Blockchain infrastructure company Coinbase (NASDAQ: COIN) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 24.2% year on year to $2.03 billion. Its non-GAAP profit of $1.94 per share was 0.7% above analysts’ consensus estimates.

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StockStory’s Take

Coinbase’s first quarter results reflected ongoing momentum in core trading and subscription businesses, driven by international derivatives expansion and stablecoin adoption. Management highlighted the strategic acquisition of Deribit, a global crypto options leader, as a key move to consolidate Coinbase’s position in derivatives and enhance cross-selling opportunities, especially for institutional clients. CEO Brian Armstrong emphasized the company’s focus on integrating spot, futures, and options trading, and pointed to strong growth in USDC (the U.S. dollar-backed stablecoin) balances as a source of recurring revenue.

Looking ahead, management cited macroeconomic uncertainty and volatile crypto asset prices as factors likely to impact trading activity and revenue in the near term. CFO Alesia Haas noted that lower asset prices in the early part of the second quarter could pressure blockchain rewards and subscription revenue. However, the leadership team maintained confidence in the company’s long-term product roadmap, continued international expansion, and the durability of its business model, stating that regulatory clarity and new product initiatives position Coinbase well for future growth.

Key Insights from Management’s Remarks

Coinbase’s management attributed the quarter’s performance to advances in derivatives trading, stablecoin utility, and expansion in international markets. Deviations from Wall Street expectations were largely due to a shift in trading volume mix and lower institutional fee rates.

• Derivatives Trading Expansion: Coinbase gained market share in global spot and derivatives, with over $800 billion in derivatives trading volume, fueled by its international exchange and recent acquisition of Deribit, which strengthens its position in options trading.
• Stablecoin Growth: USDC’s market cap reached an all-time high, with average balances in Coinbase products up 49% quarter-over-quarter. Management stated this growth supports recurring revenue and increases platform liquidity.
• International Licensing and Market Access: The company secured regulatory approvals in Argentina and India, enabling access to fast-growing crypto markets and extending the international playbook used for expansion.
• New Business Lines: Coinbase launched business accounts for stablecoin payments targeting startups and small businesses, and expanded on-chain lending with Bitcoin-backed USDC loans, a product that saw rapid uptake during the quarter.
• Policy and Regulatory Wins: Management highlighted legislative progress in the U.S. toward crypto market structure and stablecoin regulation, and noted the favorable resolution of the SEC lawsuit as a significant milestone for the industry.

Drivers of Future Performance

Coinbase’s management expects macro volatility and asset price fluctuations to impact trading volumes and revenues, while regulatory clarity and product innovation remain central to the company’s growth strategy.

• Product Integration and Cross-Sell: Management believes the integration of Deribit’s options platform will enhance cross-selling to institutional clients and improve trading volumes by offering spot, futures, and options under one roof.
• Stablecoin Ecosystem Expansion: The leadership team expects further USDC adoption, citing partnerships and compliance with European regulations as drivers of international growth and recurring revenue.
• Regulatory Environment as Catalyst and Risk: Management sees bipartisan legislative progress and court wins as long-term positives for the business, but acknowledges that evolving regulations and asset price volatility remain sources of uncertainty for guidance.

Top Analyst Questions

• Kenneth Worthington (JPMorgan): Asked about Deribit’s impact on profitability and cross-sell potential; management responded the acquisition will be accretive to adjusted EBITDA and enables seamless trading between product types for institutional clients.
• James Yaro (Goldman Sachs): Inquired about the rationale for expanding the USDC partnership to include Binance and the impact on economics; management highlighted the importance of liquidity and global adoption, noting that sharing economics with partners expands the total addressable market.
• Devin Ryan (Citizens): Questioned the competitive dynamics as traditional banks enter crypto; management explained that Coinbase aims to power infrastructure for these entrants, expecting to benefit from broader adoption of crypto rails by financial institutions.
• Patrick Moley (Piper Sandler): Sought updates on the U.S. go-to-market strategy for crypto derivatives and regulatory hurdles; management outlined progress with U.S. regulators but noted that Deribit’s products remain ex-U.S. pending further approvals.
• Alexander Markgraff (KeyBanc): Asked about future M&A priorities; management stated that Coinbase is prepared to pursue further strategic acquisitions, enabled by a strong balance sheet and improving regulatory clarity.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the integration and performance of Deribit within Coinbase’s derivatives platform, (2) continued USDC adoption and the impact of new international regulatory approvals, and (3) the effect of macroeconomic and asset price volatility on trading and subscription revenues. Additional focus will be on regulatory developments in key markets and the pace of new product rollouts, including business payments and on-chain lending.

Coinbase currently trades at a forward EV/EBITDA ratio of 16×. Should you double down or take your chips? Find out in our free research report.

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