Coinbase Reports Record Profits in First Report as a Public Company

Coinbase shares rose after the company reported strong quarterly results amid rising prices for bitcoin and other cryptocurrencies. Coinbase said it will add Dogecoin to its platform within 6-8 weeks.

Coinbase (COIN) shares surged 3.4% after America’s largest crypto exchange posted huge revenue and earnings growth amid incredible growth in Bitcoin and other cryptocurrencies.

In its first financial statement as a public company, Coinbase reported:

  • earnings per share were $ 3.05, which is $ 0.04 worse than the analyst estimate of $ 3.09;

  • total profit for the quarter was more than $ 771 million, more than four times the $ 177 million in the prior quarter and more than 24 times the profit for the same quarter last year.

  • Revenue was $ 1.8 billion, up from $ 191 million a year earlier and an analytical forecast of $ 1.81 billion.

Coinbase’s revenues and profits depend on the prices of cryptocurrencies (Bitcoin, Ethereum, Litecoin, as well as Coinbase’s own digital currency – USD Coi, backed by dollars) and the volume of trading on its platform. Approximately 94% of Coinbase’s revenue in the first quarter came from transaction fees.

  • The number of verified users on the Coinbase platform has grown to 56 million, including over 8,000 institutions.

  • The number of monthly users making transactions more than doubled from the previous quarter – from 2.8 million to 6.1 million.

  • Trading volume was $ 335 billion, of which about $ 120 billion was attributable to retail investors and $ 215 billion to institutional investors.

  • Coinbase’s operating expenses also rose to $ 813 million as the company spent more to keep its cryptocurrency trading platform technically able to keep up with the growth in trading volume. The costs of checking invoices and processing payments also increased.

Coinbase Predictions

Coinbase made an important announcement when publishing the report, promising to add Dogecoin cryptocurrency to its platform within 6-8 weeks.

Launched as a joke at first, the cryptocurrency has surged 26,000% in the past six months before falling after Elon Musk’s words in which he called Dogecoin a “fuss.”

In an interview with CNBC, Coinbase CFO Alesya Haas, when asked if investors should take Dogecoin seriously, said: “We leave that up to our users. We are a platform. We want to offer all assets that meet our listing standards and we hope to be the place to go and trade whatever you want to trade. ”

Haas added: “We’re slow. We need to add more assets. We are investing heavily to accelerate the addition of our assets. “

Coinbase did not provide investors with projections of future earnings or estimates of earnings, reiterating that the business is “unpredictable in nature”.

However, the company expects roughly 5.5 to 9.0 million monthly active users throughout the year, depending on cryptocurrency prices.

Coinbase cryptocurrency exchange went public through a direct listing on the Nasdaq on April 14. Compared to its first day of trading, Coinbase shares are down 19.25% at the close of trading on Thursday.

Analysts point out that Coinbase is facing significant growth in competition. However, according to Haas, the company “welcomes” this as it makes cryptocurrencies popular.

Major players entering the cryptocurrency trading and payment services market include PayPal (PYPL), Mastercard (MA), Goldman Sachs (GS) and Morgan Stanley (MS).

Large purchases of bitcoins were made by such companies as MicroStrategy (its assets in bitcoins were estimated at more than $ 5 billion as of April 28), Tesla (at $ 1.5 billion), Square and others.

Meanwhile, the authorities in the US, EU and other countries remain wary of cryptocurrencies, as suspicions of them as a way of money laundering and tax evasion are growing. There are also allegations of wasting huge amounts of non-ecological energy to mine cryptocurrencies.

Tesla announced this week that it would stop selling its cars for bitcoin, citing environmental concerns.

Tighter industry regulation could prove to be a major challenge for crypto exchanges.

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