Coinbase Revenue Declines 17% to $1.2B as Transaction Profits Fall

On October 30, Coinbase, the leading cryptocurrency exchange in the United States, announced its Q3 revenue of $1.2 billion, representing a 17% decrease compared to the previous quarter. The company's shareholder letter revealed a net income of $75 million and marked the seventh consecutive quarter of positive Adjusted EBITDA, which stood at $449 million.

Despite challenging market conditions, Coinbase reported average growth in staking, on-platform USDC, and custody services.

Impact of Market Conditions

The period from July to September saw the cryptocurrency markets trading sideways, which negatively affected companies reliant on transaction fees for profit. Coinbase's transaction revenue fell to $573 million, a 27% decline from the previous quarter, yet it still constituted nearly half of the total revenue.

In October, the exchange generated around $190 million in transaction revenue and anticipates Q4 subscription and services revenue to range between $505 and $580 million.

Subscription and Service Revenue

Revenue from Coinbase's subscription and services, including stablecoins, staking, and leverage for professional traders, decreased by 7% to $556 million. The company has made strides in diversifying its revenue streams, which were predominantly transaction-based just a couple of years ago.

Stablecoin revenue reached $247 million, reflecting a 3% increase from the prior quarter. The USD Coin (USDC) has emerged as the fastest-growing major USD stablecoin this year, with its supply increasing by 43% since January.

Regulatory Environment and Political Support

Coinbase emphasized the importance of the upcoming 2024 elections for advancing regulatory clarity in the cryptocurrency sector. CEO Brian Armstrong reiterated the company's commitment to supporting pro-crypto candidates, announcing an additional $25 million contribution to Fairshake PAC to bolster their efforts.

COIN Stock Performance

Earnings per share fell short of analysts' expectations, coming in at $0.28 compared to the projected $0.41. Consequently, Coinbase's stock (COIN) dropped 5% to $201 in after-hours trading, although it has risen 28% since the start of the year.