Coinbase Q1 Earnings Tripled Over Q4, But Still Missed Mark

Coinbase shares fluctuated in after-hours trading Thursday following the exchange’s first quarter earnings report, its first ever as a public company. 

In the first quarter, Coinbase reported earnings of $3.05 per share. The company reported $1.8 billion in revenue, just missing analysts’ expectations of $1.81 billion, but up from coinbase’s reported earnings of $585 million during the fourth quarter of 2020. 

Coinbase reported a net income of more than $771 million, falling within the guidance range of $730 million to $800 million. Analysts had predicted $762.6 million in net revenue. 

“Our strong Q1 2021 results reflect the strength of the crypto price cycle we entered in Q4 2020. We saw many crypto assets reach all time high prices, high levels of volatility, and increased interest across the entire cryptoeconomy,” the company said in its shareholder letter.

Users are up

Coinbase also reported an increase in users. During the first quarter the company reached 56 million users, up from 34 million during the first quarter of 2020. While Coinbase is continuing to grow, the company reported difficulties in projecting growth for the rest of the year given the volatile nature of the cryptocurrency market. 

“It is important for investors to remember that our business is inherently unpredictable,” coinbase said. “MTUs, Trading Volume, and therefore transaction revenue currently fluctuate, potentially materially, with Bitcoin price and crypto asset volatility. As a result, revenue is difficult to forecast.”

Coinbase’s shareholder letter did not mention bitcoin’s recent dip, which is being attributed to Elon Musk suspending bitcoin as a medium of purchase for Teslas, but it did note the “inherent unpredictability” of digital assets. 

Dogecoin is coming

Coinbase CEO Brian Armstrong said during the earnings call Thursday that the company will have to continue to add new assets to the trading platform in order to fuel growth. He said Coinbase plans to offer Dogecoin trading in the next six to eight weeks.

Despite the increase in revenue and users, investors should not expect significant profits anytime soon, the company said. There is also concern over new competitors in the rapidly-growing crypto industry, including Kraken and Binance. 

“We seek to operate the company at roughly break even in terms of profitability, smoothed out over time, for the time being,” Coinbase said. 

Coinbase shares fell to below $250 during after-hours trading following the release of the report. Coinbase went public via direct listing last month at $381 a share. Shares hovered around $360 at time of publication Thursday, down about 20% since the company’s public debut.