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Coinbase jumps 9% after earnings beat; results seen as 'solid'

Published 05/05/2023, 11:36
© Reuters

Investing.com - Coinbase reported first-quarter results that were better than feared on Thursday, driven by cost cuts and a jump in subscription revenue.

Coinbase Global (NASDAQ:COIN) shares are trading about 9% higher pre-open, following the report.

Coinbase reported a loss of $0.34 on revenue of $772.5 million, topping expectations for a loss of $1.39 on revenue of $655.0M. The beat comes as a jump in subscription revenue offset falling transaction revenue as trading volumes slumped.

Subscription revenue more than doubled to $362M in Q1 from $151.9M in the same period a year earlier. Total transaction revenue fell to $374.7M from $1.01B last year, driven by a slump in consumer transaction revenue as trading volume dried up. Consumer transaction revenue fell to $352.4M from $965.8M, with volume sliding to $21B from $74B a year earlier.

Looking ahead, the company said it expected subscription and services revenue to fall in the second quarter, driven by "lower USDC market capitalization."

For 2023, the company continues to seek to improve full-year 2023 adjusted EBITDA in absolute dollar terms versus full-year 2022.

BofA analysts said the results were solid but core questions remain unanswered.

"The fundamental medium/long-term questions around COIN’s core business remain. We maintain our cautious view on COIN as we continue to think retail crypto volumes will remain weak and the regulatory overhang will linger for some time. Maintain Underperform," they wrote in a note.

Barclays analysts lowered the price target to $61 from $74 per share. The analysts highlighted an uplift in retail take rate, although this trend may not prove to be sustainable.

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"A long-feared bear narrative on Coinbase from investors has been the presumed inevitability of retail fee compression, akin to what occurred in the stock brokerage business over the last several decades, but this has not yet materialized, and while we do assume some natural ongoing fee compression in our model, with few scaled competitors in the U.S., the current pricing model could sustain for some time," they said.

(Additional reporting by Senad Karaahmetovic)

 
 

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