Coinbase achieves first quarterly profit since 2021 amid robust trading

Coinbase results: Coinbase Global reported its first quarterly profit since 2021 on Thursday, buoyed by strong trading volumes driven by renewed interest in cryptocurrencies. The announcement propelled its shares up by nearly 13 per cent after the bell.

The resurgence of investor enthusiasm for crypto was fuelled by the US Securities and Exchange Commission's approval of the first spot bitcoin exchange-traded funds (ETFs) in recent months. 

Despite being approved only in January, anticipation of a favourable decision by the SEC pushed bitcoin's price up by 57 per cent in the last three months of 2023.

The surge in bitcoin's value drove a 64 per cent increase in Coinbase's transaction revenue to $529.3 million in the fourth quarter, far exceeding both internal and Street consensus expectations, according to Michael Elliott, an equity research analyst with CFRA Research.

Coinbase anticipates a robust first quarter for its subscription and services unit, which includes businesses beyond trading.

Revenue from this unit is forecasted to range between $410 million and $480 million, surpassing the LSEG estimate of $356.22 million.

In the fourth quarter, revenue from the unit rose by nearly 33 per cent to $375.4 million, with stablecoin revenue contributing significantly. 

Coinbase earns interest from its partnership with fintech firm Circle, which issues the USD Coin (USDC) stablecoin jointly governed by both entities. 

The interest earned from reserves backing USDC serves as a significant revenue stream for Coinbase, especially amid the Federal Reserve's interest rate hikes.

Overall, the company reported a profit of $273.4 million, or $1.04 per share, for the three months ended December 31, compared with a loss of $557 million, or $2.46 per share, in the same period a year earlier. 

Analysts had expected a loss of 1 cent per share, according to LSEG data.

While some analysts express concerns that spot ETFs may prompt investors to seek crypto exposure off the Coinbase platform, CFO Alesia Haas dismissed such worries, asserting that ETFs have had a net positive impact on the industry and have been additive to Coinbase's business.

(With Reuters Inputs)