Coinbase Reports Record Growth Amid Crypto Market Surge

Coinbase's revenue and profit skyrocketed in the last quarter, driven by renewed interest in crypto. With a 179% jump in consumer transactions and over $2.27 billion in revenue, the company sees a new era ahead.

Coinbase Global Inc. reported a massive surge in both revenue and profit during the last quarter, fueled by a strong market rally. The company’s revenue for Q4 reached $2.27 billion, far exceeding analysts’ expectations of $1.87 billion. Net income also saw significant growth, hitting $1.29 billion, or $4.68 per share.

The rally comes in the wake of Donald Trump’s pro-crypto stance, which has reignited investor confidence. In a shareholder letter, Coinbase stated that the crypto industry is entering a "new era" and emphasized its commitment to expanding revenue streams and improving platform utility.

A key factor behind Coinbase's success has been the return of retail investors. Many users who had previously abandoned the platform during market downturns are now back. Consumer transaction revenue rose 179% quarter-over-quarter, reaching $1.3 billion. Nearly half of the trading activity came from users who were either new to the platform or had been inactive for some time.

As of February 11, Coinbase had already generated approximately $750 million in transaction revenue. The company projects first-quarter subscription and services revenue to range between $685 million and $765 million. However, it also anticipates an increase in sales and marketing expenses.

Coinbase continues to face regulatory challenges, particularly from the U.S. Securities and Exchange Commission (SEC). The company is currently engaged in a legal battle over allegations of selling unregistered securities, a claim it disputes. Coinbase CFO Alesia Haas stated that momentum in the case has shifted in their favor after a district court granted an interlocutory appeal, pausing discovery proceedings.

Despite these challenges, Coinbase stock remains strong, gaining 20% this year. The company has also benefited from its partnership with Circle’s USDC stablecoin, generating $172 million in additional revenue compared to the previous year. Interestingly, the launch of exchange-traded funds (ETFs) for crypto in early 2024 has not negatively impacted Coinbase’s business. Haas noted that ETFs have instead contributed to overall market growth.

Operating expenses rose 19% sequentially, reaching $1.2 billion, but analysts see this spending as a catalyst for continued growth. According to Compass Point Research’s Joe Flynn, Coinbase’s increased investments have so far translated into higher revenue.

Since its direct listing nearly four years ago, Coinbase’s market value has surged to over $74 billion. The company’s stock has risen 600% over the past two years, recovering from the turbulence caused by scandals and bankruptcies like the FTX collapse in 2022. With strong financials and bullish market sentiment, Coinbase is positioning itself as a key player in the next chapter of crypto evolution.