On Wednesday, Coinbase revealed its Q3 earnings, which fell short of expectations amid a slowdown in cryptocurrency trading activity. Following the announcement, Coinbase’s stock dropped 4.8% in after-hours trading, settling at $201.50 per share.
The company reported $1.2 billion in quarterly revenue, missing FactSet’s forecast of $1.26 billion. Earnings per share were $0.28, lower than the expected $0.45, and adjusted EBITDA reached $449 million, falling short of the $469.2 million estimate. Transaction revenue saw a significant 27% decline from the previous quarter, totaling $573 million, while subscription and services revenue dropped 7% to $556 million, largely due to a decrease in average crypto asset prices.
However, stablecoin revenue provided a silver lining, increasing 3% from the previous quarter to reach $247 million. This growth was driven by an uptick in average USDC balances on the platform.
Coinbase Emphasizes Revenue Diversification
In its shareholder letter, Coinbase acknowledged “softer” market conditions but highlighted growth in staking, on-platform USDC, and custody services. Coinbase CEO Brian Armstrong underscored the company’s efforts to diversify revenue away from volatile transaction fees toward subscription and service-based income.
By the end of Q3, Coinbase reported $8.2 billion in cash, cash equivalents, and USDC holdings, up by $417 million from the prior quarter. The company also announced a $1 billion stock repurchase initiative.
Q4 Outlook and Subscription Growth Projections
Coinbase anticipates a more robust fourth quarter, projecting subscription and services revenue in the range of $505-$580 million. However, the company expects potential challenges, including a 10% drop in Ethereum’s average price in October and possible interest rate fluctuations.
In recent news, Coinbase’s layer-2 Ethereum network, Base, temporarily took the lead among all blockchains in stablecoin volume, achieving a record transaction count on the same day. Earlier this week, Armstrong sharply criticized the SEC, calling for significant changes in leadership and urging the next SEC chair to drop “frivolous” lawsuits and apologize for the impact of regulatory actions on the U.S. crypto industry.
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