- Coinbase reported a decline in first-quarter revenue due to reduced trading volume, but its service income reached a record high, driven by strong stablecoin growth.
- The company is set to acquire Deribit for $2.9 billion, expanding its presence in the cryptocurrency derivatives market.
Coinbase Revenue Takes a Hit
Coinbase Global (COIN) reported a weaker first-quarter performance, as declining cryptocurrency prices negatively impacted trading activity. The company’s net revenue dropped by 11% from the previous quarter, totaling $1.96 billion. However, this figure represented a 24% increase compared to the same period last year.
Net income fell sharply to $65.6 million, or $526.6 million when adjusted for cryptocurrency investment losses, a significant drop from the $1.18 billion it earned in the previous year. The primary driver behind this decline was reduced trading volume, which plunged by 10.5%, leading to an 18.9% decrease in transaction revenue, amounting to $1.26 billion.
Service Income Hits a New High
Despite the downturn in trading revenue, Coinbase’s service income surged, with its stablecoin revenue increasing by over 50% compared to last year. This impressive growth helped mitigate the impact of the volatile cryptocurrency market, highlighting the company’s ability to diversify its income streams.
Coinbase’s Investment Strategy Raises Concerns
Coinbase’s decision to maintain substantial cryptocurrency investments has drawn criticism, as it exposes the company to heightened market volatility. The firm’s involvement in cryptocurrency custody, staking, and trading already ties it heavily to digital asset valuations, making its direct investments an added risk.
Expansion on the Horizon: The Deribit Deal
In a bold move, Coinbase has announced plans to acquire Deribit, a leading cryptocurrency derivatives exchange, for $2.9 billion in a mix of cash and shares. This acquisition aims to strengthen Coinbase’s international presence and expand its footprint in the rapidly growing derivatives market.
Morningstar has maintained a fair value estimate of $170 for Coinbase, with a “No Moat” rating and a “Very High” uncertainty rating. Despite the revenue dip, Coinbase’s growing service income and planned acquisition of Deribit suggest the company is positioning itself for future growth.
