Coinbase’s Revenue Surges 51% to $953.8 Million, Leading to Share Price Surge

Coinbase Global Inc. surprised the market by posting a profit for the first time in two years after a fourth-quarter rebound in digital-asset markets lifted trading revenue, The company reported a 51% jump in revenue to $953.8 million, beating analysts’ predictions of $826 million. The net income for the quarter was $273 million, compared with a loss of $557 million the previous year. Consumer transaction revenue nearly doubled from the third quarter, while institutional transaction revenue more than doubled quarter-over-quarter to $36.7 million.

Wall Street analysts have been watching Coinbase closely for signs that newly launched US exchange-traded funds investing directly into Bitcoin may eat into Coinbase’s retail revenue. However, the exchange’s shares rose more than 15% in after-hours trading, indicating that investors are bullish on the company’s prospects.

The announcement is good news for the company which had a tumultuous year in 2023, with its stock surging almost fivefold after tumbling 86%. The company cited “excitement” around Bitcoin spot ETF approvals and broad expectations around improving macro conditions in 2024 as reasons for the sharp increase in crypto volatility in the fourth quarter.

Investors are also watching the impact of the ETFs on Coinbase’s custodial fee revenue, which increased to $19.7 million in the fourth quarter. Coinbase serves as a custodian for eight of the 10 spot Bitcoin ETFs, and as these funds gain funds, the company should benefit from growth in these fees.

Coinbase plans a “modest increase” in headcount to support product growth, according to Alesia Haas, the company’s chief financial officer. The company sees a positive impact from the Bitcoin ETFs across the industry through “elevated engagement,” she said.

Overall, the positive financial results marked a turning point for Coinbase and the cryptocurrency industry. As a result, investors are eagerly awaiting if Coinbase can maintain profitability for the full year and how the ETFs will affect its future revenue streams.