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February 26, 2022

Coinbase Has Earned Nearly $7 Billion This Year in Transaction Revenue

Coinbase released its fourth-quarter 2021 report, which revealed that the company generated total transaction revenue of $6.8 billion in the year in question, up 523.73 percent from the $1.09 billion generated in 2020.

The financial report far exceeded market expectations, with the company reporting $2.5 billion in net revenue for the fourth quarter, outperforming analyst predictions by 27%.

Coinbase was expected to generate $1.9 billion in revenue in the fourth quarter of 2021, according to FactSet consensus. Notably, the popular cryptocurrency exchange more than doubled transaction revenue from Q3 to Q4, accounting for 91 percent ($2.276 billion) of total Q4 revenue.

Coinbase reported a strong fourth-quarter performance, as the quarter saw the firm’s highest transaction revenue generation. Bitcoin reached an all-time high of $68,789.63 on November 10th, 2021, during the quarter in question.

Despite the report showing $840 million in net income and significant growth from 7.4 million monthly transacting users (MTU) in Q3, the company now boasts of 11.4 million users in Q4. However, COIN share prices are down 28.48 percent year to date.

Retail customers accounted for approximately $6.5 billion of total transaction revenue, accounting for 94.94 percent of total income generated. The rest came from institutional clients. It’s also worth noting that non-trading products like lending and staking only accounted for $213 million, or 9% of Q4 revenue.

According to Coinbase, there has recently been a decrease in crypto market volatility and asset prices when compared to the all-time high conditions of the fourth quarter of 2021. They blamed it on global market insecurity. Coinbase anticipates a comparative decline in MTUs and subsequent transaction revenue in Q1 2022, according to the report.

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Despite a potentially slow first quarter, Coinbase wrote to investors that it intends to make aggressive internal investments in 2022, while also preparing for any potentially unfavorable market conditions. They said,

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 cited the rapid growth of Web3, NFTs, and DeFi as potential future growth sources for the company, citing the rapid increase in NFT sales last year as an example. The company also stated that it plans to hire 6,000 people by 2022, with a strong emphasis on customer support and reliability, which Coinbase has previously struggled with.

Coinbase estimates that between $4.25 and $5.25 billion will be spent in 2022, with a strong emphasis on technology and development teams. At the time of writing, COIN is down 5.80 percent in pre-market trading.