Coinbase Global announced its first quarterly profit since 2021, buoyed by robust trading volumes driven by a renewed interest in cryptocurrency, which saw its shares surge by nearly 13% after hours. The resurgence in investor enthusiasm for crypto was spurred by the U.S. Securities and Exchange Commission’s (SEC) approval of the first spot bitcoin exchange-traded funds (ETFs).
The approval of ETFs, granted in January, contributed to a significant 57% surge in bitcoin’s price during the last quarter of 2023. This surge propelled Coinbase’s transaction revenue to $529.3 million in the fourth quarter, marking a substantial 64% increase.
Michael Elliott, an equity research analyst with CFRA Research, commented, “Results this quarter were exceptional as they far exceeded both our expectations and Street consensus.” Looking ahead, Coinbase anticipates a strong performance in the first quarter for its subscription and services unit, which includes businesses beyond trading.
Revenue from this unit is projected to be between $410 million and $480 million, surpassing the LSEG estimate of $356.22 million. In the fourth quarter, revenue from the unit surged by nearly 33% to $375.4 million, with stablecoin revenue, particularly from the partnership with fintech firm Circle, contributing significantly. Circle issues the USD Coin (USDC) stablecoin, jointly governed with Coinbase, and the interest on reserves backing USDC is a key revenue source for Coinbase.
The company reported an overall profit of $273.4 million, or $1.04 per share, for the three months ended Dec. 31, compared to a loss of $557 million, or $2.46 per share, a year earlier. Analysts, according to LSEG data, had expected a loss of 1 cent per share.
Despite longer-term concerns expressed by some analysts that spot ETFs might lead investors to seek crypto exposure off the Coinbase platform, CFO Alesia Haas dismissed such worries. “ETFs have just been net positive for the industry and additive to Coinbase,” Haas stated.
