Coinbase Stumbles: Q1 Revenue Drops 10% as Crypto Winter Chills Trading Volumes

Wall Street’s favorite crypto punching bag disappoints again—Coinbase posts weaker-than-expected Q1 earnings as retail traders hibernate. Revenue slides to $1.17B against $1.3B estimates, proving even the ’regulated’ players aren’t immune to crypto’s boom-bust cycles.

Where’d the traders go? Platform transaction revenue craters 27% year-over-year. Blame it on the lack of meme coin mania or just the collective hangover from 2024’s speculative frenzy—either way, the exchange is feeling the chill.

Silver lining? Subscription services now make up 38% of revenue (up from 29% last year). Because when trading dries up, nothing saves your quarter like locking customers into recurring revenue streams.

Meanwhile, somewhere in Miami, a degen whispers: ’Just wait for the next halving cycle.’

Higher expenses drive down Coinbase earnings

The earnings report also disclosed that operating expenses spiked 51% year-over-year to $1.3 billion. The spike was fueled mainly by increased marketing expenses and write-downs related to crypto assets held for operational use.

The higher outlays weighed heavily on profits. Coinbase recorded an adjusted net income of $526.6 million, or $1.94 a share, well below $679.2 million, or $2.53 a share, in the same quarter last year.

The company said that macroeconomic uncertainty and reduced trading demand were among the factors that had affected user engagement. However, market watchers also attributed broader risk-off sentiment to U.S. policy uncertainty, which likely kept retail and institutional investors on the sidelines.

Shares of Coinbase dropped about 3% in after-hours trading after the report.

Coinbase expands into Derivatives with $2.9B Deribit buyout

In a series of ambitious moves intended to diversify itself and hold on to more of the growth in cryptocurrency-related derivatives trading, Coinbase also said that it had signed an agreement to acquire Deribit, one of the world’s largest cryptocurrency options exchanges, for $2.9 billion.

The deal, made up of $700 million in cash and 11 million shares of Coinbase stock, is a major foray into the crypto options universe. Deribit, which is headquartered in Dubai, saw more than $1 trillion in derivatives trading volume on its platform last year.

This acquisition aims to position Coinbase as a global crypto derivatives market leader, which is increasingly becoming a key growth area for digital asset platforms.

The chief executive of Coinbase, Brian Armstrong, said the shift was part of the company’s yearning to develop, over the long term, into a one-stop financial hub for the crypto economy.

The purchase of Deribit is expected to close later this year, pending regulatory approvals.

The deal comes amid U.S. President Donald Trump’s vocal support for digital assets and his promise to make America the global hub for cryptocurrency. Riding a wave of regulatory optimism, several crypto firms are actively striking major deals to expand their reach.

Just last month, Ripple acquired multi-asset prime broker Hidden Road for $1.25 billion—one of the largest acquisitions in the company’s history.

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