Coinbase Global (COIN) delivered a mixed first-quarter earnings report Thursday, leaving investors lukewarm despite a historic rally in Bitcoin prices.
Shares of the cryptocurrency exchange operator were down nearly 2% Friday morning, paring gains from the previous session when Bitcoin crossed the $100,000 threshold and buoyed broader crypto sentiment.
The company posted $2 billion in revenue for Q1 2025, up 24% year-over-year but shy of analyst expectations of $2.1 billion. Adjusted earnings per share came in at $1.94, narrowly beating estimates by a cent. However, a 19% sequential drop in transaction revenue and a 17% decline in consumer trading volumes signaled softness in the core business, despite a favorable market backdrop.
Coinbase’s operating margin fell to 34.7%, down from 46.4% a year earlier, while free cash flow turned negative at -$182.7 million. Monthly transacting users rose to 9.7 million, but activity levels remain sensitive to price swings in major tokens, particularly Bitcoin, which plummeted from its January highs of nearly $110,000 to below $75,000 in April before rebounding.
Derivatives and Stablecoins: Coinbase Bets on the Next Growth Frontier
In a bid to diversify beyond spot trading, Coinbase announced the $2.9 billion acquisition of Deribit, a leading crypto options exchange. The move positions Coinbase as the global leader in crypto derivatives by open interest. Management expects the deal to be accretive to profitability, citing complementary growth and expanded cross-sell opportunities for institutional clients.
“Deribit enhances our global franchise and allows us to offer seamless trading across spot, futures, and options,” said President and COO Emilie Choi.
The company’s stablecoin ecosystem also emerged as a bright spot. USDC, the dollar-pegged digital token co-developed with Circle, hit an all-time high market cap of $60 billion. Average USDC balances held in Coinbase products rose 49% quarter over quarter, providing recurring revenue and liquidity to the platform. Stablecoin revenue surged 32% to $298 million, partially offsetting the slump in trading.
Coinbase is also expanding internationally, having secured new licenses in Argentina and India. These markets are viewed as strategic entry points for future crypto adoption, aligning with the company’s effort to build a diversified, global platform.
Regulatory Landscape and Macro Volatility Pose Ongoing Challenges
Despite its growing portfolio, Coinbase remains tethered to the broader health of the crypto market and the regulatory outlook. CEO Brian Armstrong struck a cautiously optimistic tone, citing a favorable court ruling that dismissed the SEC’s lawsuit against the company and legislative traction on stablecoin regulation in Congress.
“This quarter marked a turning point in the U.S. policy landscape,” Coinbase said in its shareholder letter, highlighting what it sees as emerging momentum across legislation, regulation, and litigation.
Still, risks remain. April’s crypto trading volumes were down approximately 12% month over month, with macroeconomic uncertainty and U.S. tariff policies weighing on investor sentiment. Coinbase is also navigating competition from traditional financial institutions entering the crypto space, even as it positions itself as an infrastructure provider for new entrants.
To balance growth and capital discipline, the Board authorized a $1 billion share repurchase program with no expiration date. The company also reaffirmed its strategic commitment to investing in crypto assets, allocating $150 million in Q1—primarily into Bitcoin.
As Coinbase aims to stabilize its revenue base with subscription services and stablecoins, the underlying volatility of crypto markets remains a persistent headwind. With Bitcoin surging again and the Deribit acquisition set to reshape its product offering, the coming quarters will test whether the company can truly decouple its fortunes from the trading cycles it was built on.
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