Coinbase reports first-quarter revenue beat after bitcoin rally leads surge in profit

Coinbase reported better-than-expected revenue in its first-quarter earnings report on Thursday. The stock was trading about 4% lower in extended trading.

Here's how the company did, compared to analysts' consensus from LSEG.

• Earnings: $4.40 per share. That may not be comparable to the $1.09 average analyst estimate.
• Revenue: $1.64billion vs. $1.34 billion expected

Coinbase, the primary marketplace in the U.S. for buying and selling digital tokens, reported net income of $1.18 billion, or $4.40 per share, compared to a year-ago loss of $78.9 million, or a loss of 34 cents a share. In February the company reported its first profit in two years.

Profit in the quarter includes a $650 million mark-to-market gain on crypto assets held for investment in connection with the company's adoption of updated accounting standards.

Consumer transaction revenue was $935 million for the quarter, up well over 100%from a year earlier. Total transaction revenue almost tripled in the quarter to $1.07 billion.

Transaction revenue has historically been a primary driver of revenue, with subscription and services revenue bringing in $511 million for the quarter.

Coinbase shares climbed almost 9% on Thursday ahead of the report and have jumped roughly 32% this year after soaring almost fivefold in 2023. The stock tends to benefit from big gains in bitcoin as large rallies in the cryptocurrency lead to increased trading volumes and demand for other services.

During the first quarter, bitcoin hit a new all-time high above $73,000 in March, and ethereum, the second-biggest digital asset, underwent its first major upgrade in over a year.

The industry has also seen an influx of institutional investors since the SEC approved a raft of new U.S. spot bitcoin exchange-traded funds. Many of the ETFs have partnered with Coinbase as their custody partner. By the end of the first quarter, the funds had collectively brought in more than $50 billion.

Cumulative net inflows peaked on Apr. 8, according to Raymond James analysts, and have fallen since then, alongside a slippage in bitcoin.

"The price of Bitcoin peaked as the pace of inflows moderated, and has been drifting modestly lower since mid-March," Raymond James analysts wrote in a note this week. "Indeed, trading volumes on Coinbase's platform have come well down from early-March levels."

Coinbase also remains mired in a legal fight with the SEC. In March, a judge ruled that the regulator's claim that the crypto exchange engaged in unregistered sales of securities could be heard by a jury at trial.

Another potential headwind is new competition from Crypto.com, which has re-gained market share in recent months.

Multiple insiders at Coinbase, including four members of the C-suite, collectively sold $383 million of the company's shares during the first quarter, according to analysts from Raymond James. This was more than double the amount sold in the fourth quarter of 2023 and the greatest amount of insider selling since the company listed on the Nasdaq in 2021.

Raymond James noted that the biggest seller has been co-founder and board member Fred Ehrsam, who netted $129 million for his shares.

— CNBC's Michael Bloom and Kate Rooney contributed to this report.