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Coinbase’s first quarter revenue reached US$1.597 billion, an increase of 792% year-on-year; net profit was US$771 million, an increase of 2309% year-on-year.
Original title: “Interpretation of Coinbase’s first financial report after listing”
Written by: Hegel
On May 13, Coinbase announced its Q1 financial report and shareholder letter for the 2021 fiscal year, which was also its first financial report after its listing on Nasdaq. However, compared with boring content such as revenue data, the news that “Coinbase is considering launching Dogecoin within 6 to 8 weeks” will spread more quickly and widely.
In addition to Dogecoin, Coinbase’s earnings report has other highlights, let’s take a look!
Net profit increased by 2309% year-on-year, and transaction volume increased by 1016% year-on-year
In the quarter, its revenue was US$1.597 billion, a year-on-year increase of 792%; net profit was US$771 million, a year-on-year increase of 2309%; and the diluted net profit attributable to common shareholders was US$388 million.
The financial report shows that Coinbase’s total trading revenue in the first quarter was US$1.540.6 billion, compared with US$172 million in the same period last year. Total subscription and service revenue for the quarter was US$56.4 million, compared with US$7.1 million in the same period last year.
In terms of business operations, the number of certified users in the quarter was 56 million, and the number of monthly transaction users (retail accounts, or MTU) was 6.1 million. The total transaction volume was US$335 billion, compared with only US$30 billion in Q1 last year.
In addition, since the same period last year, Bitcoin transaction volume has dropped from 50% to 39%, Ethereum has risen from 16% to 21%, and other currencies in Q1 this year accounted for 40% of total transaction volume, showing that the crypto market has become increasingly diversified.化.
Year-round outlook: The personal market is steadily steadily, and the institutional market is still inconclusive
In response to the volatility of cryptocurrency prices, Coinbase predicts that the annual MTU of 2021 will be at least 5.5 million, normally 7 million, and up to 9 million.
According to the data of the previous two years, each MTU retail investor can contribute US$34-45 in net income (ANRPU) per month. Coinbase predicts that whether this year’s crypto market is a bear market like 2019 or a bull market like 2020, ANRPU will surpass the first two Year’s performance.
Coinbase mentions the institutional market extensively in its financial reports and shareholder letters, but does not directly predict how much performance such customers can bring.
In terms of costs, in addition to the 35 million U.S. dollars spent on direct listing, Coinbase expects that the annual cost of 2021 will be between 1.3 billion and 1.6 billion U.S. dollars, mainly for marketing. It is estimated that 12% to 15% of net income in 2021 will come from sales, and transaction fees account for only a small proportion, about 13% to 19%.
In terms of taxation, since it is not yet clear what kind of operating or share tax relief policies the federal government can have on Coinbase, the cost has not been estimated yet.
In terms of revenue, Coinbase once again emphasized in its financial report that this is only the first financial report after the NASDAQ listing, and the crypto market still has great uncertainty. The trend of cryptocurrencies such as Bitcoin will directly affect the company’s profitability. . Coinbase attaches great importance to long-term development, but from the performance of previous years, now it can only set the goal as break even.
Coinbase’s “Four Nos” and “Four Musts”
In the financial report, Coinbase promised “Four Nos” and “Four Musts”:
No matter how bad the market is, one will not succumb to the quarterly target and stock price; two will not make hasty decisions and sacrifice long-term development, and will not give up new products such as Commerce (merchant-oriented collection interface service) even in the cold winter; three will not Will give up potential investment opportunities, even if others feel scared, Coinbase will quickly enter the game; four will not be excessive risk, at the expense of investor interests.
Based on the future, first, we must carefully evaluate strategic opportunities. If we cannot find a good market, we will decisively abandon choices that are of little significance; second, we must maintain a stable team structure and retain core talents, but personnel will be adjusted when the market changes; To seize the opportunity and dare to bet, the success of Xapo has strengthened Coinbase’s confidence in investing in riskier projects with certainty; the fourth requirement is to be hungry and hungry, not to boil frogs in warm water, indulge in past success and give up moving forward again Possible.
Expand product system
Coinbase not only has individual user products, but also provides exclusive solutions for corporate users such as institutional investors and ecological partners, forming a huge product, service and API system.
In terms of infrastructure, Coinbase first focused on new digital assets, added 7 tradable assets and 13 custodial assets, and launched the Coinbase Asset Hub platform in January to allow ecological partners, especially the issuer, to pass Integrate into Coinbase to speed up the currency listing process. Hundreds of applications for listing have been received. The second is to improve reliability and scalability. Compared with Q4 of 2020, the customer service team has expanded by 250%, which has become a key strategic component of the company.
In terms of retail services, Q1 launched the ETH2 pledge service with an annualized interest rate (APR) of about 6%, and has attracted 1 million users to pledge; launched the Bitcoin secured loan program, and increased the amount to 100,000 US dollars.
In terms of institutional services, Q1 transaction volume reached US$215 billion, assets under management were US$122 billion, and the total number of institutional clients exceeded 8,000. Institutions interested in investing in Bitcoin and Ethereum include hedge funds, pension funds, corporate vaults, insurance companies, etc., showing that traditional financial markets are increasingly interested in the crypto market.
In terms of the ecosystem, Q1 launched 9 activities, 3 of which were Earn activities, that is, by allowing users to obtain tokens from the issuer for free, they can better understand the project itself. In order to help companies do business with encrypted payment and pledge, Coinbase also launched Coinbase Cloud.
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