Coinbase's fourth-quarter revenue beat estimates thanks to USDC interest income, analysts said.
Interest income for the quarter came in at $146 million, up more than 100% from the previous quarter, even as full-year revenue came in 57% lower than in 2021.
The exchange said itself and the industry were "largely resilient" despite "major shocks to the system" during the quarter and a 64% drawdown in the price of digital assets during 2022. COIN added about 1% to trade at $62.64 by 8:10 a.m. EST, according to Nasdaq data.
"The quarter was made by much higher than expected interest income on USDC," said Needham analyst John Todaro. Management's outlook was "positive with the company, in our view, having a clear path to positive adjusted EBITDA for 2023, with new expense guardrails management put in place."
"That being said, the segment that has seen the fastest quarter-on-quarter and year-on-year growth for COIN has the most recent regulatory hair on it, and that is Subscription & Services, which includes staking and USDC ecosystem," he said, referring to the SEC's recent warning that it has set its gaze on staking services.
KBW analysts, led by Kyle Voigt, echoed this sentiment, saying "USDC market cap has continued to trend lower which may eventually mute some of this benefit."
While interest income was encouraging, "retail trading volumes continued to deteriorate in the quarter and came in worse than expected, down 23% from the third quarter of 2023," they said. Still, KBW raised its 2024 gross profit estimate by 12% on the back of a 40% move in the crypto market cap since its last model revision.
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