Cryptocurrencies – FinanceBrokerage
Cryptocurrency exchanges are working hard to expand their business activities. This week, an American cryptocurrency exchange Coinbase released an S-1 filing of its direct listing. As a reminder, the company’s public debut was eagerly anticipated due to recent activity in Bitcoin and other blockchain-based assets, the company’s controversial positions, and rising valuations on private exchanges.
Interestingly, Coinbase’s financial data shows a company that grew rapidly from 2019 to 2020. In addition, Coinbase has also crossed the threshold of unadjusted profitability. People should keep in mind that it is common for fast-growing tech companies to rely more heavily on adjusted earnings and other more flattering metrics.
Interestingly, Coinbase lost $ 30.4 million from $ 533.7 million in revenue in 2019. Additionally, the company’s net income rose to $ 127.5 million from $ 1.28 billion in revenue in 2020. Cryptocurrency exchanges grew 2020 by just over 139%, which is a massive improvement over 2019 results. The above data is helpful in understanding why some investors are adding up to $ 100 billion in value in the private markets.
Coinbase and investors
It’s worth noting that Coinbase has very different revenues. As a reminder, an American cryptocurrency exchange generated sales of $ 190.6 million in the first quarter of 2020. However, in the second quarter of 2020, that number dropped to $ 186.4 million. However, the company’s topline accelerated to $ 315.4 million in the third quarter of 2020 and to $ 585.1 million in the final quarter of 2020.
Interestingly, it’s easy to see why Coinbase is now pushing its direct listing. The cryptocurrency exchange just had a great quarter.
The company posted operating income of $ 226.6 million and net income of $ 176.8 million for the fourth quarter of the year. It is important that this represents high quality profitability improvements over previous periods.
Coinbase generates most of its revenue from transaction proceeds. Additionally, the company has a comparatively modest revenue category for subscriptions and services.
Last but not least, the company swung from negative operating cash flow in 2019 to incredibly positive cash flow in 2020. Still, the positive operating cash flow of $ 3.0 billion that Coinbase generated in 2020 includes 2.7 billion US dollars related to the cash flow from the change in custody funds due to customers ”, which brings the number down to a more understandable level.
The company continues to grow and it is not surprising that both investors and analysts are watching the situation closely. Coinbase has the potential to produce even better results.
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