Analysts expect strong Q1 report for Coinbase, but are watching for this 

Higher trading volumes and stablecoin revenue are set to drive sizeable quarter-over-quarter improvements, analysts say


Coinbase and Adobe Stock modified by Blockworks


Coinbase is poised for a strong showing when it reports its first quarter results later this week, analysts said — though some questions remain. 

Still, the revenue outlook for Coinbase’s layer-2 network and its international offerings, for example, would give the market a better sense of the crypto exchange’s trajectory, one analyst said. 

The lift Coinbase is set to see upon reporting earnings on Thursday is due in part to volatile crypto markets and rising prices seen during the first three months of 2024, noted Morningstar analyst Michael Miller.

Bitcoin’s price rose to an all-time high price around $73,000 in mid-March. Though the asset’s price has retreated in recent weeks to below $61,000, BTC is up roughly 38% year to date. 

“Trading revenue should be much higher than last year, and I expect the company to be solidly profitable,” Miller told Blockworks. “USDC’s market capitalization also staged a major recovery during the quarter, so there will be significant tailwinds to its interest income as well.”

Interest earned on Coinbase USDC reserves represents a decent chunk of the company’s revenue — amounting to $172 million during the fourth quarter of 2023. That stablecoin revenue figure was roughly 19% of Coinbase’s net revenue during those three months.

Owen Lau, executive director at Oppenheimer & Co, said he too expects a “meaningful beat” for Coinbase given the crypto exchange’s strong trading volumes and likely improved stablecoin revenue. 

Coinbase could also benefit from the mark-up of their corporate investment portfolio due to their adoption of accounting rule ASU 2023-08,” Lau told Blockworks. 

The law requires entities to measure certain crypto assets at fair value, with changes in fair value recorded in net income.

Expectations by the numbers

Oppenheimer analysts anticipate that Coinbase trading volume hit roughly $300 billion during the first quarter — up 95% from the prior quarter, according to an April 3 research note. 

The average market cap of USDC increased 12% quarter over quarter to $28 billion, they added.

Lau and his team also project first quarter subscription and services revenue, which comprises income related to stablecoins, to rise 15% from the prior quarter to $432 million.

They anticipate Coinbase’s total revenue in the first three months of the year to be $1.4 billion. That would be a 48% increase from the $954 million of total revenue notched in last year’s fourth quarter.  

Read more: Coinbase reported Q4 earnings Thursday. Here’s what stood out.

Another result to pay attention to will be Coinbase’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

The company notched positive adjusted EBITDA in all four quarters in 2023 — amounting to $964 million — as it prioritized expense cuts last year.

Oppenheimer analysts project adjusted EBITDA for the first quarter to have reached $699 million, primarily driven by higher estimated trading revenue than previously expected.

Those total revenue and adjusted EBITDA predictions are 20% and 42% higher than consensus estimates, respectively, according to the Oppenheimer research note.

Questions that need answering

Lau said in addition to seeing how the main metrics compare to Oppenheimer’s estimates, guidance around second quarter subscription and services revenue, as well as its upcoming expenses, will be key to forecasting the outlook for Coinbase.

Miller said he will be listening for executives’ thoughts on the company’s international expansion efforts.

Read more: Coinbase is ramping up global efforts with ‘forward-looking regulators’

“We are seeing some strong volume growth from its international futures and spot trading, but this business does have much lower fees per trade than its core business,” Miller told Blockworks. “It would be helpful to get some idea of how this new volume translates into revenue.”

Coinbase has also seen increasing use of its Base layer-2 network, the Morningstar analyst noted.

“I’m interested in how they are viewing that business and its long-term monetization potential,” Miller added. 

Other questions related to Coinbase’s trajectory are nothing new.

The company continues to navigate its lawsuit with the Securities and Exchange Commission, for example, the result of which is expected to impact the business.

District Judge Katherine Polk Failla denied most of Coinbase’s efforts to dismiss the suit last month. She said the regulator “sufficiently pleaded” that the crypto company operates as a clearing agency, broker and exchange under federal laws. 

“We currently believe that this case will be a long legal battle and will likely go to the Supreme Court to get the final decision,” Oppenheimer analysts wrote in their latest Coinbase note.

The lawsuit is a “key risk” that could impact Oppenheimer’s price target of $276 for Coinbase, the note adds. 

Coinbase’s stock price hovered around $208 at 12 pm ET — up 33% year to date but down 17% in the last month.

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