What Happened?
Coinbase’s total revenue and net profit for the first quarter of 2025 fell below market expectations and the previous quarter’s levels. The revenue decline is primarily attributed to a decrease in trading activity in the cryptocurrency market, while the significant contraction in profit is due to paper losses arising from fluctuations in the value of the company’s held crypto assets.
Despite the short-term financial pressures, Coinbase announced the acquisition of the globally significant cryptocurrency derivatives exchange Deribit for $2.9 billion. This is the largest acquisition in the company’s history, demonstrating Coinbase’s proactive investment in the high-growth derivatives sector, with an aim to become a global leader in the market and significantly enhance its international influence.
This financial report and acquisition plan illustrate Coinbase’s strategy of navigating current challenges, such as a slowdown in market trading and declining profits, while boldly investing for future growth. The market’s reaction has been complex; the acquisition news initially boosted stock prices, but the release of the financial figures led to a price retreat, reflecting investors weighing the company’s short-term pressures against its long-term growth potential.
Coinbase Q1 Report Card: Earnings Down
As the largest cryptocurrency trading platform in the United States, Coinbase’s financial report not only presents the company’s operational status but also serves as an important barometer for observing the “hot and cold” trends of the entire cryptocurrency market and industry.
Through its financial figures, one can glean insights into overall market trading activity, investor sentiment, and capital flows; its revenue structure and profitability reflect the current health of the cryptocurrency industry’s business models; and Coinbase’s major strategic decisions and investments often foreshadow high-growth areas and competitive focuses that may shape the industry’s future.
Recently, Coinbase released its operational report for the first quarter ending March 31 of this year.
Our Q1 2025 financial results are now live.
Results indicate that while the company still has some positive developments, the main financial figures did not fully meet market expectations, leading to a stock price decline in after-hours trading.
Financial Performance and Underlying Reasons
From the first quarter’s financial data, Coinbase’s total revenue reached $2.03 billion. Although this figure marks an increase compared to the same period last year, it still falls short of the analyst average expectation of $2.12 billion.
Compared to the fourth quarter of last year, total revenue also experienced a decrease of about 10%. Within the revenue structure, trading fees remain the largest contributor at $1.26 billion, while subscription and service revenue amounted to $698.1 million, with stablecoin-related income being a significant driver of this growth.
The revenue shortfall largely reflects a slowdown in market trading activity. The trading volume for individual users in the first quarter decreased by 17% compared to the previous quarter, and institutional user trading volume also dropped by 9%. This change correlates with shifts in market sentiment.
In the fourth quarter of last year, market activity surged due to the expectation that President Trump’s election could lead to a more lenient regulatory environment; however, entering the first quarter of this year, despite Bitcoin reaching an all-time high, the market experienced increased volatility in April due to uncertainties such as potential tariffs, making investors more cautious and less willing to purchase high-risk assets with significant price fluctuations, resulting in a decrease in trading volume and total transactions.
Regarding profits, net profit for the first quarter plummeted to only $66 million, far below the levels of over $1 billion in the same period last year and the previous quarter.
One major reason for the sharp profit decline is that Coinbase experienced nearly $600 million in “paper losses” (an unrealized loss affecting the current financial report numbers) due to price fluctuations of the cryptocurrencies it holds.
Proactive Strategic Layout: High-Price Acquisition of Deribit
Despite the short-term financial pressures, Coinbase has demonstrated an aggressive strategic posture. The most eye-catching move was announcing the acquisition of Deribit, a Dubai-based exchange that plays a significant role in the global cryptocurrency derivatives market, for $2.9 billion. This is not only the largest acquisition in Coinbase’s history but also the largest merger and acquisition deal in the cryptocurrency industry to date.
This acquisition holds significant strategic implications. The derivatives market (such as futures and options) occupies a substantial share in the global financial system and is rapidly developing within the cryptocurrency space. Deribit has a strong presence in this field, boasting high trading volumes and open positions. By acquiring Deribit, Coinbase can immediately expand its business footprint in the derivatives market and elevate its international influence (especially in markets outside the United States) to new heights, aiming to become the “global leader” in the cryptocurrency derivatives market.
This illustrates that Coinbase is not merely satisfied with its existing spot trading business but is actively investing in areas viewed as future growth engines.
Furthermore, Coinbase also mentioned in the first quarter that despite the decline in trading volume, they have increased their market share in the global spot and derivatives markets and strengthened their presence in emerging markets. The dismissal of the lawsuit by the U.S. Securities and Exchange Commission (SEC) is also viewed by the company as a significant judicial victory favorable for industry development.
Outlook and Market Reaction
For the second quarter, Coinbase expects subscription and service revenue to remain in the range of $600 million to $680 million. However, the company also cautioned that while stablecoin revenue is expected to increase, it may be offset by a decrease in blockchain reward income due to asset price volatility.
The market reaction to this financial report has been somewhat mixed. In the trading session prior to the report’s release, buoyed by the acquisition news among other factors, Coinbase’s stock price rose by over 5%. However, once the financial figures (particularly the revenue falling short of expectations) were disclosed, the stock price fell by about 2-3% in after-hours trading.
Since the beginning of this year, Coinbase’s stock price has accumulated a decline of nearly 17%. This reflects that investors are weighing the company’s short-term financial pressures against its long-term strategic potential.
Coinbase’s Q1 financial report reflects the fluctuations in trading activity within the cryptocurrency market in the short term, with revenue falling short of expectations and profits significantly reduced due to market volatility and asset paper losses. However, the company has not slowed down; through its substantial acquisition of Deribit, it has demonstrated its long-term strategic ambition to actively expand into high-growth potential businesses (such as derivatives) and international markets.
This financial report, along with the subsequent acquisition announcement, together depict a large cryptocurrency enterprise that is boldly investing and laying out the next growth phase while navigating short-term market headwinds. Coinbase’s future performance will depend on its ability to successfully integrate the newly acquired business and secure its foothold in the broader global cryptocurrency finance sector.
References: cointelegraph, cnbc