Revenue of $1.64 billion, net profit of $1.18 billion, key highlights of Coinbase Q1 2024 financial report

Author: Fan Jiabao, Odaily Planet Daily

Recently, Coinbase released its Q1 2024 financial report.

The report shows that Coinbase's revenue for Q1 was $1.64 billion, exceeding analysts' average expectation of $1.34 billion; net profit was $1.18 billion, or $4.40 per share, compared to a loss of $78.9 million, or a loss of $0.34 per share in the same period last year, marking an astonishing financial turnaround. This profit performance follows the company's announcement of its first profit in two years back in February.

It is worth noting that this quarter's profit includes a $650 million gain from the fair value measurement of crypto assets held for investment due to the adoption of new accounting standards.

Surge in Trading Fees: Market Recovery Combined with Bitcoin ETF Approval

By business type, total trading fee revenue for Q1 2024 was $1.077 billion, a quarter-over-quarter increase of 103.42% and a year-over-year increase of 187.35%, accounting for 65.75% of total revenue, making it the primary source of income.

The significant increase in trading fee revenue was mainly due to a substantial rise in trading volume from both retail and institutional investors.

Details of Trading Revenue (in millions of dollars)

Retail Trading Fees

In Q1 2024, retail trading fee revenue was $935 million, a quarter-over-quarter increase of 99.45% and a year-over-year increase of 184.08%. Retail trading volume in Q1 2024 was $56 billion, a quarter-over-quarter increase of 93.10% and a year-over-year increase of 166.67%. Coinbase's CFO noted during the conference call that the substantial growth in trading fees was due to an increase in new users, a recovery in trading volume from existing users, and an increase in average trading volume per user.

Institutional Trading Fees

In Q1 2024, institutional trading fee revenue was $85 million, a quarter-over-quarter increase of 132.70% and a year-over-year increase of 282.96%. Institutional trading volume in Q1 2024 was $256 billion, a quarter-over-quarter increase of 104.8% and a year-over-year increase of 106.45%.

Institutional trading fee revenue benefited from the approval of Bitcoin spot ETFs and the company's product innovations. Since the U.S. Securities and Exchange Commission approved a series of new U.S. Bitcoin spot exchange-traded funds, there has been a significant influx of institutional investors. Many ETFs chose Coinbase as their custody partner, and by the end of Q1, these funds had attracted over $50 billion in capital.

The institutional platform Coinbase Prime saw record trading volume and active customer numbers in Q1 2024. The Prime platform provides custody, trading, financing, and staking services for institutional clients, and the approval of Bitcoin ETFs in January 2024, along with the rise in Bitcoin prices during the quarter, significantly increased customer engagement in the Prime product suite.

Thanks to the stimulus of ETF issuance on trading behavior, as a custody partner for exchange-traded funds, Coinbase Prime achieved a record trading volume of 3.12 trillion transactions in Q1, a year-over-year increase of 115%, with revenue soaring from $22.3 million in the same period last year to $85.4 million, and loans skyrocketing to $797 million.

Other Trading Revenue

In Q1 2024, other trading revenue was $56 million, a quarter-over-quarter increase of 137.71% and a year-over-year increase of 140.77%. Other trading revenue benefited from the increased income from Coinbase's Layer 2 solution, Base.

Impressive Growth in Subscription and Service Revenue

Subscription and service revenue reached $511 million this quarter, a quarter-over-quarter increase of 36.09% and a year-over-year increase of 41.25%, accounting for 31.20% of total revenue, primarily driven by growth in blockchain rewards revenue, custody fees, and other subscription service revenues.

Details of Subscription and Service Revenue (in millions of dollars)

Stablecoin Revenue

In Q1 2024, stablecoin revenue was $197 million, a quarter-over-quarter increase of 14.98% and a year-over-year decrease of 0.8%. Stablecoin revenue benefited from the increase in USDC market capitalization. The value of USDC on the platform was $5.5 billion, approximately double that at the end of Q4 2023.

It is noteworthy that in the first quarter, the growth rate of USDC market capitalization was the highest among all dollar-pegged stablecoins.

Rewards Revenue

In Q1 2024, blockchain rewards revenue was $151 million, a year-over-year increase of 104.75% and a quarter-over-quarter increase of 58.68%. Blockchain rewards revenue was primarily driven by a significant rise in crypto asset prices, particularly Ethereum, which increased by about 60% from December 31 of last year to March 31.

Custody Fees Revenue

In Q1 2024, custody fees revenue was $32 million, a quarter-over-quarter increase of 63.96% and a year-over-year increase of 90.00%. Custody fees benefited from the rise in crypto asset prices and the increase in custody business from Bitcoin spot ETFs. Among the 11 Bitcoin spot ETFs approved by the SEC in January 2024, Coinbase served as the custodian for 8 of them, with the company's custody assets reaching approximately $171 billion by the end of Q1 2024.

Interest and Financing Revenue

In Q1 2024, Prime financing revenue was reclassified from other subscription service revenue to interest and financing revenue, which amounted to $67 million, a quarter-over-quarter increase of 36.40% and a year-over-year increase of 54.04%.

Other Subscription Service Revenue

In Q1 2024, Prime financing revenue was reclassified from other subscription service revenue to interest and financing revenue, which amounted to $67 million, a quarter-over-quarter increase of 36.40% and a year-over-year increase of 54.04%.

New Growth Drivers Support Continued Performance Expansion

In the foreseeable future, the passage of the stablecoin bill will provide a boost to Coinbase's stablecoin revenue.

Furthermore, the Base chain, as Coinbase's key player in L2 beat, performed well in the past quarter, with a large volume of trading in both new and old meme tokens, far exceeding other L2 chains in recent months.

Comparison of Layer 2 Network Trading Overview

Additionally, according to estimates from Wall Street analysts, revenue from Coinbase's new derivatives business is expected to reach hundreds of millions of dollars over the next two years. In the long term, Coinbase's expansion into the derivatives space increases its upside potential.

Finally, the continuous growth of Coinbase's international platform and the acquisition of compliance licenses for crypto assets in more countries will also drive the ongoing expansion of its business scale.