Coinbase made $2.2 billion in revenue from transaction fees in Q4

The largest crypto trading platform in the U.S. has beaten analysts’ expectations by 27% in its Q4 earnings despite a broader slump in the crypto market.

Coinbase’s Q4 financial report vastly exceeded market expectations Thursday, after the firm posted $2.5 billion in net revenue for the quarter, beating analyst predictions by 27%. 

FactSet consensus had forecasted Coinbase to generate approximately $1.9 billion in revenue for the period. Notably, the popular crypto exchange more than doubled transaction revenue from Q3 to Q4, generating 91% ($2.276 billion) of its total Q4 revenue from transactions alone.

Adding to investor confidence, the company’s total transaction revenue for 2021 was a whopping $6.8 billion. Despite the report posting $840 million in net income and showing substantial growth from 7.4 million monthly transacting users (MTU) in Q3 to 11.4 million in Q4, COIN share prices fell 4.7% in postmarket trading, now down a total of 30% year-to-date.

It is also worth noting that $213 million, just 9% of Q4 revenue, was generated by non-trading products coming from other sources like lending and staking.

The US-based crypto platform stated that it has recently witnessed a drop in crypto market volatility and asset prices when compared to the all-time-high conditions of Q4, owing partially to instability in global market conditions. Resultantly, the report stated that Coinbase expects to see a comparative decline in MTUs and subsequent transaction revenue in Q1 2022.

Despite a potentially sluggish Q1, Coinbase wrote to its investors that it plans for “aggressive” internal investment in 2022 while also ensuring that it is prepared for any potentially unsavory market conditions.

“In the event of a material decline in our business, below the ranges we have planned for, we may slow down our investments and would expect to manage our adjusted EBITDA losses to approximately $500 million on a full-year basis.”

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Coinbase also pointed to the growth of Web3, NFTs, and DeFi as sources of future growth for the company, using the rapid increase in NFT sales last year as a point of reference.

The company also said that it plans to hire 6,000 employees in 2022 with a large focus on customer support and reliability, something that Coinbase has suffered for in the past.

Coinbase predicts that between $4.25 to $5.25 billion will be spent in 2022, with a large focus being placed on the technology and development teams.