Detailed Analysis of Coinbase's Latest Financial Report: Nearly $6.6 Billion in Revenue for the Full Year 2024, Q4 Achieves Largest Quarterly Revenue in Three Years

Editor: Felix, PANews

Coinbase announced its fourth quarter and full-year earnings on February 13 local time. Benefiting from a strong rebound after the elections, which drove cryptocurrency prices to new highs at the end of last year, Coinbase's fourth quarter performance exceeded expectations, achieving its largest quarterly revenue in three years.

Coinbase reported earnings per share of $4.68, more than double the analysts' expectation of $2.11, with fourth quarter profits reaching $1.3 billion.

In after-hours trading, Coinbase's stock price rose 2% to around $304, with the stock price increasing by 112% over the past year. This article provides a quick overview of the key data from Coinbase's financial report.

2024 Full-Year Revenue Doubles, Q4 Contributes Over 30% of Income

2024 was a strong year for both cryptocurrency and Coinbase, with full-year revenue more than doubling to $6.564 billion, net income of $2.6 billion, and adjusted EBITDA of $3.3 billion. Among these, fourth quarter revenue reached $2.27 billion, an 88% quarter-over-quarter increase.

In terms of products, Coinbase gained market share in U.S. spot and derivatives trading products in 2024 and added custody, staking, and USDC assets to its product suite, which helped diversify revenue. Additionally, Coinbase further promoted the adoption of products like Base, Coinbase One, Prime Financing, and international expansion.

Trading Revenue

Full-year trading revenue for 2024 was $4 billion, a year-over-year increase of 162%; total trading volume was $12 trillion, up 148% year-over-year. Retail trading volume was $221 billion, a year-over-year increase of 195%; institutional trading volume was $941.2 billion, a year-over-year increase of 139%. In the fourth quarter, Coinbase's trading revenue reached $1.6 billion, a 172% quarter-over-quarter increase; trading volume was $439 billion, a year-over-year increase of 185%.

The majority of the year-over-year increase in trading volume for Coinbase in 2024 was due to rising volatility levels in crypto assets (especially in the first and fourth quarters) and an increase in average crypto asset prices. Two main factors supporting these stronger macroeconomic conditions were the launch of Bitcoin ETF products in the first quarter of 2024 and the election of a pro-crypto president and Congress in the fourth quarter of 2024, along with expectations of regulatory clarity, both of which led to increased spot crypto trading activity.

Furthermore, Coinbase's market share in the U.S. spot market grew in 2024. In spot products, Coinbase increased its initial listing efforts (i.e., being the first centralized exchange to launch tokens for trading and custody) and added 48 new spot trading assets.

Additionally, Coinbase successfully expanded its derivatives business in 2024. For example, it added 92 new assets for trading on international exchanges. Although still in the early stages, both retail and institutional derivatives trading volumes and market shares reached historic highs in the fourth quarter.

Retail Trading Revenue

In the fourth quarter, retail trading volume was $94 billion, a 176% quarter-over-quarter increase, far exceeding the 126% quarter-over-quarter growth in the U.S. spot market. Retail trading revenue for the quarter was $1.3 billion, a 179% quarter-over-quarter increase. This may be related to Coinbase listing 13 new assets in the fourth quarter, including popular memecoins like PEPE and WlF. Overall, these efforts (along with market conditions) drove a 24% quarter-over-quarter increase in MTU.

Institutional Trading Revenue

In the fourth quarter, institutional trading volume was $345 billion, a 128% quarter-over-quarter increase, outperforming the U.S. spot market. Institutional trading revenue for the quarter was $141 million, a 156% quarter-over-quarter increase. The strong performance in the fourth quarter was marked by significant quarter-over-quarter growth in revenue from exchanges and Prime. In addition to strong market conditions, institutional business also showed robust momentum.

Other Trading Revenue

Other trading revenue in the fourth quarter was $6.8 million, a 99% quarter-over-quarter increase, primarily due to increased revenue from Base's sorting services. With increased network demand and rising ETH prices in the fourth quarter, trading volumes continued to grow quarter-over-quarter, and revenue per trade was also higher. The average cost per trade remained below the target of $0.01.

Subscription and Service Revenue

In 2024, subscription and service revenue was $2.3 billion, a year-over-year increase of 64%, approximately 4.5 times higher than the levels during the 2021 bull market. The year-over-year growth in 2024 was largely driven by blockchain rewards revenue, stablecoin revenue, and Coinbase One subscription revenue.

Fourth quarter subscription and service revenue was $641 million, a 15% quarter-over-quarter increase. Fourth quarter stablecoin revenue decreased by 9% quarter-over-quarter to $226 million, but increased by 31% year-over-year to $910 million. Overall, USDC was the fastest-growing "major" stablecoin in 2024. The driving force behind fourth quarter stablecoin revenue was the significant increase in the average market capitalization of USDC and the USDC assets in the product suite.

Fourth quarter blockchain rewards revenue was $215 million, a 39% quarter-over-quarter increase. The growth was driven by rising crypto asset prices, an increase in average protocol reward rates (especially for SOL), and a continued influx of native assets.

Fourth quarter interest and financing revenue was $66 million, a 3% quarter-over-quarter increase. The growth was primarily driven by the Prime Financing business, which saw loan balances reach a record high after the U.S. elections in early November. The increase in loan volume was driven by increased trade financing activities related to ETF products and higher utilization rates of bilateral loan products. The growth in Prime Financing fees was partially offset by a decline in revenue from customer-custodied fiat currency balances, as the average balance increased by 7% quarter-over-quarter to $5.1 billion, but the actual interest rates declined, offsetting this growth.

Fourth quarter custody fee revenue was $43 million, a 36% quarter-over-quarter increase. The growth was driven by rising crypto asset prices and a continued increase in custody volumes. BTC inflows were the largest driver of growth, thanks to Coinbase's role as the primary custodian for the majority of ETFs, as well as other customer activities. Additionally, the first-day release program in the fourth quarter also contributed. As of the fourth quarter, assets under custody (AUC) were $220 billion, which is part of the total assets on the platform.

Other subscription and service revenue was $91 million, a 56% quarter-over-quarter increase. Coinbase One was the largest driver of this quarter-over-quarter growth.

Full-Year Operating Expenses of $4.3 Billion, Rising Trading and Marketing Costs

Total operating expenses for 2024 were $4.3 billion, a year-over-year increase of 30% to $1 billion. Technology and development, general and administrative, and sales and marketing expenses collectively increased by 25% year-over-year to $692 million. The growth was primarily due to increased variable spending, especially USDC reward spending and marketing expenses, as well as higher stock-based compensation and policy-related expenses due to intensified cryptocurrency promotion efforts. By the end of the year, there were 3,772 full-time employees, a 10% year-over-year increase.

Total operating expenses for the fourth quarter were $1.2 billion, a 19% quarter-over-quarter increase to $202 million, primarily due to increased trading activity leading to higher trading costs. Technology and development, general and administrative, and sales and marketing expenses collectively increased by $84 million, a 10% quarter-over-quarter increase, mainly due to performance marketing spending, higher USDC rewards (due to a significant increase in USDC assets in the product suite), and policy-related expenses.

Fourth quarter trading fees were $317 million, accounting for 14% of net income, a 85% quarter-over-quarter increase. The quarter-over-quarter growth was primarily driven by increases in trading volume, blockchain rewards fees, and blockchain transaction fees (mainly for BTC and ETH).

Technology and development expenses were $369 million, a 2% quarter-over-quarter decrease. The decrease was due to reduced personnel-related expenses, although increased spending on professional services partially offset this reduction.

General and administrative expenses were $363 million, a 10% quarter-over-quarter increase. The growth was driven by investments in customer support, which were related to the strong market environment in the fourth quarter, as well as increased legal and policy-related expenses.

Sales and marketing expenses were $226 million, a 37% quarter-over-quarter increase. This was to support the market momentum in the fourth quarter through increased variable performance marketing spending and promotional activities to drive user acquisition and revenue growth in the U.S. and internationally. Due to the increase in USDC assets in the product suite, USDC rewards also increased by 29% quarter-over-quarter to $80 million.

Additionally, in terms of share count, the fully diluted share count at the end of the fourth quarter was 286.5 million shares. This figure includes 253.6 million shares of common stock and 32.9 million diluted shares.

In terms of capital and liquidity, at the end of the fourth quarter, Coinbase had $9.3 billion in dollar resources, defined as cash and cash equivalents plus USDC (minus dollars lent or staked as collateral). Dollar resources increased by 13% quarter-over-quarter to $1.1 billion.

$750 Million in Trading Revenue Achieved in Q1 This Year, Continuing to Diversify Revenue

According to the report, as of February 11, Coinbase has generated approximately $750 million in trading revenue in Q1 this year. Coinbase stated that it is working to diversify its revenue sources and no longer relies solely on trading. From last year's financial report, as of the fourth quarter, trading revenue accounted for 68.5% of its total revenue, most of which came from retail traders.

For this quarter, revenue from its subscription and service business (including stablecoins, staking, custody, and Coinbase One products) is expected to be between $685 million and $765 million.

Coinbase also expects that the USDC stablecoin, issued by Circle and with a revenue-sharing agreement with Coinbase, will drive a quarter-over-quarter increase in sales and marketing expenses in the first quarter.

Coinbase CEO Brian Armstrong stated during the earnings call that the company has "grand ambitions to make USDC the number one stablecoin."

The percentage of trading fees as a portion of net income is expected to reach mid-high levels. Technology and development as well as general and administrative expenses are expected to be between $750 million and $800 million. Additionally, payroll taxes are expected to rise seasonally quarter-over-quarter. Net profit growth is expected to be slightly higher than in the fourth quarter.

Sales and marketing expenses are expected to be between $235 million and $375 million in Q1 2025. Since mid-fourth quarter, there has been a significant increase in marketing opportunities that meet or exceed return on investment thresholds in new and existing paid marketing channels in the U.S. and major international markets. Nevertheless, due to the continued volatility in the crypto market, daily spending on performance marketing in the first quarter varies greatly. Therefore, the potential range of outcomes for the first quarter is expected to be much larger than in previous periods. Whether it falls within this range largely depends on:

• Whether attractive performance marketing opportunities continue to be seen for the remainder of the first quarter, which have historically been closely related to market volatility and asset prices.
• The USDC assets in the product suite, which drive USDC rewards. As a reference, this accounted for about 35% of fourth quarter sales and marketing expenses.