Coinbase expects lower subscription revenue. A lot more went wrong for the crypto exchange.

By Claudia AssisCoinbase pins crypto drop on tariffs and economic uncertaintyCoinbase Global Inc. late Thursday reported a disappointing quarter that the company pinned on the drop in cryptocurrencies, alongside the broader market, due to tariffs and economic uncertainty.First-quarter sales missed Wall Street's expectations and dropped when compared to fourth-quarter sales. The company showed an even steeper quarter-on-quarter drop for its transaction revenue and called for lower current-quarter subscription sales.Coinbase shares (COIN) fell 2.7% in the extended session.Crypto prices "dropped alongside broader market declines driven by tariff policy and macroeconomic uncertainty," Coinbase executives wrote in a letter to shareholders. The total crypto market cap fell 19% to $2.7 trillion in the first quarter from the fourth quarter, the company said.Coinbase's first-quarter revenue rose to $2 billion, from $1.64 billion in the year-ago quarter and below FactSet estimates of $2.1 billion.Transaction revenue dropped 19% quarter-on-quarter to $1.3 billion, while subscription and services revenue grew 9%, also quarter-on-quarter, to $698 million, thanks mostly to stablecoin revenue, the company said.Coinbase guided for lower current-quarter subscription and services revenue, between $600 million and $680 million. The first-quarter subscription and services revenue was also at the lower end of the company's prior guidance of a first-quarter subscription and services revenue in a range of $685 million to $765 million.The expected quarter-on-quarter growth in stablecoin revenue is likely to be "more than offset by a decline in blockchain rewards revenue due to lower asset prices," Coinbase said.The company reported GAAP earnings of 24 cents a share, wide off the mark from consensus of $1.93 a share.Investors had grown concerned about Coinbase going into the report, with several investment banks cutting estimates. Analysts at MCH earlier this week downgraded Coinbase's shares to the equivalent of hold, saying they expected "tepid" results and guidance.Earlier Thursday, Coinbase announced it had agreed to acquire Dubai-based Deribit, the world's biggest trading platform for bitcoin and ether options, for roughly $2.9 billion. The Wall Street Journal first reported the deal.The agreement would give Coinbase "an immediate and dominant foothold in the high-growth derivatives space ahead of an anticipated increase in institutional adoption of digital assets," analysts at Benchmark said in a note Thursday.Derebit's "sophisticated" trading tools, which focus on institutional and high-frequency traders, could strengthen Coinbase's institutional appeal, they said.Coinbase shares have lost about 16% so far this year, underperforming the S&P 500 index SPX, which has dropped 3%.-Claudia AssisThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.