Coinbase’s Q3 Revenue Exceeds Expectations, Shares Decline on Growth Concerns

Coinbase, the second-largest cryptocurrency exchange by trading volume, unveiled its Q3 2023 earnings on Thursday. In response, the company’s stock dropped approximately 5.5% in after-hours trading.

In Q3 2023, Coinbase recorded total revenue of $674 million, a slight decrease from the previous quarter’s $707.9 million. The company’s net revenue was $623 million, down 6% from Q2 2023, but up from $576 million compared to the previous year. The company reported a minimal net loss of $2 million for the quarter, which translates to –$0.01 per share on a GAAP basis. Additionally, Coinbase posted an adjusted EBITDA result of $181 million.

Analysts had conservative estimates, even with the recent crypto market uptrend. Messari analysts estimated Coinbase to report $616 million, a 7% decrease from the previous quarter, falling below the consensus expectation of $650 million.

According to a report from Yahoo Finance, the Zacks-Consensus-Estimate anticipated Coinbase to report $650.8 million in revenue and earnings per share of negative 54 cents.

Prior to the Q3 earnings release, Coinbase’s stock had climbed 148% year-to-date but was still down 27% from its 52-week high of $114.43.

While the overall crypto market capitalization surged approximately 62% to $1.28 trillion since the beginning of the year and increased from $1 trillion a year ago, the growth in the value of crypto assets and trading volume did not translate into impressive Q3 numbers for Coinbase in terms of trade-based revenues.

In Q3, Coinbase generated $288.6 million in trading revenue, with $274.5 million from consumer activity and $14.1 million from institutional traders. These figures were lower than the $310 million and $17.1 million, respectively, in the previous quarter, as well as the $346.1 million and $19.8 million, respectively, from the year-ago period.

Despite the decline in trading revenue, Coinbase managed to achieve growth compared to the previous year through interest-based incomes.

Other Revenue Sources

In August, Coinbase anticipated “at least $300 million” in subscription and services revenue, surpassing this projection by $34 million in Q3, totaling $334.4 million. This figure slightly decreased from the $335.4 million reported in the preceding quarter.

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