TLDR
- Coinbase’s Q1 revenue fell 10% to $2 billion, missing analyst estimates by 4.1%
- Net income dropped 95% from $1.29 billion to $66 million, largely due to $596 million paper loss on crypto holdings
- Transaction revenue decreased 18.9% to $1.26 billion as trading volumes dipped 10.5%
- Coinbase announced acquisition of Deribit for $2.9 billion, the largest crypto industry acquisition to date
- Despite earnings miss, EPS of $1.94 beat the Zacks Consensus Estimate of $1.85
Coinbase, the largest cryptocurrency marketplace in the U.S., reported first-quarter results that fell short of Wall Street expectations as trading volumes slowed across the crypto market. The company saw its total revenue drop to $2 billion, down 10% from the previous quarter and missing industry estimates by 4.1%.
The crypto exchange’s net income took a major hit, falling 95% from a near-company record of $1.29 billion in Q4 to just $66 million in Q1. This dramatic decline was largely due to a $596 million paper loss on Coinbase’s cryptocurrency holdings.
🚨 Coinbase Q1 Earnings Miss
🔹 Revenue: $2.03B (missed estimates)
🔹 EPS: $1.94, down from $2.53 YoY
🔹 Stock dips 3% after-hours despite Bitcoin rally, now trading at $203
🔹 Q2 outlook lags: $600M–$680M services rev. vs. $704M expected
💥 Coinbase confirmed its $2.9… pic.twitter.com/yT304aDObJ
— Trader Edge (@Pro_Trader_Edge) May 9, 2025
Despite these disappointing figures, there was a silver lining. Coinbase’s earnings per share came in at $1.94, beating the Zacks Consensus Estimate of $1.85 for the quarter.
Transaction revenue, which makes up a substantial portion of Coinbase’s business, fell 18.9% quarter-on-quarter to $1.26 billion. This decline mirrored the overall dip in trading volumes, which decreased 10.5% to $393 billion.
Consumer trading volume specifically dropped 17% from the fourth quarter to $78.1 billion. Institutional trading wasn’t spared either, falling 9% to $315 billion.
Market Conditions and Political Factors
The slowdown comes after an unusually strong fourth quarter, which had been boosted by Donald Trump’s election victory in November. Many investors viewed Trump’s win as a positive catalyst for crypto prices.
In contrast, the first quarter saw more mixed signals. While Bitcoin did reach an all-time high on January 20, concerns about Trump’s tariff policies later created volatility that dampened investor appetite for riskier assets like cryptocurrencies.
The company specifically noted that the Trump administration’s tariffs were partly to blame for the double-digit drop in crypto market cap over the quarter.
Not all segments of Coinbase’s business saw declines. Subscription and services revenue actually rose 8.9% to $698.1 million, with stablecoin revenue being the biggest contributor to this growth.
Strategic Expansion through Acquisition
On the same day as its earnings release, Coinbase announced a major strategic move. The company agreed to acquire crypto derivatives platform Deribit for $2.9 billion, marking the industry’s largest corporate acquisition to date.
This deal will substantially expand Coinbase’s footprint in the crypto derivatives market, where its presence had previously been limited to its Bermuda-based platform.
Deribit is a significant player in the space, having facilitated over $1 trillion in trading volume in 2024 and currently maintaining around $30 billion in open interest.
The acquisition positions Coinbase as the “global leader” in crypto derivatives trading, according to the company. This move mirrors competitor Kraken’s March agreement to acquire futures brokerage NinjaTrader for $1.5 billion.
News of the Deribit acquisition contributed to a 5.1% rise in Coinbase’s share price during the May 8 trading day. However, shares pulled back 3.1% in after-hours trading following the release of the Q1 results.
Coinbase also highlighted its regulatory wins during the quarter. The company pointed to the dismissal of its lawsuit with the U.S. securities regulator as a “major judicial win for balanced, innovation-friendly regulation, and our efforts to make crypto mainstream.”
Looking Ahead
For the second quarter, Coinbase expects subscription and service revenue in the range of $600 million to $680 million. The company noted that stablecoin revenue growth is likely to be more than offset by lower blockchain rewards due to lower asset prices.
Coinbase reported generating about $240 million in transaction revenue in April alone, giving some insight into its early second-quarter performance.
Despite challenges in the first quarter, Coinbase said it gained more market share in global spot and derivatives trading. The company also reported deepening its presence in emerging markets such as Argentina and India with “critical registrations.”
Coinbase’s stock was down 2% in extended trading following the earnings release. While shares gained 5% during the May 8 trading session, they remain down nearly 17% year to date.
The Deribit acquisition is expected to help Coinbase broaden its footprint outside the U.S., potentially reducing its reliance on the domestic market where regulatory hurdles have been a persistent challenge.
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