In after-hours trading Thursday, shares of Coinbase (COIN) dipped by over 5% following the announcement that its first-quarter results did not meet expectations. The decline in cryptocurrency prices significantly impacted trading activity, which is a key revenue driver for the company.
The financial report revealed a loss of $1.49 per share, contrasting sharply with analyst predictions of a $0.27 profit. Revenue figures showed $1.41 billion, falling short of the anticipated $1.52 billion.
Transaction revenues amounted to $755.8 million, underperforming against forecasts of $805.2 million. The subscription and services segment, which investors monitor closely as Coinbase aims to decrease its dependence on trading fees, recorded $583.5 million in revenue, missing estimates of $619.3 million.
The downturn was exacerbated by a sharp decline in crypto markets, with bitcoin (BTC) and other digital assets experiencing significant price drops. Lower prices and diminished volatility typically result in reduced spot trading volumes across platforms. Although there was an expectation of a slowdown following the early-quarter selloff, bitcoin managed to recover approximately 12% in March.
Coinbase has been expanding its offerings beyond core trading services, venturing into stablecoins, staking, derivatives, and blockchain infrastructure over recent years. The company announced that its global crypto trading volume market share hit a record high of 8.6%, partly fueled by growth in derivatives trading.
The trailing 12-month derivatives trading volume saw an increase of 169% year over year, with retail derivatives revenue crossing the $200 million annualized mark for the first time. Additionally, Coinbase highlighted advancements in prediction markets and stablecoin activities, noting that its prediction markets business achieved more than $100 million in annualized revenue within two months following its U.S. launch.
Coinbase reported that during the quarter, its Base blockchain handled 62% of global onchain stablecoin transaction volumes.
Earlier this week, Coinbase announced plans to eliminate approximately 700 positions, or about 14% of its workforce, as part of a restructuring driven by AI technologies. The company also referenced the broader crypto downturn as a contributing factor to these job cuts.
Investors are keenly observing whether Coinbase’s subscription and infrastructure businesses can mitigate the cyclical nature of crypto trading revenue during market downturns.