Coinbase Misses Q3 Estimates, Cites Market Weakness

Coinbase stock fell in after-hours trading Wednesday after the cryptocurrency exchange reported third-quarter earnings and revenue that fell below Wall Street analysts’ estimates. According to the exchange, one of the reasons is “the soft market”.

Based on FactSet data, the crypto exchange posted total revenue of $1.2 billion for the quarter, compared with an average estimate of $1.26 billion.

Crypto Winter Takes its Toll on Coinbase Earnings

Coinbase Global Inc. reported Wednesday that its fiscal 2024 third-quarter revenue was $1.2 billion, nearly doubling the number from the same period last year.

Excluding those items, the company said diluted earnings per share were $0.28, a significant rebound from a $0.01 a share loss in the year-earlier period. However, that was below what analysts had been expecting. Net income for the quarter rose to $75.5 million from a loss of $2.3 billion in the year-ago period.

“Despite softer market conditions, we saw average native unit growth across staking, on-platform USDC, and custody, which contributes to long-term revenue diversification,” Coinbase said in its earnings report.

Recently Coinbase has introduced AI agents that can manage crypto wallets and interact with the blockchain on its Base network.

Diversifying Amidst Falling Trading Fees

Transaction fees, Coinbase’s primary source of revenue, plummeted 27% from the second quarter as trading volumes at US-based exchanges continued their decline. “Crypto asset volatility—a key driver of trading volume—decreased by approximately 5% when comparing the Q3 average with the Q2 average,” the company wrote in its earnings letter.

Following the report, the exchange’s shares fell almost 7%. On the year, however, they’re up about 22%, reflecting the broader bullish sentiment in digital assets.

Meanwhile, despite the still very uncertain regulatory climate in the US, this year Coinbase has unveiled a string of products, the most recent of which was the ability for holders of Visa debit cards to deposit funds into their Coinbase accounts almost instantly. To decrease its reliance on high volumes of trading to generate revenue, the exchange diversifies its bets, which also includes enhancing its custody offering and participating in the tokenization of real-world assets.