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Coinbase reports strong Q4 2023 results amid crypto market rally

Coinbase, one of the largest and most popular cryptocurrency exchanges in the US, released its latest financial report on Tuesday, revealing its fourth-quarter and full-year performance for 2023.

The company posted a net income of $273 million and an adjusted EBITDA of $305 million for Q4 2023, compared to a net loss of $30 million and an adjusted EBITDA of $177 million for Q3 2023. This represents a significant improvement in profitability and efficiency for the crypto platform.

Coinbase also saw a surge in revenue in Q4 2023, driven by increased trading volume and user activity amid the crypto market rally. The company reported total revenue of $954 million, up 41% quarter-over-quarter and 78% year-over-year. The revenue breakdown shows that transaction revenue, which comes from fees charged to users for buying and selling cryptocurrencies, accounted for $529 million, up 83% quarter-over-quarter and 12% year-over-year. Subscription and services revenue, which comes from recurring sources such as custody, earn, and staking, accounted for $375 million, up 12% quarter-over-quarter and 178% year-over-year.

For the full year of 2023, Coinbase reported a net income of $95 million and an adjusted EBITDA of $964 million, compared to a net income of $322 million and an adjusted EBITDA of $527 million for 2022. The company attributed the lower net income to higher operating expenses and taxes, as well as increased volatility and competition in the crypto space. However, the company also highlighted its strong growth in subscription and services revenue, which increased by 78% year-over-year and reached 45% of total revenue in 2023, up from 27% in 2022.

Coinbase also boasted its solid balance sheet, which showed a reduction in debt to 12% and an increase in total US dollar holdings to $5.7 billion. The company’s USD balance includes $5.1 billion of cash and cash equivalents and $576 million of USD Coin (USDC), a stablecoin pegged to the US dollar. Coinbase’s full consolidated balance sheet indicates that the firm has $207 billion of assets, mostly consisting of $203 billion of current assets, which include cryptocurrencies held by the company and its customers. Among the non-current assets, Coinbase reported nearly $450 million of crypto assets held, which represent the company’s own investments in various digital currencies.

Coinbase’s stock (COIN) reacted positively to the financial report, gaining 5.29 points (3.3%) on Feb. 15 and 21.21 points (12.8%) after hours. The share price was $165.67 as of 11:44 p.m. UTC, up 38% from its debut price of $120 in April 2022.

The financial report comes at a time when the crypto market is experiencing a strong rally, with the total market capitalization reaching a new all-time high of over $2.5 trillion on Feb. 15. Bitcoin, the largest and most dominant cryptocurrency, also hit a new record of over $60,000 on the same day, while Ethereum, the second-largest and most widely used crypto platform, surpassed $2,000 for the first time. Coinbase, as one of the leading crypto exchanges in the US and globally, stands to benefit from the increased adoption and innovation in the crypto space, as well as the regulatory clarity and institutional support that are emerging in the industry.

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