To The Moon

$Coinbase Global, Inc.(COIN)$ reported Q1 2025 results after the bell on Thursday, and overall performance was weaker than market expectations, with shares down about 3.2% after the bell.The company's Q1 profit missed expectations, primarily driven by lower trading volumes due to declining volatility in the crypto market, which in turn weighed on revenue performance.

Q1 results were slightly below expectations and guidance for Q2 results was relatively weak, but the volatility in the cryptocurrency markets over the past few months led to a decline in trading volumes on the platform, which was also expected by investors.

Results and market feedback

Overall Q1 results were down slightly sequentially, with revenue of $2.03 billion, slightly below the market consensus of $2.09 billion and down from $2.27 billion in Q4 2024, but up from $1.64 billion a year ago.

Transaction revenue was $1.26 billion, down from $1.56 billion in the fourth quarter but up from $1.08 billion in the first quarter of 2024, while subscription and service revenue increased to $698.1 million in the first quarter of 2024, up from $641.1 million in the fourth quarter of 2024 and $510.9 million in the first quarter of 2024, and up from $695.0 million in the first quarter of 2024, which was higher than the $695.0 million expected.

Adjusted EBITDA fell to $930 million, down from $1.29 billion in the prior quarter and $1.01 billion in Q1 2024, and slightly below expectations of $939 million; GAAP adjusted EPS came in at $1.94, lower than the market's expectations of $1.98, and down from $3.37 in the prior quarter and $2.53 a year ago.

In terms of guidance, the company expects Q2 subscription and services revenue of $600 million to $680 million (midpoint $640 million), down from Visible Alpha's forecast of $704.3 million; technology and development and general and administrative expenses of $700 million to $750 million (midpoint $725 million); and selling and marketing expenses of $215 million to $315 million (midpoint265 million dollars).The company also expects transaction costs as a percentage of net income to be around 15% in the second quarter.

Overall trends

• Trading volumes are down significantly, and reduced market volatility is having a direct impact on Coinbase's core business

• The company issued more conservative Q2 guidance and the market is cautious about future growth

• Investor sentiment is broadly flat, with a strong uptick in gold following a recent pullback from its highs, despite previous concerns about the ongoing downturn in the crypto-asset market.

Investment highlights

1. Performance figures vs. market expectations

• Coinbase's first-quarter revenue and profit fell short of market expectations, mainly due to lower trading volumes as the crypto market became less volatile

• The company did not release specific revenue and profit figures, but market reaction and analyst Q&A showed that the weak performance was mainly concentrated in the trading business, while the performance of other business lines was relatively stable.

2. Analysis of operational indicators

• The decline in trading volume is the core issue, affecting transaction fee income, which has a direct negative impact on Coinbase's profitability

• User activity and asset custody scale remained relatively stable, indicating some resilience in its user base and asset management business

• The Company continues to push forward with its diversified business layout, including pledging, spending and on-chain infrastructure services, in an attempt to reduce its reliance on transaction fees

3. Performance guidance and future outlook

• The Company's guidance for the second quarter of 2025 is on the conservative side, with market volatility expected to remain low and a significant recovery in trading volume difficult to achieve

• Coinbase's management emphasizes its continued focus on enhancing the long-term value of the platform and strengthening user stickiness and revenue streams through technological innovation and product diversification

• Future growth drivers will rely more on non-transactional revenue and emerging businesses such as on-chain activity infrastructure and global payment solutions

4. Conference Call Concerns and Company Response

• Analysts focused on the impact of crypto market volatility on trading volume and its sustainability, the company's management confirmed that volatility is likely to remain low in the short term, but emphasized that it is optimistic about the popularity and adoption of crypto assets in the long term

• Falling trading fee income puts pressure on profitability, management says it will mitigate earnings volatility through cost control and business diversification

• Concerns about the regulatory environment remained, and management reiterated that it would actively communicate with regulators to promote a reasonable regulatory framework to ensure business compliance and sustainable development