Coinbase recorded $2.2 billion in transaction fee revenue in Q4

Coinbase's fourth-quarter financial report released on Thursday greatly exceeded market expectations. The company reported net income of $2.5 billion in the fourth quarter, which was 27% higher than analysts' expectations.

FactSet consensus forecasts Coinbase’s revenue of about $1.9 billion for the period. Notably, the popular cryptocurrency exchange’s trading revenue more than doubled from the third quarter to the fourth quarter, with trading revenue alone accounting for 91% of its total fourth-quarter revenue ($2.276 billion) .

The firm's total trading revenue in 2021 hit $6.8 billion, adding to investor confidence. COIN shares fell 4.7% in after-hours trading despite reporting $840 million in net revenue and showing that its monthly transacting users (MTU) had grown significantly from 7.4 million in Q3 to 11.4 million in Q4 , down 30% so far this year.

It's also worth noting that $213 million of revenue came from non-trading products from other sources, such as loans and pledges, which accounted for just 9% of Q4 revenue.

The U.S.-based crypto platform said that compared with the all-time high environment in the fourth quarter, crypto market volatility and asset prices have declined recently, due in part to the unstable global market environment. As a result, Coinbase expects a relative decline in MTU and subsequent transaction revenue in the first quarter of 2022, the report said.

Despite a likely sluggish first quarter, Coinbase wrote to investors that it plans to make "aggressive" internal investments in 2022 while ensuring it is prepared for any potentially adverse market conditions.

"If our business has a material decline, below our planned range, we may slow down investment, and expect to control the annual adjusted EBITDA (profit before interest, tax, depreciation and amortization) loss of about 500 million for the whole year dollar level."

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

The company also said it plans to hire 6,000 employees in 2022, with a focus on customer support and reliability, issues Coinbase has struggled with in the past.

Coinbase expects to spend between $4.25 billion and $5.25 billion in 2022, mainly focusing on technology and development teams.

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