Coinbase (COIN) shares tumbled more than 5% in after-hours trading on Thursday after the crypto exchange posted first-quarter results that badly missed Wall Street forecasts. Falling cryptocurrency prices sapped trading activity, a key revenue driver.
Key metrics fall short
The company reported a loss of $1.49 per share, versus the expected profit of $0.27. Revenue came in at $1.41 billion, below the $1.52 billion consensus. Transaction revenue totaled $755.8 million, missing the $805.2 million estimate, while subscription and services revenue reached $583.5 million, also below the $619.3 million forecast.
Crypto downturn weighs on trading volumes
A sharp drop in bitcoin and other digital assets early in the quarter, followed by only a partial rebound in March, depressed spot trading volumes across exchanges. Coinbase noted its global spot market share rose to a record 8.6%, partly thanks to growth in derivatives trading.
Derivatives and prediction markets show promise
Trailing 12-month derivatives volume surged 169% year-over-year, and retail derivatives revenue topped an annualized $200 million for the first time. The company's prediction markets business surpassed $100 million in annualized revenue within two months of its U.S. launch. Meanwhile, its Base blockchain processed 62% of global onchain stablecoin transaction volume in the quarter.
Layoffs and AI restructuring
Earlier this week, Coinbase said it would cut approximately 700 jobs (about 14% of its workforce) as part of an AI-driven restructuring effort, also citing the broader crypto downturn. Investors are watching whether subscription and infrastructure revenue can offset the cyclical nature of trading fees.