Coinbase reported a weaker first quarter, with lower revenue, softer trading activity and a $394.1 million net loss, but prediction markets stood out as one of the company’s faster-moving new products.
The crypto exchange said prediction markets passed $100 million in annualized revenue in March, only months after launch. Management used the result to support its push beyond spot crypto trading and into a wider mix of assets.
Trading weakness hit the quarter
Coinbase reported Q1 total revenue of about $1.4 billion, down 31% year over year. Transaction revenue fell as crypto trading activity cooled, while the company’s net loss compared with net income of $65.6 million in the same quarter last year.
Adjusted EBITDA was $303.3 million, keeping Coinbase positive on that measure for a 13th consecutive quarter, but at a much lower level than last year. Consumer transaction revenue fell to $755.8 million as spot trading slowed.
Coinbase said its crypto trading volume market share reached 8.6%, a company high, even as the market around it weakened. The company also said it continued to hold about 12% of global crypto assets on its platform.
Prediction markets gave management a cleaner growth story
Prediction markets received repeated attention in Coinbase’s investor materials and earnings call. The company said the product had already reached more than $100 million in annualized revenue in March, while retail derivatives were above $200 million.
Chief Financial Officer Alesia Haas said newer products such as derivatives and prediction markets helped transaction revenue, even though they are not included in Coinbase’s core spot trading volume metric. That distinction matters because spot crypto trading remains the company’s largest revenue driver, but also one of its most cyclical.
Coinbase now presents prediction markets as part of its “Everything Exchange” strategy, alongside crypto, derivatives, commodities and other asset classes. The company’s message is that it wants more revenue lines that are not fully tied to crypto market cycles.
Legal pressure still shadows the product
The growth comes while prediction markets face state-level legal pressure. New York Attorney General Letitia James recently sued Coinbase and Gemini, arguing that their prediction market products amount to unlicensed gambling under state law.
Coinbase has also challenged state efforts to block prediction markets in several jurisdictions, arguing that federally regulated event contracts should not be treated as state gambling products.
The legal fight was not a focus of Coinbase’s Q1 call. Investors instead heard a growth story built around new products, even as the company cuts costs and shifts more work toward AI.
Coinbase cuts staff as it resets costs
The results followed Coinbase’s plan to cut about 14% of its workforce, or roughly 700 employees, as CEO Brian Armstrong pushes the company to become more AI-focused and reduce layers of management.
Coinbase expects to record about $50 million to $60 million in restructuring costs in Q2. The company is now trying to show that products such as prediction markets can add new revenue while its core trading business remains exposed to crypto market swings.
