Coinbase Q1 revenue falls 10%, misses estimates amid a slump in trading activity

Coinbase, the largest publicly traded cryptocurrency exchange in the U.S., reported a 10% drop in first-quarter revenue, missing Wall Street expectations. The company blamed the dip on reduced trading activity despite a broad recovery in the crypto market.

The total revenue in the quarter was about $2.03 billion, below analysts’ estimated $2.2 billion, a 10% decline from the previous quarter. The price of Bitcoin climbed to nearly $100,000 during the quarter, but the rally did not prompt enough user activity to lift trading revenue.

As a result, transaction revenue declined, settling at $1.26 billion below the estimated $1.33 billion. Historically, this core segment was the company’s bread and butter—it underperformed as retail investors remained cautious and institutional activity slowed.

However, Coinbase managed to rack up points in its stablecoin sector, with revenue rising 32% Q/Q and the average USDC balance across its products jumping 49% Q/Q to $12 billion.

Total revenue rose to $2.03 billion from $1.64 billion a year earlier. That still missed analysts’ expectations of $2.1 billion, according to data compiled by LSEG.

The company earned an adjusted net income of $526.6 million, or $1.94 per share, for the three months ended March 31, compared with $679.2 million, or $2.53 per share, a year earlier.

Higher expenses drive down Coinbase earnings

The earnings report also disclosed that operating expenses spiked 51% year-over-year to $1.3 billion. The spike was fueled mainly by increased marketing expenses and write-downs related to crypto assets held for operational use.

The higher outlays weighed heavily on profits. Coinbase recorded an adjusted net income of $526.6 million, or $1.94 a share, well below $679.2 million, or $2.53 a share, in the same quarter last year.

The company said that macroeconomic uncertainty and reduced trading demand were among the factors that had affected user engagement. However, market watchers also attributed broader risk-off sentiment to U.S. policy uncertainty, which likely kept retail and institutional investors on the sidelines.

Shares of Coinbase dropped about 3% in after-hours trading after the report.

Coinbase expands into Derivatives with $2.9B Deribit buyout

In a series of ambitious moves intended to diversify itself and hold on to more of the growth in cryptocurrency-related derivatives trading, Coinbase also said that it had signed an agreement to acquire Deribit, one of the world’s largest cryptocurrency options exchanges, for $2.9 billion.

The deal, made up of $700 million in cash and 11 million shares of Coinbase stock, is a major foray into the crypto options universe. Deribit, which is headquartered in Dubai, saw more than $1 trillion in derivatives trading volume on its platform last year.

This acquisition aims to position Coinbase as a global crypto derivatives market leader, which is increasingly becoming a key growth area for digital asset platforms.

The chief executive of Coinbase, Brian Armstrong, said the shift was part of the company’s yearning to develop, over the long term, into a one-stop financial hub for the crypto economy.

The purchase of Deribit is expected to close later this year, pending regulatory approvals.

The deal comes amid U.S. President Donald Trump’s vocal support for digital assets and his promise to make America the global hub for cryptocurrency. Riding a wave of regulatory optimism, several crypto firms are actively striking major deals to expand their reach.

Just last month, Ripple acquired multi-asset prime broker Hidden Road for $1.25 billion—one of the largest acquisitions in the company’s history.