Coinbase Surpasses Expectations: Q3 Results Yield Profits Amidst Cryptocurrency Downturn

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Coinbase emerged above analysts’ forecasts in the third quarter, successfully posting a net profit and a strong adjusted EBITDA despite a prolonged downturn in the cryptocurrency markets. The company, a major player in the publicly traded cryptocurrency exchange sector, reported a net profit of $2 million and an adjusted EBITDA of $181 million for the period ending September 30, 2023, as per the latest shareholder communication.

Coinbase Achieves Q3 Earnings Amidst Persistent Cryptocurrency Bear Market

On November 2, 2023, Coinbase Global Inc. (Nasdaq: COIN) unveiled its quarterly financials through a shareholder letter. The company witnessed a reduction in total revenue to $674 million, down from $736 million in the prior quarter. The decline was attributed to reduced volatility in cryptocurrency assets and a decrease in global spot trading volumes. The company’s primary revenue source, transaction fees, saw a 12% quarter-over-quarter fall, amounting to $289 million.

Coinbase remarked, “The total cryptocurrency market capitalization saw a quarterly decline of 9% to $1.1 trillion, and the average market capitalization observed a 3% decrease in the same period.” The letter highlighted that Bitcoin, representing about half of the total cryptocurrency market capitalization, experienced a 12% decline in value from the end of Q2 to the end of Q3.

Revenue from subscriptions and services remained stable at $334 million, only slightly down from $335 million in the preceding quarter. Revenue attributable to stablecoins saw an uptick of 14%, reaching $172 million, bolstered by increased interest rates. Contrastingly, blockchain rewards revenue diminished by 15% and interest income by 21%. The exchange also noted a 4% quarter-over-quarter reduction in operating expenses to $754 million.

Collective expenditure on technology, development, sales, marketing, and administrative functions was slightly reduced by 1%. At the conclusion of Q3, Coinbase’s available liquid resources stood at $5.5 billion, a $20 million increment from the previous quarter. The period also saw Coinbase repurchase $263 million of its own bonds at a 33% markdown.

Looking ahead to the fourth quarter, Coinbase indicated transaction revenue for October was approximately $105 million and anticipated that subscription and services revenue would remain consistent with Q3 levels. The company projects a downward trend in expenses, partly due to a reduction in stock-based compensation. Over the previous five days, Coinbase shares increased by more than 10% and 13% in the last month.

Coinbase revised its forecast for the full year, stating, “We now expect to realize a significant positive adjusted EBITDA for the entire year of 2023, a revision from our earlier aim of enhancing the full-year 2023 adjusted EBITDA in absolute dollars compared to the full-year 2022.”

Amid uncertain market conditions, Coinbase maintains a strong commitment to product innovation and international market expansion. The exchange has also made advancements in its efforts to offer regulated cryptocurrency derivatives within the United States and abroad. On the topic of regulation, Coinbase continues to actively seek clear legislative direction in the U.S.

Coinbase is also engaged in ongoing litigation with the U.S. Securities and Exchange Commission (SEC), with oral arguments set for January 2024. The shareholder letter also points out that 83% of G20 countries have introduced regulations for cryptocurrencies, a step the U.S. is urged to consider.

What are your perspectives on Coinbase’s recent financial report? We invite you to share your views and analyses on this matter in the comment section below.

Frequently Asked Questions (FAQs) about Coinbase Q3 Earnings

More about Coinbase Q3 Earnings

• Coinbase Q3 2023 Earnings Report
• Coinbase’s Shareholder Letter
• Nasdaq: COIN
• Coinbase and the Crypto Market Downturn
• Coinbase Regulatory Advocacy and Legal Developments