Coinbase Surpasses Q3 Revenue Expectations, Reports $674 Million in Earnings

Coinbase exceeded its revenue projections by reporting $674 million in Q3, surpassing analysts’ earlier estimates. The figure surged by 14.2% year-on-year but was down by 4.8% quarter-on-quarter.

During the same period, the San Francisco-based crypto giant generated $288.6 million in transaction revenue and $334.4 million in services and subscription revenue. The net loss, on the other hand, stood at $2 million.

Coinbase’s Q3 Earnings Report

According to the earnings statement, Coinbase’s balance sheet held more than $5.5 billion in USD assets, showing a quarterly increase of $20 million. USD resources, in this context, encompass cash, cash equivalents, USDC, and any excess funds in custodial accounts.

Much like the previous quarter, in the consumer segment, advanced trading volume decreased more significantly compared to simple trading volume. Coinbase attributed this decrease to the low volatility in the market.

Coinbase’s Q3 total transaction revenue amounted to $289 million, marking a 12% decline compared to the previous quarter. This reduction in transaction revenue was primarily a result of a 17% decrease in total trading volume during the period, although it was partially offset by higher realized fees resulting from changes in trading activity on the crypto exchange during the quarter.

Consumer transaction revenue for Q3 was $275 million, showing an 11% decline from the previous quarter. The trading volume in the consumer segment for Q3 was $11 billion, down 21%, yet it outperformed the US spot market, the report cited.

Similar to the previous quarter, advanced trading volume within the consumer category declined more than simple trading volume, as a result of the adverse market conditions. This shift in the mix of trading volume on its platform led to a higher blended average fee rate in Q3 compared to Q2.

Institutional transaction revenue amounted to $14 million in Q3, representing an 18% decrease from the previous quarter. Institutional trading volume for the same period was $65 billion, marking a 17% decrease and also surpassing the performance of the US spot market.

The drop in institutional trading volume was primarily driven by reduced market volume, which largely consists of market maker volume on its platform. During Q3, USDT volume temporarily surged across the entire industry, including on Coinbase, primarily due to de-pegging events.

Despite the receding volumes, Coinbase believes that Q3 was a strong quarter and that it is “pleased” with the financial result.

Q4 Projection

Coinbase noted that Q4 technology and development, as well as general and administrative expenses, are projected to range from $525 million to $575 million, primarily influenced by variations in stock-based compensation recognition timing, which is non-linear.

Sales and marketing expenses are expected to fall within the range of $85 million to $95 million.

Furthermore, the exchange assured that it has revised its previous goal of enhancing full-year 2023 Adjusted EBITDA in absolute dollar terms and now anticipates achieving meaningful positive Adjusted EBITDA in full-year 2023.