Coinbase Q1: Prediction Markets Emerge as Bright Spot in Weak Quarter

Prediction markets emerged as one of Coinbase’s strongest-performing newer products during a weak Q1 in which the crypto exchange reported falling revenue, softer trading activity, and a $394 million net loss.

Thursday’s earnings release followed the company’s Tuesday announcement that it’s slashing about 14% of its workforce, or about 700 employees.

Mixed Q1 Results

Coinbase delivered mixed results in Q1.

Total revenue was $1.4 billion, down 31% year over year and 21% compared to Q4 2025. The company missed analysts’ expectations of $1.52 billion. Consumer transaction revenue fell 23% quarter-over-quarter and 40% year over year to $756 million, while consumer spot trading volume dropped 35%.

Moreover, the company reported a $394.1 million net loss, or $1.49 per share, compared to analysts’ expectations of a $0.27 per share profit. Adjusted EBITDA was $303 million, marking 13 consecutive quarters of positive adjusted EBITDA, but the lowest since Q3 2023.

Coinbase’s crypto trading volume market share grew to 8.6%, a new all-time high. Coinbase also said it stored 12% of global crypto assets, more than any other platform. Derivatives trading volume grew 169% year over year.

Management attributed much of the weakness to declining crypto market capitalization and softer trading conditions across the broader market. Shares fell by 4% in after-hours trading.

Prediction Markets Reach $100m Annualized Revenue

Coinbase surpassed $100 million in annualized revenue from prediction markets in March, despite launching only a few months ago.

The earnings deck described prediction markets as “scaling quickly,” noting the figure was based on “the first two full months live.”

CEO Brian Armstrong told analysts:

Prediction markets are scaling fast, reaching $100 million in annualized revenue in March. That’s just two months after launch.”

Later in the call, CFO Alesia Haas described prediction markets as “one of our fastest-growing new products.” She highlighted that the results came from less than two months after going live.

Coinbase also stated prediction markets are “on track to be the 13th product to cross $100 million in annualized revenue.”

Notably, Coinbase leadership devoted significant attention to prediction markets during the earnings call, despite broader quarterly weakness and the company’s much larger crypto and stablecoin operations dominating overall revenue.

Prediction Markets Helped Offset Weak Crypto Trading

On the call, management said that prediction markets contributed to transaction revenue, despite being excluded from Coinbase’s core crypto spot trading metrics.

Haas explained:

We saw accelerating contributions from our newer products like derivatives and prediction markets, which contribute to our total revenue but are not included in [the] trading volume key business metric, which is spot crypto only.”

Management also suggested that prediction markets and derivatives helped offset some of the decline in spot trading activity.

Coinbase also highlighted that it reached an all-time high in crypto trading market share during Q1. Also, the company gained share in both spot and derivatives globally despite the weaker market environment.

President and COO Emilie Choi said:

Our Everything Exchange strategy is validating.”

She added:

Retail derivatives are at 200 million plus of annualized revenue, prediction markets are at 100 million plus of annualized revenue in March, and incremental revenue cross-sold into a customer base we’ve already acquired.”

Coinbase Frames Prediction Markets as Part of Broader Expansion Strategy

During the call, Coinbase discussed prediction market event contracts as part of the “Everything Exchange” initiative.

In shareholder materials, Coinbase described the initiative as:

Trade every asset class in one place: crypto, equities, prediction markets, commodities, and FX.”

Armstrong later told analysts:

We’ve transformed Coinbase from a primarily spot-focused crypto platform into a place where you can now trade any asset class.”

The company highlighted growth in several newer product categories. These include commodities contracts tied to gold, silver, and oil, which management said generated more than fourfold quarter-over-quarter volume growth.

Leadership’s message suggested that the company views multi-asset trading as an important diversification strategy beyond traditional crypto speculation.

Coinbase Restructures Around AI

Coinbase’s weak Q1 came days after the company announced plans to reduce staff by roughly 14% or approximately 700 employees, as part of a push to become more “AI-native.”

In a memo shared on X, Armstrong said Coinbase needed to “adjust our cost structure now so that we emerge from this period leaner, faster, and more efficient for our next phase of growth.”

This is an email I sent earlier today to all employees at Coinbase:

Team,

Today I’ve made the difficult decision to reduce the size of Coinbase by ~14%. I want to walk you through why we're doing this now, what it means for those affected, and how this positions us for the…

— Brian Armstrong (@brian_armstrong) May 5, 2026

Armstrong tied the restructuring to the company’s growth priorities, writing:

Crypto is also on the verge of the next wave of adoption, with stablecoins, prediction markets, tokenization, and more taking off.”

He further argued that AI is fundamentally changing how Coinbase operates. He said engineers are increasingly using AI “to ship in days what used to take a team weeks.”

During the earnings call, Coinbase said it expects to incur approximately $50 million – $60 million in restructuring expenses related to the layoffs in Q2.

Coinbase Silent on Litigation and In-House Platform Plans

Despite spending considerable time on prediction markets during the earnings call, Coinbase did not mention anything about a potential in-house prediction market platform.

Only a week after the company launched prediction markets in December 2025, Coinbase announced the acquisition of The Clearing Company, a prediction market startup. The acquisition fueled speculation that Coinbase could eventually expand its own event-contract infrastructure rather than relying exclusively on its Kalshi partnership.

Rival exchange Robinhood also acquired licensed infrastructure and recently said it plans to launch Rothera, its joint venture exchange with Susquehanna, in Q2 2026.

Also, while analysts asked questions about crypto regulation and stablecoin legislation, none addressed the ongoing state-level gambling enforcement actions or broader legal battles involving prediction markets.

Recently, New York’s Attorney General launched a legal challenge against the company. Coinbase is also involved in litigation with Illinois, Michigan, Connecticut, Wisconsin, and Nevada.

The dispute centers on whether certain event contracts, such as those tied to sports events, fall under federal derivative law or state gambling statutes. Many analysts expect the issue will likely reach the U.S. Supreme Court.