Source: phloxii
- Coinbase had a better quarter than analysts had predicted, raking in $2.5 billion in net revenue for the fourth quarter, with $2.2B coming from transaction fees.
- Jack Dorsey’s Block also had an impressive quarter as it saw its revenue shoot up by 47 percent to hit $1.188 billion, but its net profit is still abysmal.
Two of the cryptocurrency industry’s biggest publicly-traded companies have recently announced their financial results, showing just how good the year 2021 was for the industry. Coinbase exchange brought in $2.5 billion in revenue in the fourth quarter, with close to 90 percent coming from transaction fees. Block, formerly known as Square, recorded $4.4 billion in gross profit for the entirety of 2021, with $1.18 billion coming in the last quarter of the year as cryptos soared to record highs.
Coinbase outperformed market expectations, with analysts having projected its revenue would be around $2 billion. The exchange impressed on several other metrics, including the monthly transacting users who stood at 11.4 million, beating an average expectation of 9.8 million. It was also significantly up from the 7.4 million it recorded in Q3.
The positive performance by America’s largest exchange wasn’t a surprise. In the last quarter of 2021, most cryptos surged in value, with Bitcoin setting a new high just shy of $69,000 in November. This drew several traders to the market, all looking to have their share of the pie.
However, since November, BTC and Ether have lost 42 percent of their value. Cardano and Shiba Inu have lost over 70 percent of their value, while DOGE is down 83 percent.
Most analysts don’t expect crypto to hit such high figures in the first quarter of this year. In its report, Coinbase stated that it also expects a slump in activity this year.
“We believe that retail monthly transacting users and total trading volume will be lower,” the exchange said in its report. This bleak outlook led to its stock dipping by over 3 percent in post-market trading.
John Todaro, an analyst with Needham & Co. commented:
Where the crypto markets are, the outlook for 2022 doesn’t look as good as for 2021.
Despite the outlook, Coinbase believes the room for growth is massive. In the last few weeks, the exchange has already increased its own corporate crypto investment by $350 million, CFO Alesia Haas revealed.
In addition, the exchange is diversifying its revenue streams to stop relying almost fully on transaction fees. Out of the $2.5 billion it generated in Q4, 88 percent was from these fees. Only $213 million came from non-trading products such as staking and lending.
It has also announced that it’s working on an NFT marketplace and is diving deeper into crypto custody. With its January acquisition of FairX, Coinbase is also planning on expanding into derivatives.
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