Coinbase’s revenue falls 17% to $1.2 billion as transaction profits fall

On October 30, the largest crypto exchange in the United States reported that its quarterly revenue for the third quarter was $1.2 billion, down 17% from the previous quarter.

In its letter to shareholders, the company reported net income of $75 million and a seventh consecutive quarter of positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), which was 449 millions of dollars.

The firm noted that it saw average growth in native units across participation, USDC on the platform and custody “despite softer market conditions.”

The period from July to September saw crypto markets trade sideways as months of consolidation continued, which isn’t great for companies that make most of their profits from fees.

Low transaction fees

Coinbase usually makes most of its profits from transaction fees, which are some of the highest in the industry. Its transaction revenue was $573 million, down 27% from the previous quarter. However, it still accounted for nearly half of total revenue.

It reported that it generated roughly $190 million in total transaction revenue in October, adding that it expects fourth-quarter subscription and services revenue to be between $505 million and $580 million.

Revenue from the firm’s subscription and services, which includes offerings such as stablecoins, staking and leverage for professional traders, declined 7% to $556 million. The company has shown a diversification of transaction-based revenue, which accounted for more than 80% of the total a couple of years ago.

Stablecoin revenue reached $247 million, up 3% from the previous quarter. Coinbase said its USD currency (USDC) has been the fastest-growing major USD since the year.

The supply of USDC has increased by 43% since the beginning of the year, while the supply of Tether (USDT) has grown by 32% during the same period. However, Coinbase failed to mention that USDC supply dropped by 57% between mid-2022 and late 2023, while USDT only dropped by 22%.

“The upcoming 2024 election is the next important milestone in our ongoing work to drive crypto regulatory clarity,” the firm concluded before adding: “We continue to be a trusted partner to policymakers and organizations like Fairshake and StandWithCrypto.”

Coinbase CEO Brian Armstrong reiterated the company’s commitment to pro-crypto candidates in the presidential election in a post on X on October 31.

We get the US election results in 6 days, and no matter how you slice it, it’s going to be the most pro-crypto congress ever.

But we are not slowing down after the election.

Today I announce it @coinbase has committed an additional $25 million to support Fairshake PAC, which will use…

— Brian Armstrong (@brian_armstrong) October 30, 2024

COIN price tanks

Earnings per share fell short of expectations, coming in at $0.28 compared to $0.41 expected.

As a result, shares of the company ( COIN ) fell 5% on the day, falling to $201 in after-hours trading, according to Google Finance. However, the company’s shares are up 28% since the start of the year.

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