Coinbase announced its Q4 2021 financial report: revenue reached a record high of $2.49 billion, and monthly active users reached 11.4 million

Author: Richard Lee, Chain Catcher

At 5:00 AM Beijing time today, Coinbase announced its Q4 and full-year 2021 financial report. Due to the volatility in the cryptocurrency market, Coinbase's Q4 revenue reached $2.49 billion, doubling from Q3 ($1.235 billion) and setting a historical high, with a net profit of $840 million, also double that of the previous quarter, but lower than the record $1.6 billion in Q2 of last year. However, Coinbase expects a decline in financial performance for Q1 2022 as the overall cryptocurrency market enters a downturn.

As a result of this data, Coinbase (COIN) stock price rose 6.8% to $179.56, but still remains far from the over $400 price shortly after the stock's listing last year, affected by the overall condition of the cryptocurrency market. On February 22 and 23, the ARK Invest fund purchased over 110,000 shares of Coinbase stock.

Overall Revenue Increase

The financial report shows that revenue growth this quarter was primarily driven by "higher volatility and consumer interest in a broader range of cryptocurrency assets."

Of the total revenue of $2.49 billion, trading revenue was $2.277 billion, and subscription and other service revenue was $213 million, with trading revenue accounting for 91%, maintaining a high level of singularity compared to Q3 (88%).

Among this, trading revenue from retail users was $2.186 billion, while revenue from institutional trading was $91 million, both driven by a significant increase in trading volume: retail user trading volume grew by 90% quarter-over-quarter, and institutional trading volume grew by 59%. Retail trading volume accounted for 32%, an increase from Q3 (28%), with total trading volume reaching $54.7 billion.

At the same time, Coinbase had 11.4 million monthly transacting users in Q4, up from 7.4 million in Q3, a growth of 54%. The number of verified users increased to 89 million.

In terms of trading token categories, user preference for cryptocurrencies other than Bitcoin and Ethereum continues to rise. The report shows that in Q4, trading volume from Bitcoin, Ethereum, and other cryptocurrencies accounted for 16%, 16%, and 68%, respectively, with the trading volume of "other" token assets continuously rising throughout 2021, increasing from 40% in Q1 to 68%.

"In 2021, we saw a high adoption rate of other cryptocurrency assets among institutional users," Coinbase stated.

Previously, BitMart's investment manager Yolo analyzed for Chain Catcher that the rise of the metaverse and memes, along with Coinbase's accelerated work in listing and custody, have contributed to the continuous decline in Bitcoin's trading volume share.

Yolo believes that in the long term, due to the increasing complexity of the metaverse and the growing prosperity of multi-chain ecosystems, the decrease in BTC trading volume share is likely a certain event. However, when the market returns to rationality, BTC will still serve as a resting point for profit-taking, and a short-term recovery in trading volume share is also possible.

Additionally, revenue from "subscription and other services" has also seen a significant increase. In Q4, revenue from subscriptions, blockchain rewards, custody, and other areas totaled $213 million, a 47% increase from the previous quarter. Among these, the average price of cryptocurrency assets is one of the main factors for custody revenue.

Despite the good performance of the Q4 financial data, as the overall cryptocurrency market enters a "bear market," Coinbase has also issued a warning about its Q1 2022, indicating that metrics such as monthly active users (MTU), total trading volume, and subscription and other service revenue will show a downward trend compared to this quarter.

Annual Revenue Reaches $7.354 Billion

According to Coinbase's annual financial report, the exchange's net revenue for the full year 2021 was $7.3548 billion, compared to $1.1412 billion in the 2020 fiscal year. Total trading revenue was $6.8373 billion, compared to $1.0962 billion in the 2020 fiscal year; total subscription and service revenue was $517.5 million, compared to $45 million in the 2020 fiscal year. According to data provided by Yahoo Finance, 23 analysts had previously expected Coinbase's full-year revenue to reach $7.32 billion.
Coinbase's net profit for the year was $3.624 billion, compared to $322 million in the 2020 fiscal year; diluted net profit attributable to common shareholders was $3.190 billion, compared to $127 million in the 2020 fiscal year; diluted earnings per share attributable to common shareholders was $14.50, compared to $1.40 in the 2020 fiscal year.
In 2021, each user brought approximately $64 in trading revenue to Coinbase, a 42% increase from 2020.

As of the end of 2021, Coinbase had a total of 3,730 full-time employees, a threefold increase compared to the end of 2020, including personnel from the company's expanded engineering teams in India, Canada, Brazil, and Singapore.

As of the end of Q4, Coinbase held approximately $7.1 billion in cash and cash equivalents, which includes $3.4 billion in proceeds related to the long-term debt issued by the company in 2021.

Three Major Strategies for the Future

In the financial report, Coinbase also disclosed its next three major strategies.

"The first pillar of our strategy is cryptocurrency technology as an investment." Currently, Coinbase disclosed that the total fair value of its cryptocurrency investments is $696 million, and it will continue to expand international investments to "widely launch foundational Web3 products around the world, especially wallets." Additionally, it stated that it is building tools to expand support for Layer 2 networks and provide cryptocurrency derivatives trading.

The second major strategic pillar is the "cryptocurrency financial system." Coinbase stated that this means making cryptocurrency easier to use for everyday activities such as cryptocurrency payments. To this end, it plans to expand the Coinbase debit product to all U.S. users, allowing users to spend and earn 4% in cryptocurrency rewards. In June of last year, Coinbase announced the launch of a USDC crypto lending savings product, which was later suspended due to threats of litigation from the U.S. SEC.

The potential of cryptocurrency technology as an application platform is Coinbase's third major strategy. "We believe Coinbase is well-positioned to serve as a gateway for Web3 applications." In this regard, it stated that it is increasing investment in Coinbase Wallet, enhancing security features, and reducing complexity. Additionally, the company is also building other decentralized applications, such as the NFT marketplace "Coinbase NFT."

Notably, Coinbase stated that its NFT marketplace will support users accessing it through other third-party wallets.