Coinbase, the second largest the crypto exchange by trading volume, released the Q3 2023 earnings on Thursday, giving shareholders and market participants a chance to see what’s going on under the hood. In response to the report, the company’s stock fell about 5.5% in after-hours trading.
In the third quarter of 2023, Coinbase generated $674 million in total revenue, up from $707.9 million in the previous quarter. The company’s net income was $623 million, down 6% from the second quarter of 2023, but up from $576 million a year ago. The company’s net loss totaled $2 million in the quarter on a GAAP basis, worth -$0.01 per share. The company also reported an adjusted EBITDA result of $181 million.
Analysts have been bullish on the estimates even amid a recent rally in the crypto market. Messari analysts it is estimated that Coinbase will report $616 million, down 7% from the prior quarter, below the consensus expectation of $650 million.
Zacks-Consensus-Estimate expected Coinbase to report revenue of $650.8 million and earnings per share of negative 54 cents per share, according to report provided by Yahoo Finance.
Prior to the release of Q3 earnings, Coinbase stock was up 148% year-to-date. While this is quite a rally in a bear market, Coinbase’s stock value was still down 27% from its 52-week high of $114.43.
The total cryptocurrency market capitalization has increased by about 62% to $1.28 trillion since the beginning of the year, up from $1 trillion a year ago. However, recent gains in the value of crypto assets and a compound increase in trading volume mean that Coinbase’s Q3 numbers were not impressive when considering trade-based revenue.
In the third quarter, Coinbase generated $288.6 million in trading revenue, with $274.5 million coming from consumer activity and another $14.1 million from institutional traders. These figures were down from $310 million and $17.1 million in the second quarter of 2023 and $346.1 million and $19.8 million, respectively, in the prior period.
If the top line of trading was bearish at Coinbase, how did the company manage to post year-over-year growth? The answer is: interest income.
Other sources of income
Coinbase had an outlook of “at least $300 million” in August for subscription and services revenue, and beat that estimate by $34 million in the third quarter with a bottom line of $334.4 million. That figure was down slightly from the $335.4 million it reported in the sequential prior quarter.
