Coinbase Q1 2025: Revenue Down 10%, Stablecoin Up 32%

Coinbase Global Inc., the largest U.S. cryptocurrency exchange, reported a 10% decline in first-quarter revenue for 2025, falling short of Wall Street’s expectations due to reduced trading activity amid a broader crypto market downturn. Despite the disappointing earnings, the company’s stock remained resilient, buoyed by optimism about a recovering crypto market and strategic moves like the $2.9 billion acquisition of Deribit, a leading crypto derivatives platform. Coinbase’s focus on expanding market share and deepening its presence in emerging markets such as Argentina and India has also fueled confidence among investors, including Cathie Wood’s Ark Invest, which increased its stake in the company in Q1.

Q1 Financial Performance: Key Metrics and Market Challenges

For the quarter ending March 31, 2025, Coinbase reported revenue of $2.0 billion, down 10% quarter-over-quarter. Earnings per share (EPS) were $0.24, a sharp drop from $4.40 a year ago and only one-eighth of the expected $2.12, reflecting a 94% profit decline. Excluding crypto investment impacts, adjusted earnings were $527 million, or $1.94 per share. Transaction revenue, a core income driver, totaled $1.3 billion, while subscription and services revenue, including staking and custodial fees, reached $698 million. Consumer trading volume fell 17% from Q4 2024 to $78.1 billion, while institutional trading volume fell 17% from Q4 2024 to $78.1 billion, signaling reduced engagement both in retail and wholesale. The revenue shortfall was largely attributed to a broader crypto market slowdown in Q1 2025, characterized by lower asset prices and reduced volatility. Bitcoin volatility has significantly decreased compared to 2020-2022, dampening trading activity, a key revenue driver for Coinbase. Macroeconomic concerns, including fears of a U.S. economic slowdown and uncertainty over President Trump’s tariff policies, further eroded investor sentiment, with the crypto market cap falling below pre-election levels.

Source: Coinglass

Strategic Initiatives: Deribit Acquisition and Emerging Markets

Coinbase countered the market challenges with significant growth initiatives. On May 8, 2025, it acquired Deribit, the leading crypto options exchange, for $2.9 billion. Deribit, with $30 billion in open interest and $1 trillion in annual trading volume, strengthens Coinbase’s derivatives business, complementing its U.S. futures and international perpetual futures platforms. CEO Brian Armstrong described the acquisition as a “pivotal step” toward a global derivatives marketplace, targeting the rising institutional demand that drove $803.6 billion in Coinbase’s Q1 derivatives trading volume.

The company also expanded its global presence by securing regulatory approvals in emerging markets. In Q1, Coinbase obtained a Virtual Asset Service Provider (VASP) registration in Argentina and registered with India’s Financial Intelligence Unit, enhancing its access to high-growth regions. These efforts increased Coinbase’s international perpetual futures exchange market share by 60% and boosted stablecoin revenue by 32%.

Investor Confidence and Market Outlook

Despite the earnings decrease, Coinbase’s stock remained resilient, closing at $206.50 on May 8, 2025, with a 3.2% after-hours dip to around $203.30. Cathie Wood’s Ark Invest reinforced its confidence by purchasing 115,103 Coinbase shares worth $23.7 million now with a 31.7% unrealized gain. Wood’s investments, allocated across ARK Innovation ETF (ARKK), ARK Next Generation Internet (ARKW), and ARK Fintech Innovation (ARKF), highlight Coinbase’s leadership in crypto infrastructure. With Coinbase’s business expanding into new areas and the crypto market showing signs of recovery, Coinbase expects stronger performance in Q2.