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Coinbase has reported its first-quarter earnings for 2025, which tell the story of gains being crushed under ever-mounting costs and market headwinds. While revenue increased year-on-year, it fell short of analysts’ forecasts. The crypto exchange is now looking at some strategic changes to endure an unpredictable market.
Coinbase Revenue Grows, But Misses Wall Street Forecast
Consolidation revenue rang in at $2.03 billion for the first quarter, jumping 24% over $1.64 billion year-on-year. Such swell was, however, deemed insufficient to clear the bar forecasted at $2.1 billion for the quarter, which was carried technically as the correct forecast. Analysts expected a more impressive growth rate as the industry rebounded during the previous year.
Net profit was also negative. The recording of $526.6 million or $1.94 a share is lower compared to last year’s Q1 2024 figures of $679.2 million or $2.53 per share. Primary reason for such miss is that the operating expenses exceeded those planned primarily due to expansion costs and the volatility in the crypto markets.
Q1 2025 Financial Overview
| Metric | Q1 2025 | Q1 2024 | Change |
|---|---|---|---|
| Total Revenue | $2.03 Billion | $1.64 Billion | +24% |
| Net Income | $526.6 Million | $679.2 Million | –22% |
| Earnings Per Share (EPS) | $1.94 | $2.53 | –23% |
| Operating Expenses | $1.3 Billion | Not disclosed | +51% YoY |
| Transaction Revenue | $1.3 Billion | Not disclosed | –19% QoQ |
| Subscription Revenue | $698 Million | Not disclosed | +9% QoQ |
Coinbase garnered $2.03 billion in revenues for the first quarter, which fell short of expectations held by analysts who had forecast revenue of $2.1 billion. This can be attributed to a 51% year-on-year increase in operating expenses, which were largely a result of increased marketing spending and crypto-related losses-as confirmed by Reuters.
In so doing, the statement transitions into the analysis of the different factors that explain why earnings fell short, setting up the analysis on cost breakdowns and transaction declines.
High Costs and Trading Decline Cut Into Profits
A major component of lower-than-expected earnings was an increase in expenses. The annual operating cost went up by 51% to $1.3 billion, which comprised increased marketing and losses from holding crypto assets.
Platform transaction revenue constitutes a significant portion of revenue and was also reported an increase of 19% on a quarter-on-quarter basis. As crypto prices did not witness sharper movements in early 2025, many retail traders stayed at the sidelines, which resulted in the overall dipping of activities.
Subscription Services Offer Stability
On the upside, recurring revenue from subscriptions and services rose to $698 million, a 9% increase from the previous quarter. That consists of revenues from stablecoin rewards, blockchain staking, and custodial services, which are less market-sensitive, which means that they are suitable for long-term planning.
This arm of the business is rapidly becoming the company’s backbone for periods of slow trading. Analysts have added that this changing tide should result in an operating model for the company that is characterized by greater consistency in performance.
Deribit Acquisition Signals Push Into Derivatives
In what could be one of its most strategic moves to date, the exchange announced a $2.9 billion deal to acquire Deribit, a Dubai-based exchange focused on crypto options and futures. Deribit is the most robust platform in its category by volume and could give the buyer a new edge in attracting institutional traders.
“This signals a strong move into derivatives, where margins are often more predictable,” commented MarketWatch.
If the regulators approve, it stands an extra chance of reshaping the company’s revenue model. It will also enhance the buying exchange’s competitiveness at a global level, especially in markets where options trading is growing faster than spot transactions.
Market Response: Investors Pull Back Slightly
After the results announcement, the shares fell by a good 3% in after-hours trading. The stock is currently down 17% on the year, reflecting a strong concern among investors with regard to costs and future growth.
The announcement of the Deribit acquisition has cushioned the blow somewhat, as traders also weighed the possible upside of diversification into high-frequency and institutional finance products. However, the mood is still cautious.
A Muted Q2 Forecast
Outlook in Q2 was dour. Management guides revenues from subscription and services of $600 million to $680 million, falling short of analyst consensus, which awaited $704 million.
The executives cited several headwinds: global economic uncertainty, tighter regulation, and consumer fatigue, weighing heavily on trading interest in the short-term in much of the sector, from previous downturns in the market.
Strategic Focus Shifting
The shift from high-volume trading opportunities toward predictable income reflects a strategic change. Exchanges have come to realize that, in a mature market, revenues derived from predictable services are more sustainable than the sporadic trade volumes on which they may have previously relied.
It has also been legally pressuring the exchange for some time, and it is still busy lobbying and formulating a legal strategy to build a more favorable regulatory future. These could include, but are not limited to: immediate return gains.
Conclusion: A Company in Transition
Coinbase has registered its Q1 2025 earnings results, groaned under various pressures, yet still stands. Revenue did increase, yet profit slipped. Transaction volume decreased, subscription soared. And by acquiring Deribit, Coinbase may be laying a foundation for a future which is fuller and more stable.
The critical few coming quarters will be all-important. If Coinbase is able to cut costs, complete the Deribit acquisition, and grow non-trading revenue, it may find itself stronger by year-end. In the meantime, investors are keeping a keen eye, and so is the crypto community:
Can Coinbase play a role with bold moves and at the same time keep things financially sound?
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Frequently Asked Questions (FAQs)
1. Why did Q1 2025 earnings come in under expectations?
Analysts were disappointed by the rush in operating costs and a 19% decline in transaction revenue quarter-on-quarter.
2. What was the revenue reported for the first-quarter full-year 2025?
It totaled $2.03 billion, an increase of 24 percent compared to the previous year but below estimates of $2.1 billion.
3. What major acquisition did it announce in Q1 of 2025?
A $2.9 billion price tag was put on the acquisition of Deribit, a premier crypto options exchange, with the objective of expanding into the Derivatives market.
4. How did the Investors react to the Q1 report?
The stock dropped by about 3% in after-hours trading, and shares are down 17% year-to-date in a sign of concern about increasing costs and forward guidance.
Glossary of Key Terms
Coinbase (Transaction): The first transaction in a block that gives the miner their reward, including newly created coins.
Revenue: Income generated by the company in its course of undertaking business.
EPS: Earnings Per Share, a quotient that represents the amount of profit allocated to each share of common stock.
Transaction Revenue: Revenue arising from the trading activities conducted on the Coinbase platform.
Subscription and Services Revenue: Income coming from services relating to stablecoins, staking, custody, and blockchain rewards.
Operating Expenses: Expenses for running the business, also known as marketing expenses and employee compensation.
Derivatives: Financial instruments that are options or futures based on an underlying crypto asset.
