Coinbase, the cryptocurrency exchange, released its Q1 earnings on May 8, revealing a decline in both revenue and profits as trading activity waned in the early months of the year.
The total revenue was reported at $2 billion, marking a 10% decrease from the previous quarter. Net income dropped sharply to $66 million, down from $1.29 billion in Q4, largely due to a $596 million paper loss tied to the firm’s crypto assets.
Despite the significant profit drop, Coinbase surpassed analyst forecasts for earnings per share, achieving $1.94, slightly above the projected $1.85 by Zacks.
Declining Trading Activity Impacting Revenue
The first quarter saw a downturn in trading as the overall crypto market experienced valuation drops. Coinbase’s transaction revenue fell nearly 19%, totaling $1.26 billion. Trading volumes also decreased by over 10%, reaching $393 billion. The exchange indicated that market concerns, particularly related to tariffs from the Trump administration, played a role in this slowdown.
Our Q1 2025 financial results are now live. pic.twitter.com/qyIufvpEvB
— Coinbase (@coinbase) May 8, 2025
Additionally, Coinbase referenced the dramatic trading surge in Q4 of the previous year, linking it to President Trump’s election, which facilitated significantly higher trading volumes and subsequent near-record profits.
Subscriptions and Stablecoin Growth
In contrast to the slowdown in trading, Coinbase’s subscription and services segment saw an increase in revenue, rising nearly 9% to $698 million, with stablecoin-related income being the primary driver.
This segment offers Coinbase a more consistent revenue stream, especially beneficial during slow trading periods. It also signifies the company’s shift away from relying heavily on market volatility and speculative transactions for income.
Expanding Market Share
Despite facing lower volumes in some markets, Coinbase noted that it gained market share in both spot and futures trading. The company is also making headway in emerging markets like Argentina and India, citing significant user registrations in those regions.
In a significant legal development, Coinbase highlighted a court ruling dismissing its lawsuit against the US Securities and Exchange Commission, interpreting it as a win for balanced regulatory practices and support for its mission to integrate crypto into traditional finance.
Major Crypto Derivatives Acquisition
In its earnings report, Coinbase announced a nearly $3 billion deal to acquire Deribit, a leading player in the crypto derivatives space.
Deribit has reportedly processed over $1 trillion in trades in 2024 and holds around $30 billion in open interest, positioning Coinbase as a leader in the global crypto derivatives market.
Featured image from Fortune, Chart from TradingView
