Coinbase, the largest U.S.-based cryptocurrency exchange, is ultimately a crypto story. And like all crypto stories, it has its downs — and its wild ups.
Coinbase reported earnings per share of $4.40 Thursday (May 2), compared to Wall Street expectations of $1.28, representing a 244.83% beat.
The crypto platform beat Wall Street revenue estimates as well, by a comparatively more modest 19.74%.
“Our platform’s performance in the first quarter is a clear indicator of the growing confidence and interest in digital assets,” said Coinbase Co-founder and CEO Brian Armstrong on the company’s first quarter 2024 earnings call.
“We are proud to safely store over 12% of total crypto market cap on our platform,” noted Coinbase Chief Financial Officer Alesia Haas on the call.
The company’s adjusted EBITDA of $1 billion for the most recent quarter was more than Coinbase generated during all of 2023.
But, like many crypto stories, while the exchange’s quarterly results were quite strong, there was some financial engineering happening behind the outsize revenue growth reported. As Coinbase executives noted to investors, revenue was boosted by a one-time $737 gain on paper that was a result of new accounting rules from the Financial Accounting Standards Board (FASB) that allow crypto firms to record increases in crypto prices on their balance sheets.
Driving Forward a Focus on Payments Innovation Within Crypto
Per Armstrong’s shareholder letter, Coinbase is focused on driving revenue in three ways: through improvements to its core simple trading experience; growth in stablecoins; winning in the derivatives space, both in the U.S. and abroad; and driving international growth by investing in key markets.
On the stablecoin front, Coinbase’s USDC market cap increased over 30% year-to-date and is growing faster than major competitors.
“We see higher engagement from customers who hold USDC balances on our platform,” Armstrong said on the call.
“[The bitcoin] ETFs unlocked a flywheel of customer engagement across our Coinbase Prime product suite,…
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