Coinbase jumps 9% after earnings beat; results seen as ‘solid’ By Investing.com

Investing.com – Coinbase reported better-than-feared first-quarter results Thursday, driven by cost cuts and a jump in subscription revenue.

Coinbase Global (NASDAQ:) shares are trading about 9% higher before the open, in the wake of the report.

Coinbase lost $0.34 on revenue of $772.5 million, beating expectations for a loss of $1.39 on revenue of $655.0 million. This cadence comes as a result of a jump in subscription revenue to offset the decline in transaction revenue with lower trading volumes.

Subscription revenue more than doubled to $362 million in the first quarter, from $151.9 million in the same period a year earlier. Total transaction revenue fell to $374.7 million from $1.01 billion a year ago, driven by declining consumer transaction revenue as volume declined. Consumer transaction revenue fell to $352.4 million from $965.8 million, with volume falling to $21 billion from $74 billion a year earlier.

Looking ahead, the company said it expects subscriptions and services revenue to decline in the second quarter, driven by “a decline in USDC market capitalization.”

For 2023, the Company continues to strive to improve adjusted earnings for the full year 2023 in absolute dollar terms versus the full year 2022.

BofA analysts said the results were strong but fundamental questions remain unanswered.

“Fundamental mid/long-term questions about COIN’s core business remain. We maintain our cautious view on COIN as we continue to believe that retail cryptocurrency volumes will remain subdued and regulatory burden will remain in place for some time,” they wrote. Weak” note.

Barclays analysts cut the price target to $61 from $74 per share. Analysts highlighted a pickup in retail buying, although this trend may not be sustainable.

“The bear narrative that investors have long feared on Coinbase has been the presumed inevitability of retail fee pressure, similar to what has occurred in the stock brokerage business over the past several decades, but this has yet to materialize, and while we assume some natural ongoing fee pressure in Our model, with so few tiered competitors in the US, the current pricing model could continue for some time.”

(Additional reporting by Sinad Karametović)