Group 1 - Coinbase held its First Quarter 2025 Earnings Call with key executives including CEO Brian Armstrong and CFO Alesia Haas present [3] - The call included a reminder about the potential for forward-looking statements that may differ from actual results, with risks and uncertainties outlined in SEC filings [4] - Non-GAAP financial measures were discussed, with reconciliations to GAAP measures provided in the shareholder letter [5]

Financial Data and Key Metrics Changes - Coinbase reported Q1 2025 revenue of $2 billion, with adjusted EBITDA of $930 million, indicating resilience in a challenging macro environment [5][27] - Transaction revenue was $1.3 billion, down 19% quarter over quarter, while subscription and services revenue grew 9% to an all-time high of $698 million [23][26] - Adjusted net income for Q1 was $527 million, with net income reported at $66 million [27] Business Line Data and Key Metrics Changes - Global derivatives trading volume reached over $800 billion, with a significant market share increase driven by the international exchange [11] - Consumer trading volume decreased to $78 billion, down 17%, while institutional trading volume was $315 billion, down 9% [24] - Stablecoin revenue grew 32% quarter over quarter to $298 million, with USDC market cap hitting an all-time high of $60 billion [13][26] Market Data and Key Metrics Changes - Coinbase secured new licenses in Argentina and India, enhancing its international expansion strategy [14] - The average USDC held in Coinbase products increased by 49% quarter over quarter to $12 billion [13] Company Strategy and Development Direction - Coinbase aims to be the leading financial services platform globally, focusing on multiple customer groups including retail, institutions, and developers [9][21] - The acquisition of Derabit positions Coinbase as the number one crypto derivatives platform globally, enhancing its international trading capabilities [12][32] - The company is focused on building better financial infrastructure to enable economic freedom through cryptocurrency [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties and maintaining a long-term product roadmap [28][116] - The dismissal of the SEC lawsuit against Coinbase was highlighted as a significant milestone for the industry [20] - Management anticipates softer crypto trading markets in Q2 due to macro uncertainties but remains committed to growth [28] Other Important Information - Coinbase's total operating expenses were $1.3 billion, up 7%, primarily due to higher variable expenses [27] - The company is exploring further M&A opportunities to solidify its market leadership [110] Q&A Session Summary Question: Any plans on share buybacks? - The board authorized a $1 billion share repurchase program, but the focus is on opportunistic capital deployment [33][34] Question: What are Coinbase's future plans regarding crypto reserve assets? - Coinbase allocates a percentage of net income to strategic investments in crypto assets, with $150 million invested in Q1 [36][37] Question: What opportunities do you see from a growing TAM perspective? - Increased regulatory clarity is expected to benefit Coinbase, allowing it to capture more market share and partner with new entrants [38][44] Question: Can you talk about the Derabit acquisition and its impact? - The acquisition strengthens Coinbase's position in the options market and is expected to enhance profitability [47][49] Question: How does Coinbase view traditional banks entering the crypto space? - Coinbase sees potential partnerships with traditional banks and aims to provide infrastructure solutions for them [62][67] Question: What is Coinbase's long-term vision? - Coinbase aspires to be the number one financial services app globally, focusing on on-chain asset classes [71][73] Question: How does Coinbase plan to navigate different market environments? - The strategy remains consistent regardless of market conditions, with a focus on long-term growth and investment [115][116]

Financial Data and Key Metrics Changes - Coinbase reported Q1 revenue of $2 billion with adjusted EBITDA of $930 million, indicating resilience in a challenging macro environment [4] - Transaction revenue was $1.3 billion, down 19% quarter over quarter, while subscription and services revenue grew 9% to an all-time high of $698 million [21][24] - Adjusted net income for Q1 was $527 million, with total operating expenses at $1.3 billion, up 7% [25][26] Business Line Data and Key Metrics Changes - Global derivatives trading volume reached over $800 billion, with a significant market share increase driven by international exchanges [9] - Consumer trading volume was $78 billion, down 17%, while institutional trading volume was $315 billion, down 9% [22] - USDC market cap hit an all-time high of $60 billion, with average USDC held in Coinbase products increasing by 49% quarter over quarter to $12 billion [11][12] Market Data and Key Metrics Changes - Coinbase secured new licenses in Argentina and India, enhancing its international expansion efforts [12] - The average balance of USDC per holder has tripled over the last two years, indicating strong growth in stablecoin adoption [24] Company Strategy and Development Direction - Coinbase aims to be the leading financial services platform globally, leveraging cryptocurrency to enhance economic freedom [5][7] - The acquisition of Derabit positions Coinbase as the number one crypto derivatives platform globally by open interest, enhancing its international trading capabilities [10][31] - The company is focused on driving utility for the next wave of crypto adoption through emerging products and services [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating macroeconomic uncertainties and maintaining a long-term product roadmap [26] - The dismissal of the SEC lawsuit against Coinbase was highlighted as a significant win for the industry, promoting balanced regulation [19] - Management anticipates continued growth in subscription and services revenue, despite potential declines in trading revenue due to market conditions [28] Other Important Information - Coinbase's adjusted net income metric was introduced to provide clearer insights into profitability, excluding tax-adjusted impacts of crypto investment portfolio gains or losses [25] - The company is actively pursuing M&A opportunities to solidify its market leadership, with a strong balance sheet to support future acquisitions [111] Q&A Session Summary Question: Any plans on share buybacks? - The board authorized a $1 billion share repurchase program, but the focus is on opportunistic capital deployment, including the recent acquisition of Derabit [32][33] Question: What are Coinbase's future plans regarding crypto reserve assets? - Coinbase allocates a percentage of net income to strategic investments in crypto assets, with a recent purchase of $150 million predominantly in Bitcoin [34][35] Question: What opportunities do you see from a growing TAM perspective? - Increased regulatory clarity is expected to benefit Coinbase, allowing it to capture more market share and partner with new entrants in the crypto space [36][41] Question: Can you discuss the Derabit acquisition and its impact? - The acquisition strengthens Coinbase's position in the options market, enhancing profitability and providing cross-selling opportunities [45][48] Question: How does Coinbase view the entry of traditional banks into the crypto space? - Coinbase sees potential partnerships with traditional banks, providing infrastructure and services as they integrate crypto into their offerings [61][65] Question: What is Coinbase's long-term vision? - Coinbase aspires to be the leading financial services app globally, focusing on trading and payments across various customer segments [70][72] Question: How does Coinbase plan to navigate macroeconomic uncertainty? - The company prepares for various market scenarios and remains confident in its ability to invest in growth even in a bear market [115]

Financial Performance - Coinbase Global, Inc. reported quarterly earnings of $1.94 per share, exceeding the Zacks Consensus Estimate of $1.85 per share, and up from $1.65 per share a year ago, representing an earnings surprise of 4.86% [1] - The company posted revenues of $2.03 billion for the quarter ended March 2025, which missed the Zacks Consensus Estimate by 4.12%, compared to year-ago revenues of $1.64 billion [2] - Over the last four quarters, Coinbase has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance and Outlook - Coinbase Global shares have declined approximately 20.8% since the beginning of the year, while the S&P 500 has decreased by 4.3% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is $1.49 on revenues of $1.85 billion, and for the current fiscal year, it is $6.75 on revenues of $7.83 billion [7] Industry Context - The Zacks Industry Rank for Financial - Miscellaneous Services, to which Coinbase belongs, is currently in the bottom 43% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Insights - Coinbase's first-quarter revenue fell short of Wall Street expectations despite an increase in stablecoin revenue [1][2] Financial Performance - In Q1, Coinbase reported earnings of $65.6 million, or 24 cents per share, a significant decline from $1.18 billion, or $4.40 per share, a year earlier [2] - Adjusted earnings, excluding crypto investments, were $527 million, or $1.94 per share [2] - Revenue increased to $2.03 billion from $1.64 billion year-over-year, but was below the consensus estimate of $2.12 billion [2] Revenue Breakdown - Transaction revenue for the quarter was $1.26 billion, while subscription and services revenue reached $698.1 million [3] - Consumer trading volume decreased by 17% from the previous quarter to $78.1 billion, influenced by elevated volumes at the end of last year due to political events [3] Market Trends - Institutional trading volume fell 9% from the fourth quarter to $315 billion [4] - Despite a record high for Bitcoin on January 20, volatility caused by concerns over tariff policies dampened investor interest in cryptocurrencies [4] Future Outlook - For Q2, Coinbase anticipates subscription and service revenue between $600 million and $680 million [5] - The company expects stablecoin revenue growth to be offset by lower blockchain rewards due to declining asset prices [5] Strategic Developments - Coinbase announced plans to acquire Dubai-based Deribit, a major crypto derivatives exchange, for $2.9 billion, marking the largest deal in the crypto industry to date [6] - The acquisition aims to expand Coinbase's presence outside the U.S. and its derivatives business continues to gain market share [6]

Part I - Financial Information [Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company's Q1 2025 financial statements show total revenue increased to $2.03 billion, but net income sharply declined to $65.6 million due to a significant loss on crypto assets, with total assets slightly decreasing and operating cash flow turning negative [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to $21.7 billion, total liabilities decreased to $11.3 billion, and total stockholders' equity increased to $10.5 billion Balance Sheet Summary (as of March 31, 2025 vs. December 31, 2024) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$21,731,006** | **$22,541,951** | | Cash and cash equivalents | $8,051,169 | $8,543,903 | | Customer custodial funds | $5,369,865 | $6,158,949 | | **Total Liabilities** | **$11,262,766** | **$12,265,109** | | Customer custodial fund liabilities | $5,369,865 | $6,158,949 | | Long-term debt | $4,237,090 | $4,234,081 | | **Total Stockholders' Equity** | **$10,468,240** | **$10,276,842** | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2025, total revenue increased to $2.03 billion, but net income significantly decreased to $65.6 million due to a substantial loss on crypto assets, leading to a drop in diluted EPS Statement of Operations Summary (Three Months Ended March 31) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | **Total Revenue** | **$2,034,295** | **$1,637,570** | | Net Revenue | $1,960,319 | $1,587,677 | | **Total Operating Expenses** | **$1,328,489** | **$877,109** | | Operating Income | $705,806 | $760,461 | | Losses (gains) on crypto assets held for investment, net | $596,651 | $(650,429) | | **Net Income** | **$65,608** | **$1,176,245** | | **Diluted EPS** | **$0.24** | **$4.40** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash used in operating activities was $182.7 million, a reversal from the prior year, with increased cash used in investing and financing activities Cash Flow Summary (Three Months Ended March 31) | Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(182,727) | $411,485 | | Net cash used in investing activities | $(231,653) | $(125,681) | | Net cash (used in) provided by financing activities | $(893,802) | $1,927,721 | | **Net (decrease) increase in cash** | **$(1,308,182)** | **$2,213,525** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail revenue concentration, $4.24 billion in long-term debt, dismissal of an SEC lawsuit with ongoing state actions, and a subsequent agreement to acquire Deribit for $2.9 billion Revenue Breakdown (Three Months Ended March 31) | Revenue Category | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Total Transaction Revenue | $1,262,208 | $1,076,741 | | Total Subscription and Services Revenue | $698,111 | $510,936 | | **Total Net Revenue** | **$1,960,319** | **$1,587,677** | - As of March 31, 2025, the company had approximately **$4.24 billion** in long-term debt, consisting of various convertible and senior notes with maturities ranging from 2026 to 2031[64](index=64&type=chunk) - The SEC lawsuit filed in June 2023 was jointly stipulated for dismissal with prejudice in February 2025, however, the company continues to face legal actions from several U.S. state securities regulators regarding its staking services[108](index=108&type=chunk)[109](index=109&type=chunk) - On May 8, 2025, the company signed a definitive agreement to acquire Deribit, a crypto derivatives exchange, for an aggregate purchase price of approximately **$2.9 billion** in cash and stock, expected to close by December 31, 2025[122](index=122&type=chunk) [Management's Discussion and Analysis (MD&A)](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2025 net revenue grew to $2.0 billion, but net income dropped to $65.6 million and Adjusted EBITDA decreased, despite growth in MTUs and trading volume, with expense adjustments planned for Q2 [Key Business Metrics](index=29&type=section&id=Key%20Business%20Metrics) Q1 2025 key business metrics show MTUs increased 21% to 9.7 million and Trading Volume grew 26% to $393 billion, while Assets on Platform remained flat at $328 billion Key Business Metrics (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change % | | :--- | :--- | :--- | :--- | | MTUs (in millions) | 9.7 | 8.0 | 21% | | Assets on Platform (in billions) | $328 | $323 | 1% | | Trading Volume (in billions) | $393 | $312 | 26% | | Net income (in millions) | $66 | $1,176 | (94)% | | Adjusted EBITDA (in millions) | $930 | $1,014 | (8)% | - The growth in Trading Volume outpaced the overall U.S. spot market, indicating an increase in market share for the company[141](index=141&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Q1 2025 total revenue increased 24% to $2.03 billion, driven by transaction and subscription revenue growth, but profitability was significantly impacted by a $1.25 billion negative swing in crypto asset gains/losses - Transaction revenue increased by **17% YoY**, driven by a **39% rise in consumer trading volume**, although this was partially offset by a lower average blended fee rate due to a shift towards Advanced trading[144](index=144&type=chunk)[147](index=147&type=chunk) - Subscription and services revenue grew **37% YoY**, primarily due to a **$100.2 million (51%) increase in stablecoin revenue** and a **$45.7 million (30%) increase in blockchain rewards**[146](index=146&type=chunk) - Sales and marketing expenses surged **151% YoY to $247.3 million**, mainly due to higher digital advertising spend and a **277% increase in USDC rewards payouts** to enhance customer acquisition and engagement[157](index=157&type=chunk)[159](index=159&type=chunk) - The company recorded a **$596.7 million loss on crypto assets** held for investment in Q1 2025, compared to a **$650.4 million gain** in Q1 2024, a key driver of the sharp decline in net income[166](index=166&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company maintained a strong liquidity position of over $10.2 billion in cash and USDC, with approximately $4.3 billion in long-term debt and compliance with $1.6 billion in regulatory capital requirements Liquidity Resources (as of March 31, 2025) | Resource | Amount (in thousands) | | :--- | :--- | | Cash and cash equivalents | $8,051,169 | | USDC | $2,225,054 | | **Total Liquidity** | **$10,276,223** | - The company's primary contractual obligation is its long-term debt, which stood at an aggregate principal amount of **$4.3 billion** as of March 31, 2025[179](index=179&type=chunk) - Certain subsidiaries are subject to regulatory capital requirements totaling approximately **$1.6 billion**, with which the company was compliant as of March 31, 2025[185](index=185&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is crypto asset price volatility, with a hypothetical 50% price change impacting investments by $634.0 million as of March 31, 2025 - A hypothetical **50% change in crypto asset prices** would result in a **$634.0 million gain or loss** on the company's crypto assets held for investment as of March 31, 2025[194](index=194&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[196](index=196&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[197](index=197&type=chunk) Part II - Other Information [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company faces various legal proceedings and regulatory investigations, including ongoing subpoenas from the SEC and state agencies regarding its business practices and product offerings - The company is subject to ongoing regulatory oversight and has received investigative subpoenas from the SEC and various state agencies regarding its business practices, customer programs, and product offerings[201](index=201&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from crypto market volatility, revenue concentration, intense competition, operational vulnerabilities, an uncertain regulatory landscape, and concentrated voting control due to its dual-class stock structure [Business and Financial Risks](index=45&type=section&id=Business%20and%20Financial%20Risks) Business and financial risks include significant operating result fluctuations due to crypto volatility, substantial revenue dependence on Bitcoin, Ethereum, and USDC, and intense competition from less-regulated entities - Operating results fluctuate significantly due to the highly volatile nature of the crypto economy and crypto asset prices[203](index=203&type=chunk) - Total revenue is substantially dependent on crypto asset prices and transaction volumes, with a meaningful concentration from Bitcoin and Ethereum transactions and USDC-related stablecoin revenue[206](index=206&type=chunk)[209](index=209&type=chunk) - The company competes with unregulated or less-regulated companies that may have lower compliance costs and greater flexibility in product offerings[236](index=236&type=chunk)[237](index=237&type=chunk) [Operational and Security Risks](index=51&type=section&id=Operational%20and%20Security%20Risks) Operational and security risks include cyberattacks, reliance on third-party service providers, the critical need for secure private key storage, and potential disruptions to the platform or blockchain networks - Cyberattacks and security breaches on the platform, or those impacting customers or third parties, pose a significant risk to the company's brand, reputation, and financial condition[218](index=218&type=chunk) - The business relies on third-party service providers for payment processing, cloud computing, and customer service, making it vulnerable to disruptions from these partners[265](index=265&type=chunk) - The theft, loss, or destruction of private keys required to access crypto assets held in custody is a critical risk, as such losses may be irreversible and could lead to significant financial liability[284](index=284&type=chunk)[285](index=285&type=chunk) [Regulatory and Legal Risks](index=52&type=section&id=Regulatory%20and%20Legal%20Risks) Regulatory and legal risks include operating in an uncertain landscape, potential classification of crypto assets as securities, exposure to material litigation and enforcement actions, and complexities of international compliance - The business is subject to a complex and uncertain regulatory landscape, where adverse changes or failure to comply with laws could significantly harm the business[226](index=226&type=chunk) - There is a high degree of uncertainty regarding whether a particular crypto asset, product, or service could be deemed a "security," which could lead to penalties and require the company to cease offering the asset or service[256](index=256&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) - The company is, and may continue to be, subject to material litigation and enforcement actions by regulators, which are expensive and time-consuming[250](index=250&type=chunk) [Ownership and Stock Risks](index=102&type=section&id=Ownership%20and%20Stock%20Risks) Ownership and stock risks include concentrated voting control due to the dual-class structure, limiting Class A stockholder influence, and high volatility in the Class A common stock market price - The dual-class common stock structure concentrates voting control with a small group of stockholders, including the CEO, who controls a majority of the voting power, limiting the influence of Class A stockholders on corporate matters[437](index=437&type=chunk) - The market price of the Class A common stock is highly volatile and can be influenced by factors such as crypto market performance, analyst coverage, and broad market fluctuations[434](index=434&type=chunk) - The company's board authorized a **$1.0 billion share repurchase program** in October 2024, but there is no guarantee it will be fully consummated or enhance long-term stock value, with no shares repurchased as of March 31, 2025[447](index=447&type=chunk)[457](index=457&type=chunk) [Other Disclosures](index=105&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Other disclosures include no share repurchases under the $1.0 billion program as of March 31, 2025, and no Rule 10b5-1 trading plan adoptions or modifications by directors or officers during the quarter - As of March 31, 2025, no shares have been repurchased under the **$1.0 billion Share Repurchase Program** authorized in October 2024[457](index=457&type=chunk) - During the first quarter of 2025, none of the company's directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan[458](index=458&type=chunk)

First Quarter 2025 May 8, 2025 Fellow Shareholders, We delivered strong financial results in Q1, generating $2.0 billion in total revenue, $66 million in net income, $527 million in Adjusted Net Income (excluding the tax-effected impact of crypto investment asset gains/ losses), and $930 million in Adjusted EBITDA. Total transaction revenue was $1.3 billion and subscription and $ $ services revenue was nearly $700 million, driven by growth in stablecoin revenue and Coinbase One. With $9.9 billion in total $ ...

About this content About Angela Harmantas Angela Harmantas is an Editor at Proactive. She has over 15 years of experience covering the equity markets in North America, with a particular focus on junior resource stocks. Angela has reported from numerous countries around the world, including Canada, the US, Australia, Brazil, Ghana, and South Africa for leading trade publications. Previously, she worked in investor relations and led the foreign direct investment program in Canada for the Swedish government ...

Core Insights - Coinbase has announced an agreement to acquire Deribit, the world's largest cryptocurrency options and futures trading platform, for nearly $2.9 billion, with the transaction expected to be completed by the end of this year [1] Company Strategy - The acquisition is aimed at accelerating Coinbase's global derivatives strategy, indicating a strategic move to enhance its offerings in the cryptocurrency derivatives market [1]

Core Viewpoint - Coinbase Global (COIN) is expected to report its first-quarter 2025 results on May 8, with a history of earnings surprises in the last four quarters [1] Trading Volumes - Increased asset volatility and improved crypto asset prices are likely to have boosted trading volumes in the first quarter, which remains a major revenue driver for Coinbase [2] - The Zacks Consensus Estimate for total trading volume is 404 million, reflecting a 28.5% increase year-over-year. The estimate for Consumer trading volume is 83 million, indicating a 48.2% rise, while Institutional trading volume is pegged at 321 million, showing a 25.4% increase [3] Transaction Revenues - Transaction revenues are expected to benefit from higher fees for both Consumer and Institutional segments, with the Zacks Consensus Estimate for total transaction revenues at $1.325 billion, a 23% increase from the previous year. Consumer transaction revenues are estimated at $1.2 billion, and Institutional revenues at $127 million, suggesting a 49.4% year-over-year increase [4] Market Share and Product Growth - Revenues are anticipated to be supported by market share gains in U.S. spot and derivatives trading products, as well as growth in custody, staking, USDC assets, and Coinbase One subscribers [5] Earnings Prediction - The quantitative model does not predict an earnings beat for Coinbase this quarter, with an Earnings ESP of -5.23% and a Zacks Rank of 3 (Hold) [6][7]