Preheat the oven to 325 degrees F (165 degrees C). Grease and flour a 10-inch tube pan.
Beat butter and cream cheese together in a large bowl with an electric mixer until blended; add sugar and beat until light and fluffy. Blend in eggs one at a time, then stir in coconut extract. Mix in flour and baking powder until just moistened; stir in flaked coconut. Spoon batter into the prepared pan.
Bake in the preheated oven until a toothpick inserted into the center comes out clean, about 1 hour 20 minutes. Allow the cake to cool in the pan for 10 minutes; run a table knife around the edges to loosen, then invert carefully onto a serving plate or cooling rack. Let cool completely.