Coinbase’s monster Q1 in context – ClearTips

The crypto company crushed the first three months of 2021

At first The quarter of 2021, US consumer cryptocurrency trading giant Coinbase grew rapidly, earning strong profits at the same time.

For Coinbase, the disclosure of its initial Q1 2021 results comes a week before its direct listing, an event that would see the company start trading publicly. As it is both cash-rich and well known, Coinbase is using a traditional IPO in favor of a more exotic way of going public.

In its release, Coinbase revealed the following metrics, which ClearTips has compared to the Matrix from its S-1 filing:

  • Monthly Transaction Users (MTU) 6.1 million, up from 2.8 million at the end of 2020.
  • Stage property $ 223 billion, from $ 90.3 billion at the end of 2020.
  • trading volume $ 193.1 billion to $ 335 billion at the end of 2020.
  • Revenue $ 1.8 billion, from $ 585.1 million in Q4 2020.
  • Net income “About $ 730 million to $ 800 million,” from $ 178.8 million in Q4 2020.
  • Adjusted EBITDA “About $ 1.1 billion” from $ 287.7 million in Q4 2020.

The growth of coinbase from Q4 2020 to Q1 2021 is so extreme that the company’s year-over-year comparisons are comparable. For example, Coinbase had revenue of $ 190.6 million in Q1 2020, or just 11% of its Q1 2021 top line. In Q1 2021, the company’s adjusted profit alone was more than five times its annual revenue.

The new numbers may help solidify some valuation marks that have been discussed, or are promoting, like the company’s nearly $ 100 billion threshold.

The company introduced a few warnings in its public release, noting that the price cycle of cryptocurrencies could be “highly volatile, and as a result, [Coinbase] Remedy[s] [its] Performing on price cycles in lieu of quarterly results, the company also said that its future slowdown in crypto trading activity would not slow down its investment:

MTU, trading volume, and therefore currently transaction revenue fluctuate, potentially with bitcoin value and volatility of crypto assets. This revenue unexpectedly affects our profitability on a quarter-on-quarter basis. In terms of expenses, we want to prioritize those investments, including periods where we may see a decrease in the price of bitcoin. This is because we believe that scale is central to achieving our mission and is still early in the development of this industry. [Emphasis: ClearTips]

Or more simply, it is willing to sacrifice profitability in the future if its revenue declines, as it is building for the future with more near investor expectations. At least Coinbase is being clarified in its message to investors: Do not buy Quantbase stock, leading the company to expect quarterly results.

Looking ahead, Coinbase provided some guidance for its full year results. For 2021, the company provided three scenarios. The first is “an increase in crypto market capitalization and projected price fluctuations of medium-to-high crypto asset,” leading to 7 million MTUs. The second assumes “flat crypto market capitalization and low-to-medium crypto asset price volatility” and 5.5 million LVTs. The third was “a significant decrease in crypto market capitalization, similar to the observed decrease in 2018, and then lower levels of crypto asset price” and 4 million MTU for the year.

But don’t think that Coinbase is anticipated growth, simply because its best scenario predicts growth from 6.1 million MTUs to 7 million MTUs only. The company wrote in its release under the heading “Institutional Revenue” that it expects “meaningful growth in 2021 will be driven by transactions and custody revenues given the increased institutional interest in the crypto asset class.”

The Quinbase’s quarters were good. But such was the performance of cryptocurrency itself. A wager on the shares of the company, can then easily be seen as a wager on the value of bitcoin and its ilk. April 14 is going to be a fun day to watch.

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