Coinbase Reports First Profit in Two Years, Sees Surge in Shares

The largest U.S. cryptocurrency exchange, Coinbase, witnessed a significant surge in its shares, jumping 15% in U.S. trading following the announcement of its first profit in two years. The company reported a remarkable net income of $273 million in the fourth quarter, marking a substantial turnaround since its last positive net income reported in the same quarter of 2021.

Coinbase disclosed that its net revenue for the final quarter of 2023 amounted to $905 million, representing an impressive nearly 50% increase from the previous year’s $605 million. The surge in revenues can be attributed to the heightened interest in cryptocurrencies, particularly after the U.S. Securities and Exchange Commission‘s approval of the first spot Bitcoin exchange-traded funds (ETFs).

The introduction of Bitcoin ETFs opened up avenues for retail investors to engage with cryptocurrencies through regulated exchanges without direct exposure to the underlying asset, consequently driving up demand for digital currencies. The heightened interest in cryptocurrencies was also fueled by expectations of improved macroeconomic conditions in 2024, resulting in increased volatility in the crypto market.

Transaction revenues played a pivotal role in bolstering Coinbase’s revenues in the fourth quarter, while subscription and services revenue remained relatively stable. With consumer trading revenue reaching $493 million, representing a 79% increase quarter-over-quarter, the company experienced substantial growth in trading volumes.

In an interview with CNBC, Coinbase’s Chief Financial Officer, Alesia Haas, highlighted that the platform managed the surge in trading volumes without adjusting fees due to a strategic mix of fees catering to both ‘Simple’ and ‘Advanced’ traders. Haas emphasized that the fee rate results were influenced by the shifting mix of products traded on the platform, with a notable growth in Advanced trading during the volatile market conditions of the fourth quarter.