After eluding profitability for two years, Coinbase executives celebrated posting $273 million in net income for the fourth quarter of 2023, putting the net profitability for all of 2023 at $95 million.
Even before the earnings call, markets were reacting positively to Coinbase, with shares on Thursday closing up 3.3%—and rising about 13% after hours. Although there were mixed predictions among analysts on whether Coinbase would achieve quarterly profitability, JPMorgan raised its recommendation from underweight to neutral, which also helped in giving the stock price a bump, according to Bloomberg.
During the earnings call, CEO Brian Armstrong once again argued for the importance of crypto in the future of society, highlighting the push Coinbase is making to get more regulations in the U.S.—and at times even criticizing peers.
“Coinbase has always taken a long-term approach focussing on building in a compliant manner, even when it wasn’t the popular choice. Many of our competitors cut corners and broke laws to get big fast, and we’ve seen how that strategy played out,” Armstrong said.
Coinbase CFO Alesia Haas acknowledged recent gains and volatility seen in the broader crypto markets, as well as the expectation and eventual approval of Bitcoin ETFs, which have helped push the price of the top cryptocurrency by market cap past $50,000.
“The increase in volatility had a meaningful impact on our transaction revenue. We saw strong growth and reengagement from both simple and advanced traders. Notable average trading volumes materially increased among our advanced traders,” Haas said on the call.
Quarter over quarter, Coinbase saw a 78% jump in revenue from subscriptions and a $2.6 billion decline in operational costs. Fourth-quarter total revenue reached $954 million and for the year was $3.1 billion.
While some feared the newly launched Bitcoin ETFs could cannibalize some of Coinbase's business, executives on the call didn't seem nearly as concerned with that as they were with crypto innovation in the U.S. lagging behind other jurisdictions with established laws.
Chief Operating Officer Emilie Choi echoed sentiments from Armstrong about finding the best path forward, with the CEO highlighting that Coinbase is supporting two bills currently in Congress. The company also has invested in an $85 million pro-crypto super PAC and is supporting the Stand with Crypto Alliance, which aims at registering crypto users to vote in the upcoming general election.
“We remain confident that the U.S. will get this right," Armstrong said, "whether it comes from the courts creating new case law, Congress passing new legislation, or ultimately the 52 million Americans who’ve used crypto voting in this upcoming election."
