Coinbase reported its preliminary results for 2021 Q1 on April 6, recording revenues of approximate $1.8 billion, up from approximately $190.6 million in the same period last year. In the unaudited results, the cryptocurrency trading platform recorded profits of $730 million to $800 million, compared to $31.9 million in 2020 Q1, riding on the increasing interest in cryptocurrencies.
Coinbase reported astronomical growth between Q4 2020 and Q1 2021. Net trading volumes grew to $335 billion, from $193.1 billion at the end of 2020. The company’s verified user base stood at 56 million, up from 43 million at the end of 2020, reporting monthly transacting users (MTUs) of 6.1 million.
Coinbase’s results for the quarter mirrors the growth of the cryptocurrency assets in the first quarter, with Bitcoin recording a 98.53% returns YTD, while Ethereum recorded a 184.26% returns YTD.
However, the platform warned that fluctuations in trading volume, MTUs and trading volume could bring revenue unpredictability, which will affect its quarterly profitability sequentially.
“MTUs, Trading Volume, and therefore transaction revenue currently fluctuate, potentially materially, with Bitcoin price and crypto asset volatility. This revenue unpredictability, in turn, impacts our profitability on a quarter-to-quarter basis”
The platform is poised to debut trading on the Nasdaq on April 14 through a direct listing, with its recent numbers backing its approximately $100 billion. The listing, a first for a cryptocurrency platform will come just a few days after the cryptocurrency market value surpassed $2 trillion for the first time, thanks to an Ethereum record price.
Coinbase’s Outlook for 2021
Coinbase gave 3 scenarios for the rest of the year. Its first assumption reflects a rather conservative optimism, assumes an increase in crypto market capitalization and moderate-to-high crypto-asset price volatility, which will mean continuous MTUs growth throughout the rest of the year, recording average MTUs of 7 million.
On the other hand, assuming a flat crypto market capitalization and low-to-moderate asset volatility assumes a slight decline in MTUs, averaging 5.5 million for 2021.
Finally, a decrease in crypto market capitalization similar to 2018 and low levels of price volatility could shave its average MTUs to 4 million.
The company is betting on transaction and custody revenue to drive its growth for 2021, driven by increased interest in crypto. CEO Brian Armstrong says Coinbase will be adding more assets and give people more access to decentralized financial applications.
On the other hand, Coinbase is managing expectations of institutional revenue, saying that its institutional revenues are inherently unpredictable. That said, it is worth noting that the platform will continue building its prime brokerage offering, leveraging on its Bison Trail acquisition to create an “Amazon Web Services for Crypto.”
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