EPS of $1.04 increased by 146.3% from previous year
Gross margin of 83.7%
Net income of 273.44M
""Our total revenue was $3.1 billion, down $86 million year-over-year. We saw a decline in transaction revenue, but this was largely offset by a 78% increase in subscription and services revenue."" - Alesia Haas
In Q4 2023, Coinbase Global Inc (COIN) reported significant financial improvement with a revenue of $953.8 million, reflecting a 41.5% quarter-over-quarter increase and a substantial 51.6% year-over-year growth. The company achieved a net income of $273.4 million, significantly boosted by strong trading activity amid heightened market volatility driven by anticipation around Bitcoin ETF approvals. Management emphasized their focus on cost discipline, achieving a remarkable 45% reduction in operational costs year-over-year, while simultaneously enhancing product offerings such as derivatives trading and Coinbase Prime.
The Q4 performance showcases Coinbase's resilience and adaptation to regulatory challenges and competitive pressures, positioning it as a key player in the evolving cryptocurrency marketplace. With continued emphasis on international expansion and the integration of USD Coin into global transactions, Coinbase is targeting long-term growth while maintaining clear leadership in compliance and customer trust.
Key Performance Indicators
Revenue
953.80M
QoQ: 41.48% | YoY:51.61%
Gross Profit
798.75M
83.74% margin
QoQ: 36.87% | YoY:46.26%
Operating Income
104.60M
QoQ: 231.04% | YoY:118.83%
Net Income
273.44M
QoQ: 12 172.27% | YoY:149.09%
EPS
1.14
QoQ: 12 100.00% | YoY:146.34%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $953.8 million (YoY: +51.6%, QoQ: +41.5%)
**Net Income:** $273.4 million (YoY: +149.1%, QoQ: +12,172.3%)
**Operating Income:** $104.6 million (YoY: +118.8%, QoQ: +231.0%)
**Gross Profit Margin:** 83.7%
**EPS:** $1.14 (Diluted EPS: $1.04)
Financial Highlights
Financial Highlights for Q4 2023:
- Revenue: $953.8 million (YoY: +51.6%, QoQ: +41.5%)
- Net Income: $273.4 million (YoY: +149.1%, QoQ: +12,172.3%)
- Operating Income: $104.6 million (YoY: +118.8%, QoQ: +231.0%)
- Gross Profit Margin: 83.7%
- EPS: $1.14 (Diluted EPS: $1.04)
Key Trends:
- Transaction Revenue: Increased 83% in Q4 due to a rise in average trading volumes and market volatility, indicating strong re-engagement from both simple and advanced traders.
- Subscription and Services Revenue: Grew by 12%, reaching $375 million, driven predominantly by blockchain rewards and asset custody services.
- Cost Management: Total operating expenses were $838 million, up 11% from the previous quarter, reflecting higher marketing and legal expenditures but significantly down year-over-year due to operational efficiencies.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
953.80M
51.61%
41.48%
Gross Profit
798.75M
46.26%
36.87%
Operating Income
104.60M
118.83%
231.04%
Net Income
273.44M
149.09%
12 172.27%
EPS
1.14
146.34%
12 100.00%
Key Financial Ratios
currentRatio
1.03
grossProfitMargin
83.7%
operatingProfitMargin
11%
netProfitMargin
28.7%
returnOnAssets
0.13%
returnOnEquity
4.35%
debtEquityRatio
0.49
operatingCashFlowPerShare
$-0.02
freeCashFlowPerShare
$-0.07
priceToBookRatio
6.64
priceEarningsRatio
38.12
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management Commentary:
- Growth and Strategy: Brian Armstrong, CEO, stated, "We cut costs by 45% year-over-year and managed to ship product faster with a lean team. This led to $95 million of positive net income for 2023... we established ourselves as the trusted leader in crypto."
- Product Expansion: Armstrong highlighted that in 2023, Coinbase launched derivatives trading globally and expanded payment capabilities with USD Coin, emphasizing a holistic advancement in services and compliance.
- Regulatory Climate: Armstrong reinforced the importance of clarity around crypto regulations, asserting, "The majority of G20 countries now have crypto legislation either already passed or being drafted... we are continuing to grow our business in the meantime."
"Our total revenue was $3.1 billion, down $86 million year-over-year. We saw a decline in transaction revenue, but this was largely offset by a 78% increase in subscription and services revenue."
ā Alesia Haas
"We will continue to fight in the courtroom to get sensible case law passed. Iām very pleased with our financial position, operating efficiency, and the competitive landscape, and I think we are incredibly well positioned for long-term growth."
ā Brian Armstrong
Forward Guidance
Looking forward to Q1 2024, Coinbase anticipates a robust start with transaction revenue expected to reach around $320 million, evidencing strong momentum in both institutional and retail trading activities. Management expects subscription and services revenue to range between $410 million and $480 million, influenced heavily by crypto pricing dynamics. Operating expenses are forecasted to remain relatively stable, with increases primarily in technology and general administrative costs, as Coinbase continues to invest in its operational capabilities while focusing on profitability.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
COIN Focus
83.74%
11.00%
4.35%
38.12%
MCO
65.00%
36.10%
10.20%
52.47%
MSCI
82.20%
53.70%
-54.50%
27.74%
ICE
56.40%
34.70%
1.45%
48.63%
CME
81.80%
60.00%
3.05%
23.22%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Coinbase's strategic focus on compliance, cost discipline, and product diversification provides a robust foundation for future growth. Investors should closely monitor the company's capacity to enhance its product offerings while navigating regulatory challenges. The current cash position and the strategic direction towards integrating USD Coin into a broader payments ecosystem are compelling positives in an evolving financial landscape. Overall, Coinbase displays a strong potential for recovery and growth, making it an attractive option for long-term investors.
Key Investment Factors
Growth Potential
Coinbase's expansion into international markets and derivatives trading presents significant growth opportunities, especially with the recent approval of Bitcoin ETFs that are likely to increase retail and institutional participation in crypto trading.
Profitability Risk
The company faces competition from both new entrants and established players in the fintech space, compounded by regulatory uncertainties that could impact revenue generation and operational strategies.
Financial Position
With a strong cash position of $9.6 billion, including $5.7 billion in cash and short-term investments, Coinbase maintains a solid balance sheet that supports ongoing investment and operational resilience.
SWOT Analysis
Strengths
Leading position in the cryptocurrency exchange market with a trusted brand
Strong cash reserves allowing potential for growth and innovation
High gross profit margins indicative of effective cost management
Weaknesses
High dependence on trading volume and market volatility for revenue generation
Operational costs are still significant despite reductions
Opportunities
Expansion into international markets can drive new user acquisition
Growing popularity of Stablecoins and crypto-related payment solutions presents new revenue streams
Threats
Intense competition from traditional financial institutions and new crypto exchanges
Uncertain regulatory environment that could impact operational flexibility