Coinbase has brushed off the 2022 crypto winter blues by delivering a standout Q4 earnings beat, underpinned by the stirring crypto market comeback. The largest US cryptocurrency exchange swung to a healthy profit, reversing a long string of losses.
TLDR
- Coinbase swung to a Q4 profit of $1.04 per share, smashing expectations of $0.02 per share
- Revenue soared 51% year-over-year to $954 million, topping forecasts of $826 million
- Transaction revenue jumped 83% quarter-over-quarter amid “risk on” crypto market activity
- Coinbase upgraded its balance sheet, now holding $5.7 billion in cash and USDC
- Projects Q1 subscription revenue of $410-480 million, though cautioning on transaction fees
Bolstered by investors piling back into digital assets, Coinbase generated $1.04 in diluted EPS for Q4 2023. This trounced expectations of $0.02 per share and capped a turnaround from the $2.46 loss per share logged a year prior.
The crypto platform also blew past revenue forecasts by raking in $954 million, a 51% explosion versus the same quarter last year. Analysts had pegged top-line sales at $826 million.
Driving the brisk growth was an 83% quarterly surge in transaction revenue to $529 million, signaling traders returned to Coinbase to ride the renewed crypto bull market. This metric includes both consumer transaction fees up 60% yearly and institutional transaction revenue vaulting 173%.
Subscription and services revenue from custody, staking, and other activities climbed a solid 33% as well. But it was the consumer trading volumes reawakening that most buoyed results.
Coinbase pins this performance on the approval of spot Bitcoin ETFs fueling higher crypto prices and stoking “risk on” sentiment more broadly in 2024. With asset prices rising across the board, traders poured back into digital tokens to play the rally.
And Coinbase finds itself well-positioned to capture resurgent crypto demand after shoring up its financial position over the past year. It has slashed debt to just 12% of assets while boosting its cash stockpile to $5.7 billion, including $5.1 billion directly on hand.
This war chest provides ample liquidity to handle market fluctuations and scale up operations. It also gives Coinbase an advantage as competitors faltered amidst crypto winter pressures.
Although still projecting volatility, the exchange believes 2024 holds continued growth potential as institutional adoption expands. Coinbase already supports over 100 institutional clients on its international exchange.
But a note of caution remains on transaction revenue relying on fickle trading volumes. Coinbase tempered full-year projections by revealing it had banked $320 million of transaction fees half-way into Q1 2024 while urging analysts not to extrapolate further.
On the other hand, subscription income appears more stable with Q1 forecasts at $410-480 million. This steady base should prevent severe drops if spot trading activity moderates. Though total expenses are still expected to trend higher in 2024.
