[ad_1]
After a better than expected reveal Based on financial results in its fourth quarter earnings report, US-based Coinbase has big plans.
The second-largest crypto exchange told its investors that it intends to focus more on its work with the popular USDC stablecoin this year, as a way to experiment with and improve blockchain usability. Leverages the layer-2 blockchain base launched, and has promised to maintain it. Regulatory work on behalf of ourselves and the larger Web3 industry. Meanwhile, bull markets and institutional investments are becoming active again.
coinbase is strong fourth quarter results This comes as the crypto industry returns to form, having spent most of 2023 in recession. As last year ended, trading activity picked up, and 2024 started off with a significant regulatory win regarding a spot Bitcoin ETF that could provide Coinbase and its peers a strong start to the year.
Overall, total crypto market capitalization rose 14% over the seven-day period to $1.96 trillion, the highest level since April 2022, before the Terra Luna collapse. With the recent growth in the crypto market, many market players also expected Coinbase’s trading-based revenues to increase as well – and so it did.
In the fourth quarter, Coinbase generated $529.3 million worth of “transaction,” or trading, revenue, of which $492.5 million came from retail activity and $36.7 million from institutional traders. The total figure was 83.4% higher than the $288.6 million in the third quarter.
Even though it’s looking bright, the exchange’s total trading revenue is still down 44% year-on-year as the market climbs back to bull market levels.
financial result
Coinbase generated $953.8 million in revenue in Q4 2023, up from the $629.1 million it generated in Q4 2022. It also easily surpassed the $674.1 million revenue posted in last year’s third quarter. The company’s reported figures beat expectations, including revenues of $820 million.
Earnings were $1.04 per share on net income of $275.7 million, beating expectations by $0.02 per share.
tailwinds
Coinbase could surpass its strong Q4 results in the first quarter of 2024, a period that includes regulatory wins, including the approval and launch of several spot Bitcoin ETFs that rely on the company to hold its digital assets. (As they raise more AUM, Coinbase’s custody business should expand linearly with those flows.)
But Coinbase is also the custodian of 8 of the 11 spot Bitcoin ETF issuers, meaning it is also finding cash flow through that avenue. And the more the spot Bitcoin ETF market grows, the more opportunity Coinbase has to make money. (The company is optimistic on the matter, calling the SEC’s approval of the Spot Bitcoin ETF “a pivotal moment for the expansion of the cryptoeconomy.”)
As of Feb. 13, its earnings document notes that the company recorded “approximately $320 million” worth of transaction revenue, putting its pace for the quarter at around $640 million to $650 million. With subscriptions and services revenue estimated to be “in the range of $410-480 million” for the current quarter, Coinbase could surpass $1 billion in quarterly revenue for the first time in several quarters.
With higher demand for its custody product in the near term, rising trading fees, and crypto prices regaining their former intensity, Coinbase is in a much stronger position than it was a year ago. Additionally, there are some potential headwinds for the company. Coinbase, like many fintech playersIs There was a lot of benefit from the increase in interest rates, which increased the value of reserves held by the USDC and the income provided by its own cash reserves. Interest rates in Coinbase’s domestic market are expected to soften this year, which may limit the company’s interest-based income growth. There is also a possibility that some consumers will turn to ETF products instead of buying Bitcoin directly through Coinbase, which could lead to some unevenness in its trading income.
Nevertheless, Coinbase aims to generate positive adjusted EBITDA even during a prolonged market downturn. It did, and now it’s back in growth territory as a slimmer company. That’s hardly a bad place to start the year, and provides a little warmth for an industry that has just endured a long winter.
[ad_2]
Thanks For Reading