Coinbase Global Inc. reported a disappointing financial quarter later on Thursday, attributing the decline to falling cryptocurrency values, which mirrored broader market trends attributed to tariffs and overall economic uncertainties.
The first-quarter sales fell short of what analysts predicted on Wall Street and were also down from those reported in the fourth quarter. Additionally, the firm experienced a more significant sequential decline in its transaction income and forecasted reduced subscription sales for the present quarter.
Coinbase shares dropped 2.7% during the after-hours trading.
In a letter to shareholders, Coinbase executives stated that cryptocurrency values "declined along with overall market decreases caused by tariff policies and economic uncertainties." According to the firm, the entire crypto market capitalization decreased by 19%, dropping from $3.4 trillion in the final quarter of the previous year to $2.7 trillion in the initial quarter of this year.
In the first quarter, Coinbase saw its revenues climb to $2 billion, up from $1.64 billion during the same period last year, but this figure came in slightly lower than the FactSet projections of $2.1 billion.
The transaction revenue fell by 19% compared to the previous quarter, totaling $1.3 billion, whereas the subscription and service income increased by 9% sequentially to reach $698 million, largely due to gains from stablecoin operations, according to the firm.
Coinbase predicted lower subscription and service revenues for the current quarter, estimating them to fall within the range of $600 million to $680 million. Similarly, the first-quarter subscription and service revenue landed at the lower end of the previously provided forecast, which was between $685 million and $765 million.
Coinbase stated that the anticipated increase in stablecoin revenue on a quarterly basis will probably be overshadowed by a decrease in blockchain rewards income resulting from diminished asset values.
The firm announced GAAP earnings of 24 cents per share, significantly below the estimate of $1.93 per share.
Concerns were rising among investors ahead of the report, leading multiple investment firms to lower their forecasts. Earlier in the week, analysts from MCH downgraded Coinbase's stock to a "hold" rating, anticipating "moderate" outcomes and forward-looking statements.
On Thursday, earlier in the day, Coinbase revealed that they had reached an agreement to purchase Deribat, which is based in Dubai and leads globally as the largest marketplace for Bitcoin and Ether option trades, for approximately $2.9 billion. The Wall Street Journal first reported the deal.
The accord would provide Coinbase with "a swift and commanding entry into the burgeoning derivatives market before the expected rise in institutional acceptance of digital assets," noted analysts at Benchmark in a report issued Thursday.
Derebit’s "advanced" trading instruments, designed for institutional and high-frequency traders, might enhance Coinbase’s attractiveness to institutional investors, according to them.
This year, Coinbase's stock price has declined by roughly 16%, significantly underperforming the S&P 500 index, which has only decreased by 3%.
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