GuShiio.com Original source: CoinBase
Original text compiled and compiled by: Felix, PANews
Coinbase announced its fourth-quarter and full-year earnings on February 13 local time. Thanks to a strong post-election rebound that pushed cryptocurrency prices to record highs at the end of last year, Coinbase exceeded expectations in the fourth quarter and achieved its largest quarterly revenue in three years.
Coinbase reported earnings per share of $4.68, more than double analysts ‘expectations of $2.11, and fourth-quarter profit reached $1.3 billion.
In after-hours trading, Coinbase’s shares rose 2% to around $304, having gained 112% over the past year. This article takes you to take a quick look at various key data in Coinbase’s financial report.
In 2024, revenue will double for the whole year, and Q4 will contribute more than 30% of revenue
2024 was a strong year for both cryptocurrency and Coinbase, with full-year revenue more than doubling to $6.564 billion, net income of $2.6 billion, and adjusted EBITDA of $3.3 billion. Among them, revenue in the fourth quarter reached US$2.27 billion, a month-on-month increase of 88%.
In terms of products, Coinbase gained market share in U.S. spot and derivatives trading products in 2024, and added custody, pledge and USDC assets to its product suite, which helped drive revenue diversification. In addition, Coinbase further promotes product adoption of Base, Coinbase One, Prime Financing and international expansion.
trading income
The transaction revenue for the whole year of 2024 was US$4 billion, a year-on-year increase of 162%; the total transaction volume was US$1.2 trillion, a year-on-year increase of 148%. Among them, retail transaction volume was US$221 billion, a year-on-year increase of 195%; institutional transaction volume was US$941.2 billion, a year-on-year increase of 139%. In the fourth quarter, Coinbase’s trading revenue reached US$1.6 billion, a month-on-month increase of 172%; transaction volume was US$439 billion, a year-on-year increase of 185%.
Most of the reasons for Coinbase’s year-on-year growth in trading volume in 2024 are due to increased levels of volatility in crypto assets, especially in the first and fourth quarters, and higher average prices for crypto assets. The two main factors supporting these stronger macroeconomic factors are the launch of Bitcoin ETF products in the first quarter of 2024, and the election of a pro-cryptocurrency president and Congress in the fourth quarter of 2024 and associated regulatory clarity expectations, both of which have led to increased spot crypto trading activity.
In addition, Coinbase’s share of the U.S. spot market will increase in 2024. In terms of spot products, Coinase has added initial launch work (i.e., the first centralized exchange to launch tokens for trading and custody) and added 48 new spot trading assets.
Not only that, Coinbase also successfully expanded its derivatives business in 2024. For example, 92 new assets have been added to trade on international exchanges. Although still in its early stages, retail and institutional derivatives trading volume and market share both hit record highs in the fourth quarter.
Retail transaction income
Retail trading volume in the fourth quarter was US$94 billion, a month-on-month increase of 176%, far exceeding the U.S. spot market, which grew by 126% month-on-month. Retail transaction revenue for the quarter was US$1.3 billion, a month-on-month increase of 179%. This may be related to the launch of 13 new assets on Coinbase in the fourth quarter, including popular memecoins such as PEPE and WlF. All in all, these efforts (coupled with market conditions) drove MTU growth of 24% month-on-month.
Institutional transaction income
Institutional trading volume in the fourth quarter was US$345 billion, a month-on-month increase of 128%, outperforming the U.S. spot market. Institutional transaction revenue for the quarter was US$141 million, a month-on-month increase of 156%. Fourth-quarter results were strong, with significant month-on-month growth in revenue from exchanges and Prime. In addition to strong market conditions, institutional businesses are also developing strongly.
Other transaction income
Other transaction revenue in the fourth quarter was US$68 million, a month-on-month increase of 99%, mainly due to the increase in Base’s sorter revenue. Due to increased network demand and higher ETH prices in the fourth quarter, the number of transactions continued to grow month-on-month, and revenue per transaction was also higher. The average cost per transaction remains below the target of $0.01.
Subscription and service revenue
Subscription and service revenue in 2024 will be US$2.3 billion, a year-on-year increase of 64%, which is approximately 4.5 times higher than the 2021 bull market level. Most of the year-on-year growth in 2024 will come from blockchain reward revenue, stablecoin revenue and Coinbase One subscription revenue.
Subscription and service revenue for the fourth quarter was $641 million, a 15% month-on-month increase. Stabilcoin revenue fell 9% month-on-month to US$226 million in the fourth quarter, but increased 31% year-on-year to US$910 million for the year. Overall, USDC is the fastest-growing “major” stablecoin in 2024. The driving force for fourth-quarter stablecoin revenue was the average USDC market value and a significant increase in USDC assets in the product suite.
Blockchain reward revenue in the fourth quarter was US$215 million, a month-on-month increase of 39%. The driving force for growth is rising crypto asset prices, rising average negotiated reward rates (especially SOL), and continued inflows of native assets.
Interest and financing expense income in the fourth quarter was US$66 million, a month-on-month increase of 3%. The growth came mainly from Prime Financing, whose loan balance hit a record high after the U.S. election in early November. The growth in loan volume was driven by increased trade finance activity related to ETF products and increased utilization of bilateral loan products. The increase in Prime Financing fees was partially offset by a decline in revenue from customer-held fiat tender balances, as the average balance increased by 7% month-on-month to $5.1 billion, but the increase was offset by lower real interest rates.
Custody fee income in the fourth quarter was US$43 million, a month-on-month increase of 36%. The driving force for growth comes from rising crypto asset prices and the continued growth in the number of custody. BTC inflows are the biggest driver of growth, thanks to Coinbase’s role as the main custodian of the vast majority of ETFs, as well as other customer activities. It also benefited from the first-day release plan in the fourth quarter. As of the fourth quarter, assets in custody (“AUC”) were US$220 billion, which is part of the platform’s total assets.
Other subscriptions and services revenue was $91 million, a month-on-month increase of 56%. Coinbase One is the biggest driver of month-on-month growth.
Full year operating expenses were US$4.3 billion, and transaction and marketing costs rose
Total operating expenses in 2024 will be US$4.3 billion, a year-on-year increase of 30% to US$1 billion. Technology and development, general and administrative, and sales and marketing expenses combined increased 25% year-on-year to US$692 million. The growth was mainly due to increased spending in variable areas, particularly USDC incentive spending and marketing expenses, and higher stock compensation and policy spending, due to increased cryptocurrency promotion. At the end of the year, it had 3,772 full-time employees, a year-on-year increase of 10%.
Total operating expenses in the fourth quarter were US$1.2 billion, a month-on-month increase of 19% to US$202 million, mainly due to increased transaction expenses due to increased trading activity. Technology and development, general and administrative, and sales and marketing expenses increased by a combined $84 million, or a 10% month-on-month increase, mainly due to performance marketing expenses, higher USDC rewards (due to significant increases in USDC assets in the product suite), and policy-related expenses.
Transaction expenses in the fourth quarter were $317 million, accounting for 14% of net income, an increase of 85% month-on-month. The month-on-month increase was mainly due to the increase in transaction volume, blockchain reward fees and blockchain transaction fees (mainly BTC and ETH).
Technology and development expenses were US$369 million, down 2% month-on-month. The decrease is due to a decrease in personnel-related costs, which is partially offset by an increase in professional service-related expenditures.
General and administrative expenses were US$363 million, a month-on-month increase of 10%. The driving force for growth was client-supported investment, which was related to a strong market environment in the fourth quarter, with increases in legal-related fees and policy-related expenses.
Sales and marketing expenses were $226 million, a month-on-month increase of 37%. Support market momentum in the fourth quarter by increasing variable performance marketing spending and promotions to drive user acquisition and revenue growth in the U.S. and internationally. Due to the increase in USDC assets in the product suite, USDC rewards also increased by 29% month-on-month to US$80 million.
In addition, in terms of number of shares, Coinbase’s fully diluted number of shares at the end of the fourth quarter was 286.5 million shares. The figure includes 253.6 million ordinary shares and 32.9 million diluted shares.
In terms of capital and liquidity, Coinbase ended the fourth quarter with $9.3 billion in dollar resources, which are defined as cash and cash equivalents and USDC (net of dollars lent or pledged as collateral). Dollar resources increased by 13% month-on-month to US$1.1 billion.
This year, Q1 has achieved transaction revenue of US$750 million and will continue to promote revenue diversification
The report said that as of February 11, Coinbase had generated approximately US$750 million in transaction revenue in Q1 this year. Coinbase said it is working hard to diversify its revenue sources and no longer relies solely on transactions. Judging from last year’s earnings report, as of the fourth quarter, Coinbase’s trading revenue accounted for 68.5% of its total revenue, most of which came from retail traders.
Revenue from its subscription and services businesses, which include stablecoins, pledges, custody and Coinbase One products, is expected to be between $685 million and $765 million for the quarter.
Coinbase also expects USDC stablecoins issued by Circle and signed a revenue sharing agreement with Coinbase to drive month-on-month growth in sales and marketing expenses in the first quarter.
Coinbase CEO Brian Armstrong said on an earnings conference call that the company has “ambitious goals of making USDC the number one stablecoin.”
Transaction fees are expected to reach mid-to-high levels as a percentage of net income. Technology and development and general and administrative expenses are expected to be between $750 million and $800 million. In addition, payroll taxes are expected to rise quarter by quarter due to seasonal factors. Net profit growth is expected to be slightly higher than in the fourth quarter.
Sales and marketing expenses are expected to be between $235 million and $375 million in the first quarter of 2025. Since the middle of the fourth quarter, marketing opportunities that meet or exceed the ROI threshold have increased significantly across old and new paid marketing channels in the U.S. and major international markets. Despite this, due to continued fluctuations in crypto market conditions, daily expenditures on effectiveness marketing varied widely in the first quarter. As a result, the range of potential results in the first quarter is expected to be much wider than in previous periods. Whether you fall within this range depends largely on
·Whether you continue to see attractive impact marketing opportunities that have historically been closely correlated with market volatility and asset prices throughout the rest of the first quarter
·USDC assets in the product suite that drive USDC rewards. For reference, this accounted for approximately 35% of sales and marketing expenses in the fourth quarter
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