Coinbase surpasses expectations with Q1 revenue surge amid Bitcoin boom

Coinbase reported revenues of $1.64 billion during the first quarter, surpassing the expected $1.34 billion amount.

The surge in revenue comes amid a robust Bitcoin rally that has significantly impacted the crypto market.

The company’s earnings stood at $4.40 per share, a substantial improvement from the $1.09 average analyst estimate, though differences in accounting methods could affect comparability. This represents a significant recovery from the previous year’s loss of $78.9 million, or 34 cents per share.

A significant component of the revenues was a $650 million mark-to-market gain on digital assets held for investment, following new accounting standards adopted by the company.

Transaction revenue, a key income source for Coinbase, nearly tripled this quarter to $1.07 billion, with consumer transaction revenue alone climbing to $935 million, doubling from the previous year.

Consumer transaction revenue rose to $935 million, an increase of over 100% from the year before.

The company’s stock has seen a remarkable 30% increase this year, following a nearly 5x increase in 2023. The surge is closely tied to the performance of Bitcoin, which not only affects trading volumes but also boosts demand for additional services offered by Coinbase.

During the quarter, bitcoin reached a new all-time high, crossing $73,000 in March. Ethereum, the second-largest crypto, also saw significant interest following its major upgrade earlier in the year. The crypto sector has attracted substantial institutional investment, especially after the SEC approved several US spot bitcoin ETFs, many of which have selected Coinbase as their custody partner.

Despite these positive developments, Coinbase faces challenges, including a legal battle with the SEC over allegations of unregistered securities sales, a claim to be decided by jury trial. Furthermore, competition is intensifying, particularly from Crypto.com, which has regained market share in recent months.

Amid these financial highs, Coinbase also saw a notable increase in insider selling.

According to Raymond James analysts, insiders, including four C-suite executives, sold shares worth $383 million during the quarter, a significant increase from the previous periods and the largest since the company’s 2021 Nasdaq listing.

Fred Ehrsam, co-founder and board member, was the largest seller, cashing out $129 million in shares.

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