Coinbase disclosed $1.78 billion in fourth-quarter revenue on Thursday, indicating that its business suffered alongside Bitcoin’s retreat from all-time highs last year.
The figure represented a 22% decrease compared to a year ago, while fourth-quarter revenue also fell short of analysts’ expectations of $1.84 billion.
Coinbase posted a net loss of $667 million for Q4, marking a reversal from a year ago, when the firm notched $1.3 billion in profits alongside President Donald Trump’s re-election.
Coinbase said the loss stemmed from a $718 million decrease in the value of its investment portfolio, which was largely unrealized. At the same time, strategic investments, including in Circle, lost $395 million in value.
Coinbase doesn’t trade digital assets within its investment portfolio, but there are some instances where liquidations occur due to operational purposes, Anil Gupta, vice president of investor relations at Coinbase, told Decrypt.
“It’s more of a buy and hold situation,” he said. “We’re [not] selling any of the portfolio from a profit recognition standpoint, it’s just kind of our normal course of operations.”
The company said that it earned $983 million from facilitating customers’ transactions. That marked a quarter-over-quarter decrease from $1 billion in Q3. Amid Trump’s White House win, transaction revenue surged to $1.56 billion in Q4 2024.
Coinbase shares slid 7.9% to $141 before the company announced fourth-quarter earnings, according to Yahoo Finance. As the crypto market has come under pressure, the company’s stock price has dropped more than 55% within the past six months.
In after-hours trading, the company’s stock swung wildly, recently showing a slight uptick to just above $142.
Despite taking a hit last quarter, Coinbase said that it’s “deliberately well capitalized” to navigate crypto’s market cycles with $11.3 billion in cash and cash equivalents.
Despite Coinbase’s efforts to diversify its business in recent years, the firm’s latest performance showed how the San Francisco-based exchange is still exposed to a fast-changing crypto market through its reliance on charging customers trading fees.
Still, Coinbase disclosed $364 million in fourth-quarter stablecoin revenue, up from $226 million a year prior. The company earns income through a revenue sharing agreement with Circle, where it reserves a portion of the interest that USDC’s reserves generate.
The metric falls under the exchange’s subscriptions and services umbrella, along with staking. In its fourth quarter, Coinbase said that so-called blockchain rewards, which come from users participating in the process of validating transactions, came in at $151 million.
Coinbase highlighted its diversification in the shareholder letter, noting that it has 12 products that generate more than $100 million in annualized revenue.
“That should help soften the blow that the cryptocurrency market is dealing with right now,” David Bartosiak, a stock strategist at Zacks Investment Research, wrote in a note. He described stablecoins and subscriptions as “shock absorbers when trading cools.”
“This is fundamentally a different business than we were several years ago,” Coinbase’s Gupta told Decrypt. “We’ve done a really good job, I think, of growing and expanding our product offering.”
In the shareholder letter, Coinbase said that it is continuing to double down on derivatives following its $2.9 billion acquisition of Deribit last year. Although it didn’t specify the total, Coinbase said it saw all-time highs in quarterly derivatives trading volume in Q4.
Coinbase said the softer quarter stemmed from market conditions, but it was able to outperform the market on total trading volume at $271 billion due to growth in derivatives.
Earlier this week JPMorgan analysts downgraded their price target to $290 from $399. They pointed to lower crypto trading volumes, a significant drop in the total crypto market capitalization in Q4, and falling USDC circulation.
There were hints that Coinbase could be bracing for a disappointing quarter, with Argus Research analyst Kevin Heale telling Decrypt earlier this week that he’d never seen a company ask analysts to submit questions in advance of an earnings announcement.
The company continues to prioritize Base, its Ethereum layer-2 scaling network, as a way to augment its business using decentralized finance. And last year, the company said that it was exploring a token for the network that could be worth an estimated $12 billion to $34 billion.
The firm views Base as a key stepping stone towards tokenization. Last year, the company signaled that it would allow users to trade stocks traditionally as it works towards that vision.
Through Feb. 10, Coinbase said that it generated $420 million in transaction revenue. That suggests Coinbase users are buying the crypto market’s latest dip, Gupta said.
“Generally speaking, our retail customers are holding onto their assets,” he said. They’re not liquidating into this market. And in fact, we’re seeing a lot of buying activity from our retail customers quarter-to-date.”
Editor’s note: This story was updated after publication to add further detail and comments from Coinbase.
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