Coinbase’s Q3 revenue beat expectations, but its shares fell as growth prospects underwhelmed

Coinbase, the second largest crypto exchange by transaction volume, published its Q3 2023 results 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 shares fell about 5.5% after hours.

In the third quarter of 2023, Coinbase generated total revenue of $674 million, up from $707.9 million in the previous quarter. previous quarter. The company’s net revenue was $623 million, down 6% from the second quarter of 2023, but up from $576 million a year ago. The company’s net loss was $2 million over a three-month period on a GAAP basis, or a value of -$0.01 per share. The company also reported adjusted EBITDA earnings of $181 million..

Analysts were hesitant with the estimates, even amid a recent crypto market rally. Messari Analysts estimates that Coinbase will report $616 million, down 7% from the previous quarter, below consensus expectations of $650 million.

The Zacks Consensus Estimate expects Coinbase to report $650.8 million in revenue and negative earnings per share of 54 cents per share, according to a report. report powered by Yahoo Finance.

Prior to the third quarter earnings release, Coinbase stock was up 148% year to date. Although this was a fairly significant rally in a bear market, Coinbase’s stock value was still down 27% from its 52-week high of $114.43.

Global market capitalization of cryptocurrencies grew about 62% to $1.28 trillion since the start of the year and represents an increase from $1 trillion a year ago. However, recent gains in crypto asset value and a constitutive increase in trading volume do not mean that Coinbase’s Q3 numbers were 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 coming from institutional traders. These numbers are down from $310 million and $17.1 million in the second quarter of 2023, and $346.1 million and $19.8 million, respectively, from last year.

If Coinbase’s revenue was down, how did the company manage to show growth compared to the year-ago period? The answer is: interest-based income.

Other sources of income

Coinbase had an outlook of “at least $300 million” in August for its subscription and services revenue, and exceeded that estimate by $34 million in the third quarter with a final result of $334.4 million . This figure is down slightly from the $335.4 million reported in the previous sequential quarter.

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