In This Article:
Coinbase Global (COIN) missed first quarter estimates on its top and bottom lines amid headlines that it will be acquiring crypto derivatives exchange Deribit in a deal valued at $2.9 billion.
Benchmark Company managing director and senior research analyst Mark Palmer weighs in on whether Coinbase's lackluster performance is actually "inconsequentual" in comparison to the Deribit deal.
To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.
Mark, I'm sure you're still sifting through the results, but I know you're a bull on this name here. Um, but I am curious what you make of that revenue miss.
Yeah, um, well, first of all, thanks for having me. Um, you know, the the miss is in the big picture, you know, really inconsequential, especially relative to uh, today's news, uh, where the company, um, announced the largest uh, acquisition in the history of the digital asset industry. Uh, and, um, positioned itself to be an even bigger player in, uh, among, uh, institutional investors. So what we're seeing right now in terms of, uh, the the top line and particularly subscription and services revenue, uh, you know, that is point in time. What, um, we are thinking about is, uh, where are these numbers going to go once derivit is actually part of, uh, the Coinbase family. And and that's what's really exciting. Uh, so, you know, right now, if you look at subscription services, you've got custody, you've got staking, um, you've got, uh, the the, um, uh, contribution of, uh, stable coins, uh, but derivatives is really not a big part of that. And if we see the kind of institutional adoption of crypto that we are anticipating, a lot of those institutional players want to express their views in crypto via derivatives. And so now, Coinbase, uh, via Derabit, which is the largest player globally, uh, is in a great position to do exactly that.
And and Mark, I I know though, you you make a beeline, as so many do for that subscription services revenue number. So the fact that in Q1, it did it did come in a touch light, 698, consensus was 702.5. That's not a concern for you.
No, it really isn't. Um, you know, especially, you know, the the the trading volume side, you know, we are have the ability to track, any analyst can track that on a daily basis. Uh, the reason why subscription and services revenue is so important is because the company is trying to become less dependent on particularly retail transaction revenue. Um, and so, uh, the more that it can grow that number, the better. But again, this is a work in progress. Um, you know, if we are able to see, uh, the US Congress pass and enact a a market structure bill, um, such that there's a regulatory framework and institutions feel much more comfortable, uh, participating in the crypto space, then the numbers with regard to, uh, staking, for example, custody, um, and now derivatives, uh, are likely to be much, much higher. So this, in our view, is really not about where they were as of, uh, March 31st, what happened in the first quarter of 2025. It's about where do we go from here. And there's some pretty exciting things on that front, um, especially again, if we see that legislation passed so that everybody knows what the rules of the road are going to look like going forward.
