Coinbase smashed Q1 estimates, achieving $1.6 billion in revenue and $1.2 billion in net income. The standout performance came from the bottom line, with diluted earnings per share working out to $4.40, far surpassing analysts’ predictions of $1.09.
This impressive 244.8% earnings beat was largely driven by the recent introduction of bitcoin exchange-traded funds (ETFs). That led the company’s institutional platform, Coinbase Prime, to hit record highs in volume and number of clients.
“The bitcoin ETFs—combined with strong market conditions in Q1—unlocked a flywheel of customer engagement across this more robust product suite,” Coinbase leadership wrote in its letter to shareholders. “In fact, nearly 40% of institutional clients engaged with at least 3 products in Q1.”
Coinbase Prime revenue was up 105% year-over-year, bringing in $256 billion. The crypto exchange has also served as a partner to 8 of the 11 new ETFs. At the close of Q1, Coinbase held $171 billion in crypto assets.
A Strong Market
Outside of institutional investors, the crypto market has experience a surge. Bitcoin led the charge, reaching an all-time high of $73,837.85 in mid-March. For Coinbase, revenue from consumer transactions jumped 99% compared to the previous quarter.
The market climb coincides with the latest bitcoin halving, which has traditionally driven the crypto market upwards. As the market has matured, however, it has fostered increased competition. Crypto.com, which offers a wide range of cryptocurrencies at lower fees, has emerged as a formidable competitor to Coinbase’s dominance.
Legal Concerns
That’s not the only concerning news for the company. The SEC recently made inroads in its lawsuit against Coinbase, alleging the company operated as an unregistered broker. Additionally, the SEC alleges that Coinbase was not simply serving as an exchange because of the crypto funds it created and administered.
Despite the lawsuit, Coinbase shares are up 355% over the past 12 months. After the banner Q1 earnings release, however, Coinbase stock sold off almost 4%. That’s likely due to the heavy run-up prior to the announcement.
