Coinbase Profit Jumps 66% on Crypto Gains as Revenue Falls 35%
Coinbase earned $719 million in the third quarter, up 66%, driven by gains on its crypto holdings even as revenue fell 35% from a year earlier.
Coinbase Global, the largest US cryptocurrency exchange, reported third-quarter net income of $718.7 million on Thursday, Oct. 29, up 66% from $432.6 million a year earlier, according to an earnings presentation the company filed with the US Securities and Exchange Commission. Most of that profit came from a $715 million gain on the crypto assets Coinbase holds as investments. Its main business shrank: total revenue fell 35% to $1.22 billion as customers traded less.
What happened
Diluted earnings came to $2.51 a share, up from $1.50 a year earlier. Analysts had expected a loss of about 26 cents a share, Investing.com reported. Revenue of roughly $1.2 billion was in line with forecasts, the outlet said.
The quarter reversed a sharp loss three months earlier. In the second quarter, Coinbase lost $359.5 million, including a $209.5 million loss on its crypto investment portfolio. Bitcoin.com News noted that the third-quarter profit followed two straight quarterly losses.
The headline profit and the underlying business told different stories. Coinbase’s adjusted net income, which strips out gains on crypto and other investments, was $77.7 million, down 82% from $420.7 million a year earlier. Adjusted EBITDA, a measure of operating earnings before interest, taxes, depreciation and amortization, fell 58% from a year earlier to $332.9 million. It rose 60% from the second quarter, though, and it was the company’s 15th straight quarter of positive adjusted EBITDA.
Trading slows, other businesses grow
Transaction revenue, the fees Coinbase earns when customers buy and sell crypto, fell 44% from a year earlier to $590.2 million, according to the company’s filing. Spot crypto trading volume more than halved, to $134.5 billion from $294.3 billion. Volume in crypto derivatives, contracts that track the price of digital assets, rose to $985.9 billion from $845.8 billion.
Subscription and services revenue fell 20% to $570.2 million. That category includes interest income from USDC, a dollar-pegged stablecoin Coinbase helps run, plus staking rewards and the Coinbase One paid membership. Stablecoin revenue alone was $307 million. The category now accounts for 49% of Coinbase’s net revenue, up from 48% in the second quarter, Bitcoin.com News reported.
The company also highlighted these figures:
- Its share of global crypto trading volume rose to 10.7%, up from 10.3% in the second quarter and the fourth straight quarterly gain.
- Average USDC held on its platform reached a record $22 billion, up 49% from a year earlier.
- Coinbase One paid subscribers hit a record, up 24% year over year.
- Prediction markets, where users bet on the outcome of real-world events, passed $200 million in annualized revenue.
Brian Armstrong, Coinbase’s co-founder and chief executive, said the company “continued to execute well on things in our control,” according to Investing.com. Alesia Haas, the chief financial officer, said prediction markets are “less correlated to crypto volatility,” Bitcoin.com News reported. That is a sign the company wants to depend less on trading swings.
Market reaction and what comes next
Coinbase shares closed down about 1% in regular trading on Thursday, at roughly $160.60. Bitcoin.com News put the close at $160.59, while Investing.com cited $160.68. Reports on the after-hours move were mixed. One Investing.com report said the stock rose about 0.2%. A second Investing.com report said it fell 2.17%, to $157.10, and Bitcoin.com News said it dipped slightly.
Coinbase did not give revenue guidance for the fourth quarter or the full year. In its filing, it said transaction revenue came to about $165 million from Oct. 1 through Oct. 25. It expects fourth-quarter subscription and services revenue of $550 million to $630 million and adjusted expenses of $1.007 billion to $1.157 billion.
The results show how closely Coinbase’s reported profit still tracks crypto prices. Because the company holds digital assets on its balance sheet, swings in their value can produce large gains or losses that have little to do with how many customers are trading. That is how a quarter with falling revenue still delivered one of its larger profits of the past year.
