Coinbase earnings report disappoints! Q1 revenue and profit fall short of expectations, stock drops over 5% after hours

Coinbase, the largest cryptocurrency exchange in the United States (stock code on the US market: COIN), announced its latest financial results on Thursday. Affected by sluggish coin prices and a cooldown in trading activity, the company’s first-quarter revenue and profits fell below market expectations, dragging the after-hours share price down more than 5%. Coinbase posted a first-quarter loss of $1.49 per share, far from analysts’ original forecast of earnings of $0.27 per share; revenue came in at $1.41 billion, also missing the market’s estimate of $1.52 billion. In terms of revenue structure, its core “trading income” was $755.8 million, below the market expectation of $805.2 million. “Subscription and services revenue,” which is seen as key to Coinbase’s transformation and is intended to reduce reliance on transaction fees, was $583.5 million as well, also trailing the estimated $619.3 million. Amid the double pressure of a downturn in cryptocurrency prices and a narrowing of market volatility, spot trading volumes across major exchanges have generally declined. Although Bitcoin rebounded by about 12% in March, it still couldn’t make up for the damage left by the early-quarter selloff, and investors were already mentally prepared for Coinbase’s underwhelming first-quarter results. In fact, to break out of the limits of a single line of business, Coinbase has aggressively expanded its footprint in recent years, extending into stablecoins, staking, derivatives, and blockchain infrastructure, with its transformation strategy showing early signs of effectiveness. Coinbase said on Wednesday that, benefiting from strong growth in derivatives trading, the company’s global cryptocurrency trading market share has risen to a record high of 8.6%. Coinbase added that, over the past 12 months, derivatives trading volume surged 169% year over year compared with the same period last year; the “annualized run rate” of retail derivatives revenue also surpassed the $200 million mark for the first time. In addition, the breakout potential of its prediction markets and stablecoin business should not be underestimated. Coinbase disclosed that its prediction markets business launched in the United States and, within just 2 months, its annualized revenue had already exceeded $100 million. Meanwhile, the blockchain network “Base,” developed by Coinbase itself, processed up to 62% of global on-chain stablecoin transaction volume this quarter. To cope with downward pressure in the crypto market and seek technological breakthroughs, Coinbase announced earlier this week that it would cut about 700 employees, representing about 14% of its total headcount, and also initiate an AI-driven organizational restructuring plan.