Coinbase released its fourth-quarter 2021 report which revealed that the firm generated a total transaction revenue of $6.8 billion in the year in question, up 523.73% from the $1.09 billion generated in 2020.
The financial report vastly exceeded market expectations, after the firm posted $2.5 billion in net revenue for the fourth quarter, beating analyst predictions by 27%.
FactSet consensus had forecasted Coinbase to generate approximately $1.9 billion in revenue for the fourth quarter of 2021. Notably, the popular crypto exchange more than doubled transaction revenue from Q3 to Q4, generating 91% ($2.276 billion) of its total Q4 revenue from transactions alone.
What the report states…
Coinbase report showed a strong Q4 performance as the quarter represented the firm’s largest transaction revenue generated. The quarter in question saw Bitcoin hit an all-time high of $68,789.63, recorded on the 10th of November 2021.
- Despite the report posting $840 million in net income and showing substantial growth from 7.4 million monthly transacting users (MTU) in Q3, the firm now touts if 11.4 million users in Q4. COIN share prices however, is down a total of 28.48% year-to-date.
- Of the total income generated, retail clients accounted for approximately $6.5 billion of the total transaction revenue, representing 94.94% of the total. Institutional clients accounted for the rest. It is also worth noting that $213 million, just 9% of Q4 revenue, was generated by non-trading products coming from other sources like lending and staking.
- Coinbase stated that it has recently witnessed a drop in crypto market volatility and asset prices when compared to the all-time-high conditions of the fourth quarter 2021. They attributed this to instability in global market conditions. The report also stated that Coinbase expects to see a comparative decline in MTUs and subsequent transaction revenue in Q1 2022.
Despite a potentially sluggish Q1, Coinbase wrote to its investors that it plans for “aggressive” internal investment in 2022 while also ensuring that it is prepared for any potentially unsavoury market conditions. They stated, “In the event of a material decline in our business, below the ranges we have planned for, we may slow down our investments and would expect to manage our adjusted EBITDA losses to approximately $500 million on a full-year basis.”
Coinbase also pointed to the growth of Web3, NFTs, and DeFi as sources of future growth for the company, using the rapid increase in NFT sales last year as a point of reference. The company also said that it plans to hire 6,000 employees in 2022 with a large focus on customer support and reliability, something that Coinbase has suffered from in the past.
Coinbase predicts that between $4.25 to $5.25 billion will be spent in 2022, with a large focus being placed on the technology and development teams. COIN is down 5.80% in the pre-market skirmish, as of the time of this writing.
