In summary
- On Thursday, Cryptocurrency exchange Coinbase reported a decline in revenue from the previous quarter, finding that its customers were less engaged in cryptocurrency trading over the summer.
- The company’s sales fell to $1.2 billion in Q3 2024 from $1.45 billion in the previous quarter, missing analyst expectations of $1.26 billion.
- Coinbase reported a profit of $75 million compared to a loss of $2 million a year ago, and attributed the decline in revenue to a drop in trading volumes.
On Thursday, cryptocurrency exchange Coinbase reported a decline in revenue from the previous quarter, finding that its customers were less engaged in cryptocurrency trading over the summer.
The company’s sales fell to $1.2 billion in Q3 2024 from $1.45 billion in the previous quarter, missing analyst expectations of $1.26 billion, according to FactSet data. Meanwhile, Coinbase reported a profit of $75 million compared to a loss of $2 million a year ago.
“This was a strong quarter for the business across the three priorities we set at the beginning of the year: driving revenue, driving cryptocurrency utility, and driving regulatory clarity,” Anil Gupta, vice president of investor relations, told Decrypt, adding which was the company’s fourth consecutive profitable quarter.
Coinbase’s share price rose to $279 in March, shortly after the price of Bitcoin hit an all-time high of around $73,000. Although shares had since fallen to $211, as of Wednesday’s market close, the price was still 35% higher so far this year. During after-hours trading, Coinbase’s share price was down 4%, falling to $202 at the time of writing.
The company attributed its decline in third-quarter revenue to declining trading volumes, which stood at $185 billion compared to $226 billion in the second quarter. The decline was most pronounced among its retail customers.
Coinbase revealed that transaction revenue derived from retail users declined quarter-over-quarter to $483 million, falling 27% from $664 million. Meanwhile, transaction revenue from institutional users fell 13% to $55 million from $63 million in the second quarter.
The company also revealed that its board of directors had authorized a $1 billion share buyback program, with “the timing and amount of buybacks” depending on market conditions.
In a research note earlier this month, analysts at Oppenheimer attributed a forecasted slowdown in trading volume to a “lack of positive catalysts coupled with US election uncertainty.” Still, Oppenheimer considered Vice President Kamala Harris’ support for a cryptocurrency regulatory framework as a factor that could benefit Coinbase’s trading volumes in the fourth quarter.
“We continue to build great products, focusing on some of the building blocks that are now in place to help bring one billion users on-chain,” Coinbase said in a letter to shareholders. “Looking beyond Election Day 2024, we are prepared to work with any administration and believe the odds of pro-crypto legislation are better than ever.”
When cryptocurrency prices were down during the bear market, Coinbase embraced subscriptions and service revenue as a way to diversify its business. Including revenue earned on assets backing Circle’s USDC stablecoin, revenue from subscriptions and services briefly surpassed transaction-based revenue in the third quarter of last year.
Oppenheimer analysts wrote that Coinbase stablecoin revenue will likely decline as the Federal Reserve moves forward with its easing campaign. However, Coinbase reported on Thursday that the stablecoin’s revenue reached $246 million, increasing sequentially from $240 million.
While lower interest rates hit the stablecoin’s revenue, the company said in its letter to shareholders that the figure was bolstered by a growing amount of USDC on its platform, which rose 7% to $6.6 billion. from one quarter to the next.
“We continue to increase native units on the platform,” said Gupta. “We are optimistic about the long-term revenue of the stablecoin.”
The company’s Ethereum Layer 2 scaling network, Base, has been a highlight for the exchange, serving as a popular destination for its on-chain products. In its letter to shareholders, the company said Base “consolidated its position as a leader in on-chain activity,” with the number of transactions it processed increasing 55% quarter over quarter.
Edited by Andrew Hayward
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