Coinbase raises year outlook for users as crypto prices surge

Coinbase’s results are benefiting from recording crypto prices, including a doubling in Bitcoin in the ninety days through March.

Coinbase, the eight-year-old San Francisco startup that is a trading platform for Bitcoin and other crypto-currencies, this afternoon reported Q1 revenue and profit in line with an outlook offered in April, just before its IPO.

The company also raised its outlook for expected monthly users, while again citing a range of possible scenarios for crypto prices.

It was the company's first report since going public on Nasdaq month. 

The report sent Coinbase shares up slightly in late trading. The stock is up 6% from its IPO price of $250, and down 19% from its first-day close. 

As the company noted in its shareholder letter, prices have surged in the past quarter, stating, "Our strong Q1 2021 results reflect the strength of the crypto price cycle we entered in Q4 2020."

Added the company, 

We saw many crypto assets reach all time high prices, high levels of volatility, and increased interest across the entire cryptoeconomy. Crypto market capitalization reached nearly $2 trillion at the end of Q1 2021 compared to $782 billion at the end of Q4 2020. By the end of Q1, the price of Bitcoin had nearly doubled to approximately $59,000 compared to the end of 2020, and the price of Ethereum more than doubled during this same period to approximately $1,900. This market environment drove strong engagement with the Coinbase platform, reflected in retail, institutional and ecosystem partner growth across all key metrics including our Verified Users, retail Monthly Transacting Users (MTUs), Trading Volume, and Assets on Platform.

The report follows a sharp sell-off in Bitcoin Wednesday evening, after Tesla CEO Elon Musk tweeted that the company would stop accepting payment in Bitcoin because he said the currency consumes too much energy when it is "mined" by coin minters.

Revenue in the three months ended in December rose 12%, year over year, to $1.79 billion, yielding a net loss of $3.05 a share.

That was consistent with an outlook offered April 6th, just before the initial public offering. 

Analysts had been modeling $1.79 billion and $3.05 per share.

Other metrics for the trading platform were also as reported last month, including 56 million "monthly transacting users," or MTUs, $223 billion in assets, and trading volume of $335 billion.

For the current quarter, the company sees trade volume  coming in at least as high as last quarter:

Coinbase quarter to date performance across our four key business metrics are trending to meet or exceed our Q1 results. For example, we expect total Trading Volume to meet or slightly exceed Q1 Trading Volume if our performance continues at the current pace. MTUs have grown since March 31, 2021 driven by continued strength in the crypto market and our increased investment in sales and marketing. Within Q2, Coinbase has spent over two weeks as a top 10 free app on iOS and Android. We expect our Q2 MTUs to be higher than Q1 levels.

For the rest of the year, the company offered a range of three scenarios, high, middle and low, depending on the price of crypto currencies. Now, however, the company sees an upper bound of 9 million MTUs, versus 7 million projected previously; a middle scenario of 7 million versus 5.5 million previously; and a low-end scenario, assuming a sharp drop in crypto prices aking to the decline in 2018, of 5.5 million, up from 4 million.

The company says this year it plans "to substantially increase our marketing investments" in order "to drive awareness of Coinbase and our industry."