Coinbase Posts First Quarterly Profit Since 2021

This Thursday, Coinbase Global has reported its inaugural quarterly profit since 2021, buoyed by robust trading volumes fueled by renewed interest in cryptocurrencies, pushing its shares up by nearly 13% post-market, according to Reuters.

The surge in investor interest in crypto was reignited in recent months by the approval of the inaugural spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).

The approval of the ETFs in January catalyzed a 57% surge in bitcoin's price in the final quarter of 2023, propelling a 64% increase in transaction revenue for the crypto exchange Coinbase to $529.3 million in Q4.

Michael Elliott, equity research analyst with CFRA Research, remarked, "Results this quarter were exceptional as they far exceeded both our expectations and Street consensus."

Coinbase anticipates a robust first quarter for its subscription and services unit, with revenue forecasted between $410 million and $480 million, surpassing LSEG's estimate of $356.22 million.

In Q4, revenue from the unit surged by nearly 33% to $375.4 million, with stablecoin revenue making the largest contribution. The interest earned on reserves supporting USDC, a stablecoin issued jointly by Coinbase and fintech firm Circle, has become a significant revenue stream. The company has been able to capitalize on higher income due to the Federal Reserve's interest rate hikes.

The company reported a profit of $273.4 million, or $1.04 per share, in the quarter ending Dec. 31, compared to a loss of $557 million, or $2.46 per share, a year earlier, defying analyst expectations of a 1 cent loss per share, according to LSEG data.

Despite concerns voiced by Elliott about potential migration of investors seeking crypto exposure off the Coinbase platform due to spot ETFs, CFO Alesia Haas dismissed such worries, stating, "ETFs have just been net positive for the industry and additive to Coinbase."