Coinbase posts big revenue beat but expects trading volume to fall in the first quarter

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Monitors display Coinbase signage during the company’s initial public offering (IPO) at the Nasdaq MarketSite in New York, U.S., on Wednesday, April 14, 2021.
Michael Nagle | Bloomberg | Getty Images

Coinbase reported fourth-quarter earnings that beat analyst estimates after the bell on Thursday. Shares bounced around after the report. They were down about 5% after hours before the call with analysts.

Here are the key numbers:

  • Earnings per share (EPS): $3.32, versus $1.85 expected, according to a Refinitiv survey of analysts
  • Revenue: $2.5 billion, versus $1.94 billion expected, according to Refinitiv

The company predicted that retail Monthly Transaction Users (MTUs) and total trading volume would be lower in Q1 2022 compared to Q4 2021. Coinbase attributed the change to decreased crypto asset volatility and a 20% decrease in crypto market capitalization quarter-to-date. It said the declining market cap is driven by macroeconomic factors like geopolitical instability and the U.S. Federal Reserve signaling a tightening of financial conditions.

Coinbase expects subscriptions and services revenue to be lower in Q1 because of crypto asset price declines.

In the fourth quarter, MTUs grew to 11.4 million in Q1, up from 7.4 million in Q3. That came after Coinbase saw a decline in MTUs between Q2 and Q3.

It also saw net income double quarter-over-quarter to $840 million in Q4. That’s several times the net income Coinbase saw in Q4 2020, when it reported $177 million.

The report comes after major cryptocurrencies saw a weak month in December despite an overall explosion in value in 2021. Investors blamed the slow end to the year on concerns about cryptocurrency’s energy consumption and on macroeconomic factors like the rise of the omicron Covid variant.

Coinbase warned shareholders in the previous quarter that its stock should be considered a long-term investment since its business is “volatile.”

That’s been demonstrated in recent weeks as major cryptocurrencies like bitcoin fell amid concerns that Russian troops would invade Ukraine. That’s led some analysts to question the idea that bitcoin could act as a safe-haven currency in times of geopolitical instability.

Coinbase warned in its letter to shareholders that 2022 will continue to have a fair amount of uncertainty for its business.

“We enter 2022 with even more unknowns which make our business all the more difficult to forecast,” the company wrote, pointing to “global macroeconomic headwinds” on top of unpredictable crypto asset prices, rising interest rates and inflation. But, it said, it sees increased opportunities and adoption of cryptocurrency.

This story is developing. Check back for updates.

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Sophie Tremblay

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