2021 “driven by revenue from transactions and custody operations, given the increased institutional interest [интерес организаций] to the class of cryptoassets ”.

However, given the unpredictable nature of its future earnings, Coinbase gave three possible scenarios for the growth in the number of monthly MTU users for the full year of 2021: the most optimistic one assumes growth to 7 million; in the middle range, assuming the cryptocurrency market remains unchanged, MTU will fall to 5.5 million, and the most conservative forecast in the event of a price drop is 4 million MTU.

Coinbase said it expects about $ 35 million in one-time costs associated with direct listing; and general and administrative expenses ranging from $ 1.3 billion to $ 1.6 billion for the full year of 2021. That being said, according to Coinbase’s plans, sales and marketing will account for between 12% and 15% of net revenue in 2021.

Coinbase said: “On the cost side, we intend to prioritize investments, including during periods when we may see the price of cryptocurrencies decline.”

Coinbase CEO Brian Armstrong said on Tuesday that more assets will appear on the Coinbase crypto exchange and retail investors will have access to decentralized finance (DeFi) applications through its platform. wrote last month that surveys of banks indicated that Americans will spend US government-allocated aid in the form of direct payments of $ 1,400 in the stock market and bitcoin.

As for institutional investors, the company will continue to build its core brokerage offering and is leveraging the Bison Trails acquisition to create what Armstrong called “Amazon’s web services for cryptography.”

In other news Tuesday, Coinbase has joined a new Washington, D.C.-based lobbying organization that focuses on cryptocurrencies and digital assets. Square and Fidelity are also members of the organization.

On Monday, the cryptocurrency sector reached an all-time peak in market capitalization of $ 2 trillion. Bitcoin’s market capitalization was over $ 1 trillion, holding that milestone for a full week.

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