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Coinbase Global (COIN 8.44%)
Fourth Quarter 2024 Earnings Announcement
February 13, 2025, 5:30 PM ET

Agenda:

• Opening Remarks
• Q&A Session
• Participants on the Call

Opening Remarks:

Operator:

Good afternoon. I’m Sarah, your conference facilitator today. I’d like to extend a warm welcome to everyone attending Coinbase’s fourth quarter and full year 2024 earnings call. [Operator instructions] Anil Gupta, Vice President of Investor Relations, you may now proceed.

Anil Gupta — Vice President, Investor Relations

Thank you, and good afternoon to everyone. Welcome to the Coinbase earnings call for the fourth quarter and entire year of 2024. Joining me today are: Brian Armstrong, co-founder and CEO; Emilie Choi, president and COO; Alesia Haas, CFO; and Paul Grewal, chief legal officer. I trust you’ve all had a chance to review our shareholder letter, published on our investor relations page earlier today.

Before we begin, I want to remind you that during this call, we may make forward-looking statements that could differ significantly from actual outcomes. Details on risks and uncertainties that might impact these results can be found in our SEC filings. We will also discuss non-GAAP financial measures today; reconciliations to the closest GAAP measures are available in the shareholder letter on our investor relations page.

We are again utilizing Say to facilitate questions from our shareholders and will also take live inquiries from research analysts. With that, I will hand it over to Brian for his initial comments.

Brian Armstrong — Co-Founder and Chief Executive Officer

Thank you, Anil. The voice of the cryptocurrency community was clearly heard in the recent U.S. elections, representing a significant moment for the crypto world.

President Trump is rapidly working on his promise to position the U.S. as the global leader in cryptocurrency. The most hospitable Congress for crypto that we’ve ever encountered is now pushing legislation on stablecoins and market structure. The U.S.’s strong leadership in this space is drawing attention globally, which will likely spur other nations to adopt crypto at a faster pace.

As we dive into our financial results for 2024, I am thrilled to report that Coinbase had an exceptional year. Our total revenue surged to $6.6 billion, double that of the previous year, accompanied by $3.3 billion in adjusted EBITDA, marking two consecutive years of positive EBITDA. Over five of the last six years, we have consistently achieved positive adjusted EBITDA.

Our subscription and services revenue saw incredible growth, increasing by 64% year-over-year to $2.3 billion, primarily due to USDC, staking, and our Coinbase One services. Our international revenue share climbed to 19% in Q4, thanks to advances in our payment infrastructure and localized efforts. We now have a replicable strategy to enter new markets and achieve profitable contributions quickly.

We are strategically positioned to leverage the new regulatory trends in our favor. Our commitment to compliance and trustworthiness is being validated and rewarded. Let’s discuss how cryptocurrency is entering mainstream society and the evolving regulatory landscape. We anticipate that this will significantly expand Coinbase’s total addressable market (TAM). We aim to be the primary platform enabling companies to integrate cryptocurrency into their operations. We believe on-chain technology represents the future of online transactions.

Think back to the early 2000s when every business had to adapt to the internet—the potential for crypto is similarly transformative. By the end of this decade, as much as 10% of global GDP could be transacted on crypto platforms, with Coinbase at the forefront providing the most reliable and scalable infrastructure.

Our focus for 2025 is to increase revenue through our existing product offerings while fostering utility across emerging crypto categories. Our ambitions include enhancing trading capabilities, promoting USDC’s status as the top dollar stablecoin, and duplicating our successful strategies in new high-growth markets, particularly focusing on driving subscription services revenue.

Significant opportunity lies in the payments sector where stablecoin transactions reached an impressive $30 trillion last year, tripling year-over-year. We are actively working to incorporate crypto payments across our entire product ecosystem, aiming to establish Base as the leading blockchain for startups and larger enterprises alike. We will maintain a focus on lowering transaction fees while encouraging retail user growth.

Lastly, we are committed to scaling our foundational services to support the growing transaction volumes in the crypto market. Our policy team is diligently working towards substantial legislative changes, including building support for crypto-friendly candidates heading into the 2026 elections. Besides, we are enhancing our backend services, ensuring we can effectively support our clients and partners.

In summary, we are entering a pivotal period for cryptocurrency, armed with unprecedented opportunities to enhance the financial system and broaden economic freedom. Regulatory barriers are diminishing, with governments becoming more receptive to the innovation generated within the crypto industry. This will propel significant advancements across trading, payment systems, and consumer applications in 2025. I will now pass the floor to Alesia for a review of our financials.

Alesia Haas — Chief Financial Officer

Thank you, Brian. As mentioned, the fourth quarter proved to be a successful period for Coinbase, capping off a remarkable year. We successfully executed our financial strategy by diversifying our revenue streams, achieving positive adjusted EBITDA, and maintaining operational discipline while strategically investing for growth. Let’s review our results.

All comparisons made will be on a quarter-over-quarter basis. In terms of the broader crypto market, we experienced a strong rally following the U.S. elections, fueled by the election of a pro-crypto Congress and President. The average crypto market cap increased by 33%, with asset volatility rising by 27%. This environment led to a total trading volume of $439 billion in Q4, up 137%. Consumer trading volume reached $94 billion, climbing 176%, surpassing the growth of the U.S. spot market by 126%.

As Brian noted, this constituted an all-time high. Consumer transaction revenue of $1.3 billion represented a 179% increase. Our trading volume expanded strongly in both simple and advanced categories. Throughout the quarter, we introduced 13 new assets, including trending meme coins. Investments in improving user experience and platform reliability were beneficial, resulting in nearly 24% growth in monthly active users, reaching 9.7 million. Almost half of our trading customers were either new to Coinbase or returning after over a year, which highlights our success in attracting participants back to the market.

Institutional trading volume also grew impressively, reaching $345 billion—a 128% increase—and institutional transaction revenue hit $141 million, up 156%. Adoption of our prime product suite was notable, with leading clients engaging with custody, trading, financing, and staking services. Our prime financing product noted peak loan balances in the fourth quarter, correlating with favorable market conditions.

Our subscription and services revenue reached $641 million, a 15% increase, benefiting from higher asset prices and the growth in the USDC market cap, along with inflows into staking, custody, and USDC offerings. Notably, stablecoin revenue saw a minor decline, while other subscription and service revenues surged, largely driven by our Coinbase One program, which has surpassed 600,000 paid members since its early December launch.

In terms of operating expenses, total Q4 expenses amounted to $1.2 billion, reflecting a 19% increase primarily due to higher transaction activities. Technological, administrative, and marketing costs grew collectively by over $84 million (10%) quarter-over-quarter as we invested in marketing initiatives and climbed USDC rewards amidst advocacy efforts within the crypto landscape.

Our Q4 adjusted EBITDA was $1.3 billion, with net income also at $1.3 billion, benefiting from a $476 million pre-tax gain from our crypto asset portfolio—mostly unrealized gains—translating to $357 million post-tax. At quarter-end, our USD resources totaled $9.3 billion, highlighting our strong financial foundation that allows us to invest in growth opportunities and potential acquisitions.

Before we close with our outlook, it’s worth noting the SEC’s recent issuance of Staff Accounting Bulletin 122, which rescinded the previously required recording of customer crypto assets and liabilities on our balance sheet. We have adopted this change, shifting our focus back to assets on the platform to measure the crypto and USDC we securely hold for our customers, totaling $404 billion—about 12% of the total crypto market cap.

Looking ahead to Q1, we’ve made a strong start, generating approximately $750 million in transaction revenue so far. We forecast Q1 subscription and services revenue to be sequentially higher, expected to fall between $685 million and $765 million, driven by increased stablecoin revenue and growth in Coinbase One subscribers, supported by higher average crypto asset prices.

We also anticipate Q1 expenses for technology, development, and administrative services to range between $750 million to $800 million. Marketing expenses are projected to fall between $235 million to $375 million, influenced by performance-related marketing opportunities and USDC reward contributions. With that, let’s open the floor for questions.

Anil Gupta — Vice President, Investor Relations

We will now take the top three inquiries from the Say portal. First question: “What impact did the February liquidation event have on Coinbase users? Have we experienced any user loss due to the price fluctuations?” Alesia, can you take that?

Alesia Haas — Chief Financial Officer

(Smiling) I find this question amusing. Volatility is inherent to crypto markets. The price shifts we saw in February aren’t out of the ordinary compared to the fluctuations we experience regularly. The market recovered swiftly, and it’s vital to note our retail users tend to be long-term holders, returning actively during favorable market conditions. Therefore, the February volatility had no considerable effect on our business.

Anil Gupta — Vice President, Investor Relations

Next question: “With shifting regulatory conditions nearing favorable outcomes, Base’s rapid ascent, the international business thriving, and the potential inclusion of Coinbase in the S&P 500, what additional growth prospects can you highlight, Brian?”

Brian Armstrong — Co-Founder and Chief Executive Officer

Thank you for the question. I assure you, I didn’t create that inquiry. It underscores Coinbase’s diverse revenue from multiple product lines, which has seen growth. I’m proud of our shift towards a retail platform, institutional platform, and developer platform, positioning us well to capture future market opportunities. Regarding promising growth drivers, many initiatives are in progress that I’m excited about but can’t discuss at this time. However, I can highlight the ongoing transformation of crypto into a daily utility rather than merely an asset class, as well as our continued international expansion and the potential for mergers and acquisitions moving forward. We now have a trusted framework for growth which will drive potential value significantly.

Anil Gupta — Vice President, Investor Relations

Final question: “What initiatives are becoming feasible under the emerging regulatory framework?” Brian?

Brian Armstrong — Co-Founder and Chief Executive Officer

The regulatory landscape is indeed changing. A critical piece will be passing market structure legislation to clarify which tokens are commodities, securities, stablecoins, etc. With clarity, we expect a surge of capital entering crypto, paving the way for innovation and growth. Additionally, we hope the legislation will create pathways for stablecoins and inclusivity in banking services. A foundational crypto bill of rights is also crucial, ensuring Americans can self-custody their assets and use crypto freely. Paul, have I covered everything?

Paul Grewal — Chief Legal Officer

I’d like to emphasize the need for a functional bill of rights, which is already supported by the executive orders promoting dollar-backed stablecoins and ensuring fair banking access.

Anil Gupta — Vice President, Investor Relations

Thank you all for your questions. Sarah, please proceed with the first question from the line.

Q&A Session:

Operator:

Thank you. Our first question comes from Owen Lau with Oppenheimer. Your line is open.

Owen Lau — Analyst

Good evening, and thank you for taking my questions. Congratulations on a stellar quarter! Observing the U.S. market shares for December and January, we’ve seen you capture a portion from competitors, even with new lower-cost offerings flooding the market. Could you elaborate on how you’re maintaining this market share amidst growing competition?

Brian Armstrong — Co-Founder and Chief Executive Officer

Thank you for your recognition. We’re proud of our record market shares in both U.S. spot and global derivatives. The crypto landscape is expanding, which benefits Coinbase. Our mission is to integrate crypto within every bank, fintech, and payment platform globally—helping enlarge the market pie while enhancing trust in our platform.

Alesia Haas — Chief Financial Officer

Moreover, we’ve kicked off Q1 strongly and believe our assets addition initiatives, user experience enhancements, and robust marketing will enable sustained share gains.

Operator:

Next question comes from Devin Ryan of Citizens JMP. Your line is open.

Devin Ryan — Analyst

Thanks for the great results! Regarding international derivatives, we’ve seen substantial growth, but fees seem lower. As you expand, should we expect these rates to stay competitive or rise? How do you envision the future of fees in this niche?

Alesia Haas — Chief Financial Officer

Our current focus is on enhancing liquidity and trading volumes. While our pricing is relatively lower for derivatives compared to spot trading, we anticipate that as we achieve scale, our fees will adjust according to market dynamics.

Operator:

The next question comes from Benjamin Budish with Barclays Capital. Your line is open.

Benjamin Budish — Analyst

Thank you for taking my question! Could you elaborate on the activities and trading behaviors of customers who are new or returning to the platform? Are they engaging in significant volume, and what trends do you observe among Coinbase One users?

Alesia Haas — Chief Financial Officer

While we typically don’t disclose cohort specifics, new users often show interest in popular coins or delve into crypto for the first time. These users generally come from effective marketing campaigns. Returning users engage heavily during volatile market conditions. The Coinbase One program encourages active monthly trading due to the benefits derived from trading fees.

Brian Armstrong — Co-Founder and Chief Executive Officer

Indeed, returning users often explore more products as they revisit the platform, presenting us with opportunities to showcase additional offerings.

Operator:

The next question comes from Ken Worthington of J.P. Morgan. Your line is open.

Ken Worthington — Analyst

As we see a friendlier administration, how can Congress and regulators ensure a conducive environment for developers within the crypto landscape?

Brian Armstrong — Co-Founder and Chief Executive Officer

Legislation focused on market structure and token classification is paramount. Clear definitions on commodities, securities, and stablecoins will encourage capital flow into crypto, leading to a flourishing startup ecosystem. We’re also eager to see effective stablecoin regulations emerge to support digital dollar adoption.

Anil Gupta — Vice President, Investor Relations

We appreciate everyone’s inquiries and engagement today. Sarah, let’s take one more question.

Operator:

Our final question comes from Alex Markgraff of KBCM. Your line is open.

Alex Markgraff — Analyst

Regarding sales and marketing strategies, is the wider forecast range reflective of changes to our approach or is it primarily due to fluctuating market conditions?

Alesia Haas — Chief Financial Officer

The wider forecast range reflects current market conditions. We are seizing marketing opportunities post-election and want to maintain flexibility in our approach based on market volatility.

Anil Gupta — Vice President, Investor Relations

That concludes our Q&A. Thank you for joining us today; we look forward to updating you next quarter.

Operator:

[Operator signoff]

Duration: 0 minutes

Participants on the Call:

Anil Gupta — Vice President, Investor Relations
Brian Armstrong — Co-Founder and Chief Executive Officer
Alesia Haas — Chief Financial Officer
Owen Lau — Analyst
Devin Ryan — Analyst
Benjamin Budish — Analyst
Ken Worthington — Analyst
Paul Grewal — Chief Legal Officer
Peter Christiansen — Analyst
Emilie Choi — President and Chief Operating Officer
Patrick Moley — Analyst
John Todaro — Analyst
Dan Dolev — Analyst
Bo Pei — Analyst
Alex Markgraff — Analyst

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