Shares of Coinbase (COIN) fell more than 5% in after-hours trading Thursday after the crypto platform reported weaker-than-expected first-quarter results as falling cryptocurrency prices hit trading activity, one of the company’s main sources of revenue.
The company posted a loss of $1.49 per share, compared with analysts’ expectations for a profit of $0.27. Revenue came in at $1.41 billion, missing estimates of $1.52 billion.
Transaction revenue totaled $755.8 million, missing analyst expectations of $805.2 million. Revenue from subscriptions and services, a segment investors are watching closely as Coinbase tries to reduce its reliance on trading fees, totaled $583.5 million, missing expectations of $619.3 million.
Crypto markets weakened sharply as bitcoin and other digital assets fell. Lower prices and reduced volatility generally lead to weaker spot trading volumes across all exchanges. Investors were expecting a slowdown after the cryptocurrency sell-off earlier in the quarter, even though bitcoin rallied 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 market share of global cryptocurrency trading volume rose to a record 8.6%, 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 run rate of $200 million for the first time, Coinbase said.
The company also noted 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 launching in the United States.
Meanwhile, Coinbase said its Base blockchain processed 62% of global on-chain stablecoin transaction volume during the quarter.
Earlier this week, Coinbase said it would cut about 700 jobs, or about 14% of its workforce, as part of an AI-powered restructuring effort. The company also cited the broader cryptocurrency slowdown as a factor behind the layoffs.
Investors are increasingly focused on whether Coinbase’s infrastructure and subscription businesses can offset cyclical swings in cryptocurrency trading revenue during weaker markets.
