Shares of Coinbase (COIN) fell more than 5% after hours Thursday after the crypto exchange reported weaker-than-expected first-quarter results as falling crypto prices weighed on trading activity, one of the company’s main sources of revenue.
The company reported a loss of $1.49 per share, while analysts were expecting a profit of $0.27. Revenue came in at $1.41 billion, below estimates of $1.52 billion.
Trading revenue totaled $755.8 million, missing analysts’ expectations of $805.2 million. Revenue from subscriptions and services, a segment investors are watching closely as Coinbase attempts to reduce its reliance on trading fees, totaled $583.5 million, below expectations of $619.3 million.
Crypto markets weakened sharply on bitcoin and other digital assets fell. Lower prices and reduced volatility generally lead to lower spot trading volumes on exchanges. Investors expected a slowdown after the cryptocurrency sell-off at the start of the quarter, even though bitcoin rebounded about 12% in March.
Coinbase has spent the last few years expanding beyond its core trading business into stablecoins, staking, derivatives and blockchain infrastructure. The company said on Wednesday that its global market share in crypto trading volume reached 8.6%, a record high, driven in part by growth in derivatives trading.
Trailing 12-month derivatives trading volume increased 169% year over year, while retail derivatives revenue surpassed an annualized rate of $200 million for the first time, Coinbase said.
The company also highlighted the growth of prediction markets and stablecoin activity. Coinbase said its prediction markets business surpassed $100 million in annualized revenue in the first two full months after its U.S. launch.
Meanwhile, Coinbase said its Base blockchain processed 62% of global on-chain stablecoin transaction volume during the quarter.
Earlier this week, Coinbase announced it would cut about 700 jobs, or about 14% of its workforce, as part of an AI-focused restructuring effort. The company also cited the broader crypto slowdown as a factor behind the layoffs.
Investors are increasingly wondering whether Coinbase’s subscription and infrastructure businesses can offset cyclical fluctuations in cryptocurrency trading revenue during weak markets.
