Coinbase books up to $800m in profits ahead of public listing

7 Apr 2021

Image: © Jesse/Stock.adobe.com

The cryptocurrency exchange revealed that it made $1.8bn in revenue in the first quarter of 2021 as it prepares to go public next week.

As its stock market debut looms, cryptocurrency exchange Coinbase has disclosed profits of up to $800m in the first quarter of 2021.

The company revealed that it generated estimated revenue of around $1.8bn in the quarter, with profits between $730m and $800m. This compares with $322m in profits for all of 2020.

The first quarter of the year saw a massive bump in monthly transacting users signing up, from 2.8m in late 2020 to 6.1m. Monthly transacting users are customers that are regularly buying and selling on the exchange every month.

This surge in revenues – mostly generated from trading commissions – and customers on Coinbase can be attributed to the massive upticks in the price of bitcoin and other cryptocurrencies in recent months. Coinbase is one of the world’s largest crypto exchanges by trading volume and arguably the biggest in terms of mainstream awareness.

For Coinbase and its investors, it paints a rosy picture for next Wednesday (14 April) when the company will go public on the Nasdaq through a direct listing. The company is expected to be valued between $68bn and $100bn.

Support Silicon Republic

The bumper numbers for the first quarter will also bring very high expectations for Coinbase to meet once it starts trading.

It will be subject to the whims of the notoriously volatile cryptocurrency market. While bitcoin has assumed a much firmer position in Wall Street of late, its price can still fluctuate and this can mean instability in Coinbase’s revenue.

“This revenue unpredictability, in turn, impacts our profitability on a quarter-to-quarter basis,” the company said in its trading update.

“In terms of expenses, we intend to prioritise investment, including in periods where we may see a decrease in bitcoin price. This is because we believe that scale is central to achieving our mission and it is still early in the development of this industry.”

Coinbase acknowledged that its monthly transacting users could swing wildly in 2021 from a low of 4m to a high of 7m if growth rates in the crypto market remain on track.

Jonathan Keane is a freelance business and technology journalist based in Dublin

editorial@siliconrepublic.com