In a surprising turn of events, shares of Coinbase, the prominent cryptocurrency exchange, saw a significant surge of 12.7% in after-hours trading, following an impressive fourth-quarter earnings report that not only beat Wall Street expectations but also marked a robust return to profitability for the company. The report detailed a net revenue of $905 million for the quarter, a staggering 45.2% increase from the previous quarter, far surpassing the anticipated $825 million by analysts.
The exchange’s return to profitability is particularly noteworthy, with net income reaching $273 million, marking the first instance of positive income since the fourth quarter of 2021. This is a stark contrast to the $2 million net loss reported in the preceding quarter. The bulk of the firm’s revenue, $529.3 million, was attributed to transaction revenue, with consumer crypto trading accounting for $493 million of this total, nearly doubling from the third quarter’s figures. Institutional transaction revenue also saw a significant increase, more than doubling to $36.7 million. Consumer trading volume alone surged to over $29 billion, representing a 164% increase quarter-on-quarter.
Subscription and services revenue also contributed significantly to the firm’s earnings, totaling $375.4 million, with stablecoin and blockchain rewards generating $171.6 million and $95.1 million, respectively. This financial upswing has led to a notable increase in Coinbase’s share price, which rose to $186.7 in after-hours trading, as per Google Finance data.
Coinbase’s stock had already been on an upward trajectory, with a 41.2% increase over the last eight trading days in anticipation of a strong financial report. This optimism was further bolstered by an upgraded rating from JPMorgan analysts on February 15. The crypto community, including Ben Weiss, CEO of CoinFlip, expressed little surprise at Coinbase’s performance, citing the firm’s continued expansion of offerings in the fourth quarter as a key factor.
Looking ahead, Coinbase aims to remain a leader in compliance and regulatory discussions, a move that is expected to set the stage for clearer regulatory frameworks ahead of the 2024 election. The company also highlighted its achievement of generating positive Adjusted EBITDA throughout all four quarters of 2023, totaling nearly $1 billion, and anticipates moderate headcount growth and an increase in total expenses for 2024, signaling continued investment in its growth and infrastructure.
