The US cryptocurrency exchange Coinbase released the S-1 dossier before direct listing. Due to recent activities between Bitcoin and other blockchain-based assets, the company’s controversial political stance, and its soaring valuation on private exchanges, the company’s first public appearance is highly anticipated.
The financial status of Coinbase shows that a company has grown rapidly from 2019 to 2020. Not only that, but the company also crossed the threshold of unadjusted profit margins. In fast-growing technology companies, they are usually more inclined to rely on adjusted profits and other more pleasing indicators.
In 2019, Coinbase had revenue of $33.7 million and revenue of $30.4 million. In 2020, the company’s net income increased to 127.5 million U.S. dollars, while revenue was 1.28 billion U.S. dollars.
The crypto unicorn has grown by more than 139% in 2020, a significant improvement over its performance in 2019. The size and growth of the company helped us understand why some investors are bidding up to $100 billion in value in the private equity market.
Coinbase’s revenue has changed a lot. The company’s revenue in the first quarter of 2020 was US$190.6 million, and the figure fell to US$186.4 million in the second quarter.
Coinbase’s revenue accelerated to US$315.4 million in the third quarter of 2020 and increased by US$558.1 million in the last quarter of 2020. It is easy to see why Coinbase will continue to go public; the company just released an excellent quarter.
In that huge fourth quarter, Coinbase generated $226.6 million in operating income and $176.8 million in net income. These represent high-quality profitability improvements in the last period and provide Coinbase with attractive year-end profit margins.
As expected, cryptocurrency exchanges generate most of their revenue from trading revenue. Coinbase’s “subscription and service” revenue category is also relatively small, with revenue of approximately $20.7 million in the fourth quarter of 2020.
Finally, Coinbase’s cash flow has turned from a negative number in 2019 to an incredibly positive cash flow in 2020. However, the positive operating cash flow of $3 billion generated by Coinbase last year includes “$2.7 billion in cash-related customers arising from changes in custody funds”, reducing the number to an understandable level.
This is the first glance, but Coinbase is a fast-growing, profitable unicorn that looks easier than going public. The question for investors is only how to evaluate Coinbase’s revenue growth because it does track the widespread interest in the market for cryptocurrency, a long-established number.