Coinbase Misses Q1 Targets Amid $2.9B Deribit Deal

Coinbase Global shares dropped in after-hours trading Thursday as the cryptocurrency exchange reported first-quarter revenue below Wall Street expectations, overshadowing its announcement of a landmark $2.9 billion acquisition. The company posted revenue of $2.03 billion, up 24% year-over-year but falling short of the $2.12 billion analyst consensus, according to CNBC.

The disappointing earnings release came hours after Coinbase announced its acquisition of Dubai-based Deribit, the world’s leading crypto options exchange, in the largest deal in cryptocurrency industry history. This strategic move highlights Coinbase’s push to diversify revenue streams beyond its core U.S. operations amid increasing global competition.

Earnings Miss Reflects Post-Election Normalization

Coinbase reported adjusted earnings of $527 million or $1.94 per share for the quarter ended March 31, representing a significant drop from the $1.18 billion ($4.40 per share) recorded a year earlier. The results fell short of analyst expectations, with consensus forecasts calling for earnings of $1.98 per share, according to Yahoo Finance.

Transaction revenue, the company’s primary income source, totaled $1.26 billion, while subscription and services revenue contributed $698.1 million. Consumer trading volume fell 17% from the previous quarter to $78.1 billion, while institutional trading volume declined 9% to $315 billion.

“Macro uncertainty, including around global trade policy, is impacting consumer sentiment and may contribute to softer crypto trading markets,” the company stated in its shareholder letter. This uncertainty appears linked to President Trump’s tariff policies, which have created market volatility and dampened investor appetite for riskier assets like cryptocurrencies.

Bitcoin Volatility Creates Mixed Trading Environment

The first quarter of 2025 presented a mixed landscape for cryptocurrency markets. Bitcoin reached an all-time high in January before experiencing significant volatility in subsequent months. The recent surge above $100,000 on Thursday provided a temporary boost to Coinbase shares before the earnings release reversed market sentiment.

Despite the quarterly downturn in trading volumes, Coinbase noted it generated approximately $240 million in transaction revenue in April alone, suggesting a potential stabilization in trading activity. The company provided second-quarter guidance for subscription and service revenue between $600 million and $680 million, below analyst expectations of $704 million.

The earnings report highlights the ongoing challenge of cryptocurrency market volatility for exchanges like Coinbase, whose revenue remains heavily dependent on transaction fees. The company’s stock has declined nearly 17% year-to-date through Thursday’s close, reflecting broader market concerns about the sustainability of crypto trading volumes.

Deribit Acquisition Signals Strategic Pivot

Earlier Thursday, Coinbase announced its $2.9 billion acquisition of Deribit, the dominant player in cryptocurrency options trading with approximately 80% market share in Bitcoin and Ethereum options. The transaction, which includes $700 million in cash and 11 million shares of Coinbase Class A common stock, represents the largest acquisition in cryptocurrency industry history, according to Reuters.

“One of the things we liked most about this deal is that it’s not just a game changer for our international expansion plans — it immediately diversifies our revenue and enhances profitability,” said Greg Tusar, Coinbase’s vice president of institutional product. The acquisition is expected to close by the end of 2025, pending regulatory approvals.

The Deribit deal strategically addresses several challenges facing Coinbase. By acquiring the leading crypto options exchange, Coinbase gains immediate access to markets where leverage trading is more prevalent, particularly in Asia and Europe. This international expansion could help offset potential regulatory constraints in the U.S. market.

Revenue Diversification Strategy Takes Shape

The acquisition represents Coinbase’s most aggressive move yet to diversify revenue sources beyond spot trading. Options trading revenues are typically less cyclical than spot trading, as traders use options to manage risk during both market uptrends and downturns. This could provide Coinbase with more consistent revenue streams less susceptible to cryptocurrency market volatility.

Deribit processed more than $1 trillion in trading volume in 2024 and currently maintains approximately $30 billion in open interest on its platform. The exchange has a “consistent track record of generating positive adjusted EBITDA,” according to Coinbase, suggesting the acquisition could enhance profitability immediately upon completion.

The deal follows similar consolidation moves in the cryptocurrency industry, including Kraken’s $1.5 billion acquisition of NinjaTrader in March and Ripple’s $1.25 billion purchase of Hidden Road. These transactions reflect growing competition among major cryptocurrency exchanges seeking to expand service offerings and geographic reach.

Regulatory Environment Remains Key Variable

Coinbase’s acquisition strategy comes amid an evolving regulatory landscape under the Trump administration, which has pledged to position the U.S. as a global cryptocurrency hub. While regulatory optimism has fueled industry consolidation and investment, uncertainty remains regarding specific policy implementations.

The Deribit acquisition will require approval from Dubai’s Virtual Assets Regulatory Authority (VARA), which granted Deribit a full license in late 2024. Any transfer of this license to Coinbase adds complexity to the transaction and highlights the importance of navigating regulatory requirements across multiple jurisdictions.

For investors, the combination of disappointing quarterly results and a major strategic acquisition creates a complex picture of Coinbase’s near-term prospects. While the Deribit deal promises long-term benefits through revenue diversification and international expansion, the immediate challenges of declining trading volumes and market volatility may continue to pressure financial results in coming quarters.