Coinbase shares impressive growth numbers in their Q1 results

Coinbase has announced its Q1 estimated results and the numbers are looking solid. So far the exchange has recorded some impressive growth in the first three months of the year. 

The announcement comes a week before the company’s Nasdaq direct listing.

The company has seen a 117% growth in monthly transacting users (MTU’s) in comparison with the Q4 of 2020. Their MTU’s in the first quarter of the year increased to a total of 6.1 million while the exchange currently holds 56 million verified users. Notably, at the same time last year, Coinbase MTU’s were roughly 1.3 million.

Q1 estimated results reflect a trading volume of $335 billion with a total revenue of approximately $1.8 billion. This brings in a net income of approximately $730 to $800 million and adjusted EBITDA of around $1.1 billion.

Coinbase reveals that total assets on their platform represents 11.3% of the total crypto markets share, or around $223 billion that is liquid on the exchange.

In the announcement, the exchange looks ahead to the remainder of 2021 and explains that MTUs, Trading Volume, and transaction revenue fluctuates along with Bitcoin price and other crypto asset’s volatility. Hence this unpredictability is a factor that influences revenues and their profitability on a quarter-to-quarter basis.

Taking the unpredictability into consideration, Coinbase provides a range of possible scenarios for full-year 2021. The scenarios are centered around the MTU’s which bring in the company’s revenue by transacting on the platform.

The company considers High, Mid and Low scenarios:

  • High: Average 2021 MTUs of 7.0 million. This scenario assumes an increase in crypto market capitalization and moderate-to-high crypto asset price volatility. In this scenario, we expect that MTUs continue to grow for the remainder of 2021.
  • Mid: Average 2021 MTUs of 5.5 million. This scenario assumes flat crypto market capitalization and low-to-moderate crypto asset price volatility. This scenario assumes a modest decline in MTUs from Q1 2021.
  • Low: Average 2021 MTUs of 4.0 million. This scenario assumes a significant decrease in crypto market capitalization, similar to the decrease observed in 2018, and low levels of crypto asset price volatility thereafter. In this scenario, we assume MTUs will decrease in a corresponding manner and end 2021 at similar levels to Q4 2020.

While the company expects a meaningful growth in 2021 driven by transaction and custody revenue given the increased institutional interest in the crypto asset class, it does note reservations with regards to the unpredictable nature of the industry and its assets.

Coinbase says to prioritize investment even in periods where a decrease in Bitcoin price is seen because of the “believe that scale is central to achieving our mission and it is still early in the development of this industry.”

We are seeing Bitcoin’s bull market continuing into the beginning of this year. An all-time high in March stood out and was even surprising given historically it has not been a great month. But times change and past results are not indicative of future results.

The Q1 figures so far are estimations and have yet to be audited. However, they do show the strength of the cryptocurrency market, both in value and interest. 2021 is looking to be an exciting year and the industry is ready to embrace massive adoption across the board.

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