Coinbase Global, Inc.

Good afternoon. My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the Coinbase First Quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Anil Gupta, Vice President Investor Relations, you may begin your conference.

Good afternoon and welcome to the Coinbase first quarter 2025 earnings call. Joining me on today's call are Brian Armstrong, co-founder and CEO, Emily Choi, president and COO, Alicia Haas, CFO, and Paul Grewal, chief legal officer. I hope you've all had the opportunity to read our shareholder letter, which was published on our Investor Relations website earlier today. Before we get started, I'd like to remind you that during today's call, we may make forward-looking statements, which may vary materially from actual results. Information concerning risks, uncertainties, and other factors that could cause these results to differ is included in our SEC filings. Our discussion today will also include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in our shareholder letter on our investor relations website. Non-GAAP financial measures should be considered in addition to, not as a substitute for, GAAP measures. We'll start today's call with opening comments from Brian and Alicia, and then take questions from retail shareholders and our research analysts. And with that, I'll turn it over to Brian for opening comments.

Thanks, Anil. Coinbase delivered across the board in Q1. We posted strong financials, rolled out product innovations at a rapid pace, and continued to grow global market share. Financially, we're better positioned than ever to capitalize on the opportunities ahead of us in 2025. As just one example, our Q1 revenue was $2 billion, with $930 million in adjusted EBITDA, demonstrating how resilient our business is even in an uncertain macro environment. Before I dive into the product updates, I want to remind everybody about why Coinbase exists. Coinbase was founded to increase economic freedom in the world. We think cryptocurrency is the most important technology to update the financial system and create that economic freedom for people all over the world. Many people today don't have access to good financial services and it's holding back progress. Everyone deserves access to basic financial infrastructure, good property, sound money, free from high inflation, the ability to get a loan, make payments without high fees and delays, and to choose what to do with their own money. Greater economic freedom is correlated with all sorts of outcomes we want in society, like higher GDP per capita, self-reported happiness, and income for the bottom 10%. It's foundational to all progress. Now, this ties into all the products we build across multiple customer groups, including retail, businesses, institutions, and developers. And serving these multiple customer groups has the potential to create synergies in our business over time. For instance, our emerging payments business drives volume on our exchange. Or by serving retail, pro, and institutional traders all in one platform, we get more liquidity and order flow on our exchange. We have retail customers who want to spend crypto. We also have businesses who want to accept crypto. That's sparking economic activity. So our goal is to be the number one financial services platform in the world across each of the customer groups we serve with crypto rails eventually powering the majority of global GDP. Now let's take a minute to go through some of our product updates in Q1 in service of this broader mission. I'll talk about it in three parts. The first one is going to be about driving revenue in our core businesses. The second is going to be driving utility for the next wave of crypto adoption, some of our emerging products. And third is going to be scaling our foundations, primarily around policy and legal outcomes. So for this first one, we're driving more revenue in our core businesses. Let's start with trading. We're continuing to gain share in Q1 in spot and derivatives. We drove over $800 billion in global derivatives trading volume while still early. This is a significant market share increase driven by our international exchange where we saw our purpose market share increased by over 60%. This morning, we announced the acquisition of Deribit, the world's leading crypto options exchange with over $30 billion of open interest and $1 trillion in trading volume outside the US last year. This makes Coinbase the number one crypto derivative platform globally by open interest. And it's our biggest move yet to accelerate our international roadmap and build out this comprehensive trading platform. Traders benefit from having spot futures and now options together under one roof. So Deribit is a very important piece of the puzzle for us to bring this together all at Coinbase. We also launched Portfolio Margin 2.0, expanding access to long-short capabilities and increasing leverage for our institutional traders. And we made great strides across our stretch goal to make USDC the number one dollar stablecoin as well. In fact, USDC hit a market cap all-time high of $60 billion in Q1, and the average USDC held in Coinbase products increased 49% quarter over quarter to $12 billion. Given our partnership with Circle, which is indefinitely renewable, increased USDC balances on our platform result in durable revenue for Coinbase. Base stablecoin balances reached $4 billion in Q1, up 12% quarter over quarter. This was also largely driven by USDC. Next up, we accelerated our international expansion for our core businesses. We continued to repeat our successful international playbook driven by obtaining new licenses. So we secured a VASP registration in Argentina. We also registered with India's Financial Intelligence Unit, FIU, unlocking access to one of the fastest growing crypto markets. It's really great to see this product execution at a rapid pace in our core businesses. Second, as I mentioned, we're also focused on driving utility for the next wave of crypto adoption and some more emerging products. So first, under this section, stablecoin payments have seen enormous growth lately, and we've started to build a business account for Coinbase, which includes B2B payment features for startups and SMBs. In Q2, we'll be onboarding the first businesses to our pilot, enabling them to make stablecoin pans and payouts. Given Coinbase's long history building crypto infrastructure, custody, trading, and our network of bank partners around the world, we think we're well positioned to power stablecoin payments for many businesses. This quarter, we also expanded our on-chain lending products powered by BASE. We launched Bitcoin-backed USDC borrowing. This is giving users instant liquidity without having to sell their Bitcoin. In the first 100 days, we saw over $100 million in loans. It's now up to $160 million in loans. Since January, it's growing at a really incredible pace. So we've found a lot of success with that product. We're also continuing to focus on empowering builders on base. We think this is a big opportunity for the next wave of adoption. So we made two acquisitions that completed in Q1 to enhance the utility of base. The first one, Spindle, is an on-chain ad platform. This helps apps get distribution, could be a big business over time. And we also acquired a company called Ironfish, which is helping create private transactions on base. We think this is a big missing feature for people to send private transactions. So finally, we are scaling our foundations and our world-class policy and legal teams had big wins in Q1, both in DC and in courts. So we saw a new executive order come out that directed the establishment of a strategic Bitcoin reserve and digital asset stockpile. This is a huge step with the United States of America now officially recognizing Bitcoin as a strategic asset. I believe other countries will follow that lead. We also saw bipartisan legislation advance in Congress, building clearer frameworks for both stablecoins and crypto market structure. We've been meeting regularly with members on both sides of the aisle in the House and the Senate to help progress stablecoin market structure legislation. And even the vote that happened earlier today, we think is good progress. It's all part of the negotiation. We think there'll be another vote next week on stablecoins. And so we're very excited about that progress. The dismissal of the SEC lawsuit against Coinbase also marked a major judicial win for the balanced, innovation-friendly regulation that we've been advocating for. That was a really important milestone, not just for us, but for the entire industry and protecting our customers' rights. So in closing, it's important to realize that crypto is eating financial services and Coinbase is 100% focused on crypto. We're building better financial infrastructure for the world, which will enable more economic freedom. We've been focused on crypto since the beginning, 12 years ago, and we continue to be focused there, executing at a rapid pace. With growing regulatory clarity, we believe crypto rails are poised to power an increasing share of global GDP and update every aspect of the financial system over time. Now I'll turn it over to Alicia.