Blockchain infrastructure company Coinbase (NASDAQ:COIN) fell short of the market’s revenue expectations in Q1 CY2025, but sales rose 24.2% year on year to $2.03 billion. Its non-GAAP profit of $1.94 per share was 1.9% below analysts’ consensus estimates.
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Coinbase (COIN) Q1 CY2025 Highlights:
- Revenue: $2.03 billion vs analyst estimates of $2.11 billion (24.2% year-on-year growth, 3.6% miss)
- Adjusted EPS: $1.94 vs analyst expectations of $1.98 (1.9% miss)
- Adjusted EBITDA: $929.9 million vs analyst estimates of $943.4 million (45.7% margin, 1.4% miss)
- Operating Margin: 34.7%, down from 46.4% in the same quarter last year
- Free Cash Flow was -$182.7 million, down from $964.6 million in the previous quarter
- Market Capitalization: $50.05 billion
Company Overview
Widely regarded as the face of crypto, Coinbase (NASDAQ:COIN) is a blockchain infrastructure company updating the financial system with its trading, staking, stablecoin, and other payment solutions.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Coinbase’s sales grew at an incredible 60.3% compounded annual growth rate over the last five years. Its growth surpassed the average consumer internet company and shows its offerings resonate with customers, a great starting point for our analysis.
Long-term growth is the most important, but within consumer internet, a half-decade historical view may miss new innovations or demand cycles. Coinbase’s annualized revenue growth of 57.7% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Coinbase generated an excellent 24.2% year-on-year revenue growth rate, but its $2.03 billion of revenue fell short of Wall Street’s high expectations.
Looking ahead, sell-side analysts expect revenue to grow 12.3% over the next 12 months, a deceleration versus the last two years. Still, this projection is above average for the sector and implies the market sees some success for its newer products and services.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Coinbase has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the consumer internet sector, averaging 25.9% over the last two years.
Taking a step back, we can see that Coinbase’s margin dropped meaningfully over the last five years. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. If the longer-term trend returns, it could signal increasing investment needs and capital intensity.
Coinbase burned through $182.7 million of cash in Q1, equivalent to a negative 9% margin. The company’s cash flow turned negative after being positive in the same quarter last year, which isn’t ideal considering its longer-term trend.
Key Takeaways from Coinbase’s Q1 Results
We struggled to find many positives in these results as its revenue, EPS, and EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 2.5% to $201.25 immediately after reporting.
Coinbase underperformed this quarter, but does that create an opportunity to invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.