The election of a new commander in chief benefited Coinbase’s bottom line last quarter.
The exchange reported a stronger-than-expected quarter for profit and revenue on Wednesday as transaction revenue surged 270% alongside last year’s presidential election.
Revenue derived from transaction fees, which typically accounts for a majority of Coinbase sales, reached $1.56 billion in Q4, up from $572.5 million the previous quarter, when the exchange’s customers had apparently grown less engaged over the summer.
Amid the recent trading boom, Coinbase’s total revenue rose to $2.3 billion, up from $954 million a year ago and surpassing Wall Street expectations of $1.84 billion, according to FactSet data.
Posting an earnings per share mark of $4.68, Coinbase disclosed $1.3 billion in Q4 profit, more than doubling analysts’ $2.11 estimate.
President Donald Trump’s reelection in November sent the price of Bitcoin and other cryptocurrencies soaring. But Coinbase stock also emerged as a major winner, rallying to a three-year high of $349.75 per share in December.
In after-hours trading, Coinbase shares rose 2% to around $304. The San Francisco-based exchange’s stock price has risen 112% over the past year.
Trump’s promise to end an “un-American” crackdown on the crypto industry could have major consequences for Coinbase, which was sued by the SEC in 2023 for allegedly operating as an unregistered securities exchange. The case is still ongoing, but was frozen by a judge last month due to conflicting rulings in other crypto-related cases.
Trump tapped Paul Atkins, a former SEC commissioner, to lead the agency. Pending Atkins’ confirmation, acting SEC Chair Mark Uyeda has unveiled a task force for crafting clearer rules, selecting SEC Commissioner Hester Peirce, a crypto advocate, to lead the initiative.
In a shareholder letter, Coinbase said that a new regulatory environment would likely bolster its business model, describing the shift as “the dawn of a new era for crypto.”
While Coinbase reported a 141% increase in total revenue year-over-year, $2.3 billion fell just shy of a record-breaking performance for the exchange. During the height of the pandemic-era bull market in the fourth quarter of 2021, Coinbase boasted $2.5 billion in sales.
As markets cooled in 2023, Coinbase embraced subscriptions and services revenue as a way to diversify its business. That figure includes income from reserves backing Circle’s USDC stablecoin. Coinbase took an equity stake in Circle in August 2023.
Coinbase disclosed on Thursday that stablecoin revenue came in at $226 million, rising sequentially slightly from $246 million, and up from $172 million a year ago.
Coinbase’s subscription and services segment, which includes also includes the exchange’s staking and custody products, rose 14% quarter-over-quarter to a record $641 million.
With last year’s approval of spot Bitcoin and Ethereum ETFs, U.S. investors gained more options for investing in major cryptocurrencies. Coinbase serves as a custodian for many such products, but it effectively placed the firm in competition with brokerages.
In the first quarter of last year, alongside the approval of spot Bitcoin ETFs, Coinbase reported $312 billion in trading volume. In the current quarter, trading volumes clocked in at $439 billion, rising 185% from $154 billion a year prior.
Edited by Andrew Hayward
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.
Source: https://decrypt.co/305870/coinbase-q4-2024-spike-bitcoin-boom
