Coinbase's first-quarter revenue fell short of expectations, leading to a 2.67% drop in its stock price, and announced a $2.9 billion acquisition of Deribit.

On May 8, 2025, Coinbase released its first-quarter 2025 financial report, showing a 24% year-over-year revenue increase, though it fell short of expectations, and a 94% decline in net profit. The stock price dropped 2.67% in after-hours trading. On the same day, Coinbase announced its acquisition of the Dubai-based crypto derivatives exchange, Deribit, in a deal involving cash and stock payments, pending regulatory approval.

First Quarter Earnings Miss Expectations, Trading Revenue Plummets

According to Coinbase's first quarter 2025 earnings report, as of March 31, the company's total revenue was $2 billion, which, although a 24% increase from the $1.64 billion in the same period last year, still fell short of the market expectation of $2.12 billion and was about 10% lower than the $2.3 billion in Q4 2024. Net profit plunged from $1.18 billion in the same period last year to $65.6 million, a drop of 94%; earnings per share was $0.24, far below the market expectation of $1.93.

Trading revenue, which is Coinbase's main source of income, accounting for over 60%, performed poorly in the first quarter. Trading revenue was $1.262 billion, down 19% from the previous quarter's $1.556 billion. Total trading volume also decreased from $439 billion in the previous quarter to $393 billion, a reduction of about 10%. Among them, retail trading volume was $78.1 billion, down 17% quarter-on-quarter; institutional trading volume was $315 billion, down 9% quarter-on-quarter.

The company pointed out that the reduction in trading activity is closely related to macroeconomic uncertainty, particularly the tariff policies implemented during President Trump's administration, which heightened market risk aversion and led investors to reduce exposure to risk assets, including cryptocurrencies.

Subscription and Service Revenue Growth, Stablecoins Shine

Despite the decline in trading revenue, Coinbase saw growth in subscription and service revenue. In the first quarter, this revenue reached $698 million, up 9% quarter-on-quarter, mainly driven by contributions from stablecoins (such as USDC) and the Coinbase One subscription service. The average holding of USDC increased by 49% quarter-on-quarter, reaching $12.3 billion, driving stablecoin revenue up 32% quarter-on-quarter to $298 million.

However, blockchain reward income decreased by 9% quarter-on-quarter due to falling asset prices, partially offsetting the growth brought by stablecoins. Coinbase expects second quarter subscription and service revenue to be between $600 million and $680 million, with the growth in stablecoin revenue potentially offset by a decrease in blockchain reward income.

Operating Expenses and Crypto Asset Losses Impact Profitability

In the first quarter, Coinbase's total operating expenses were $1.3 billion, up 7% quarter-on-quarter. Among these, technology and development, general administrative, and marketing expenses increased by a combined $40 million, mainly due to rising marketing expenses and customer support costs. Transaction expenses were $303 million, accounting for 15% of net income.

Additionally, the company recognized $597 million in unrealized losses due to price fluctuations of held crypto assets, further compressing net profit. These losses mainly stemmed from Bitcoin and other crypto assets held by Coinbase for long-term investment purposes.

Post-Market Stock Price Decline, Down Nearly 17% Year-to-Date

On the day of the earnings release, Coinbase's stock price rose 5.06% during regular trading hours, closing at $206.50. However, affected by the earnings miss, the post-market stock price fell 2.67% to $200.98. Since the beginning of 2025, the stock has cumulatively fallen about 16.83%.

Announces $2.9 Billion Acquisition of Deribit, Expands Derivatives Market

On the same day as the earnings report, Coinbase announced it would acquire Dubai-based crypto derivatives exchange Deribit for approximately $2.9 billion. The exchange is the world's largest Bitcoin and Ethereum options platform, with a trading volume exceeding $1.2 trillion in 2024 and open contracts worth $30 billion.

The acquisition includes $700 million in cash and 11 million shares of Coinbase Class A common stock, with the transaction price subject to customary adjustments. The deal is subject to regulatory approval and is expected to be completed by the end of 2025. Coinbase will also take over Deribit's operating license in Dubai.

Coinbase CFO Alesia Haas stated in the earnings call that the addition of Deribit is expected to immediately enhance the company's profitability and strengthen the diversity and stability of trading revenue. CEO Brian Armstrong noted that the acquisition is an important step in the company's global derivatives strategy.

Coinbase's first-quarter revenue fell short of expectations, leading to a 2.67% drop in its stock price, and announced a $2.9 billion acquisition of Deribit.

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