KEY POINTS:

  • Coinbase's stock rallied 14% to $189.28

  • Company generated transaction revenue of $320 million in Q1

  • Adjusted operating cash flow of $292 million in Q4

Coinbase Global, the crypto broker, reported its first quarterly profit since 2021, with earnings of $1.04 per share in Q4, a significant improvement from a loss of $2.46 per share the previous year. This positive financial performance led to a substantial increase in the company's stock, which more than doubled in the past six months. The stock rallied 14% to $189.28, adding more than $5 billion to the company's market value.

The company's revenue for the quarter ending on December 31 was $953.8 million, a significant increase from $629.1 million a year earlier. This increase in revenue was primarily driven by a surge in transaction revenue, which rose 45.3% in Q4 to $905 million from the previous quarter. Additionally, the company also saw an increase in subscription-and-services revenue, primarily due to blockchain rewards and steady fees as a custodian of crypto.

Coinbase's business model has thrived amid increased volatility and trading volumes. The company has seen positive flows from both retail and institutional segments, and has benefited from the launch of spot Bitcoin ETFs in January. The company served as the custodian partner for 8 of the 11 approved ETFs. Furthermore, the company expanded into 11 new markets and is making progress in developing its derivatives trading, which constitutes 75% of all crypto trading.

In the first quarter as of February 13, the company generated transaction revenue of $320 million, more than 60% of what analysts are expecting for the entire three-month period. This was primarily due to the increase in revenue, which rose 45.3% in Q4 to $905 million from the previous quarter. Coinbase produced an adjusted operating cash flow of $292 million in Q4, representing an operating cash flow margin of 32.3% for the quarter. The company's transaction revenue, which is over 50% of total revenue apart from subscriptions, is on par with and exceeding where it was with Q4 revenue.