This content was originally published on Ellie Frost’s Substack.
In case you missed them, below are the main results from yesterday’s earnings.
- $1.8 billion revenue
- $1.1 billion adjusted EBITDA
- $730–800 million net income
- $223 billion assets on platform
- 56 million verified users (VU) and 6.1 million monthly transacting users (MTU)
What does this boil down to? I had three main takeaways and questions regarding trading take rate, users and 2021 projections.
Trading Take Rate
We are only provided a total revenue of $1.8 billion. If you arbitrarily take this and the $335 million volume, you would get an impressive ≈54 bps as Q1’s take rate. Huzzah! Does that definitively mean that the take rate remained high because retail users came in force? No.
There are three lines of revenue: transactional, subscription, and other. Note that “net revenue” is considered transactional and subscription. However, these three lines of revenue all have different drivers.
Transactional revenue is based off of trading volume, which is largely driven by volatility.
Subscription revenue is custody, staking fees, and so on, so it is largely driven by assets under management (AUM).
Other revenue is when they sell their treasury of BTC, ETH, and other cryptocurrencies.
So, you should only be calculating a ratio of trading volume to transactional revenue. For 2020, this was 86 percent of total revenue, but we do not yet have that detail here to definitively say how much of the total revenue was actually transactional.
As an example, assets on platform (AoP) grew from $90 million in Q4 2020 to $223 billion in Q1 2021. People may have bought two quarters ago and kept AoP. With rising asset prices, Coinbase may earn more revenue off of them, but this revenue has nothing to do with this quarter’s trading volume.
Where does that leave us with scenarios for the Q1 revenue? Several possibilities come to mind:
Scenario A. They actually did have…