Coinbase Reports a Big Revenue Beat in Fourth Quarter

Crypto trading platform Coinbase reported its fourth quarter financial results this week, revealing a big revenue beat.

The company however has said that it expects trading volume to fall in the first quarter and warned its stock should be considered a long-term investment because its business is “volatile.”

Coinbase’s earnings come after major cryptocurrencies saw a weak month in December, despite an overall explosion in value in 2021.

Shares bounced around after the Q4 report but were down about 5% in extended trading by the end of executives’ call with analysts.

For the quarter, earnings per share came in at $3.32 versus $1.85 that was expected per a Refinitiv survey of analysts. Revenue at $2.5 billion was compared to $1.94 billion expected, according to Refinitiv

Coinbase predicted that retail monthly transaction users (MTUs) and total trading volume during the first quarter would be lower than the prior period. The company attributed the change to decreased crypto asset volatility and a 20% decrease in crypto market capitalization quarter to date.

Declining market cap is driven by macroeconomic factors like geopolitical instability and the Federal Reserve signaling a tightening of financial conditions, the company added.

The company also said it expects subscriptions and services revenue to be lower in the current quarter because of falling crypto asset prices.

MTUs jumped to 11.4 million in the prior quarter, up from 7.4 million in the third quarter; Coinbase saw a decline in MTUs between the second and third quarters.

Net income for the company had doubled to $840 million in the fourth quarter compared with the prior period, or several times the year-earlier quarter, when it reported $177 million.

CEO Brian Armstrong shot down the idea that the crypto sector could be entering a new “crypto winter.” “I don’t expect it to be anything quite that pronounced over time,” Armstrong said, referring to previous crypto winters.

“We enter 2022 with even more unknowns, which make our business all the more difficult to forecast,” the company wrote. CFO Alesia Haas said that while Coinbase’s stock moves have been largely tied to changes in cryptocurrency prices.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.