Coinbase profit rebounds as investment gains cushion weaker trading

Coinbase Global returned to profitability in the third quarter, helped by lower operating expenses and gains on crypto assets held in its investment portfolio. The result came even as the cryptocurrency exchange’s main trading business weakened.

Profit returns despite a trading slowdown

Coinbase reported net income of $718.7 million, or $2.51 per share, for the quarter ended September 30, compared with net income of $432.6 million, or $1.50 per share, a year earlier, according to Reuters. The quarter followed three consecutive quarters of losses.

Transaction revenue, the company’s largest source of income, fell 43% year over year to $590.2 million from $1.05 billion. Reuters reported that Coinbase shares were down 3.3% in after-hours trading following the results.

Cost controls and portfolio gains support results

Total operating expenses declined about 17% to $1.15 billion from $1.39 billion a year earlier. Reuters said investment gains on crypto assets also helped cushion the effect of weaker trading activity; the report did not provide a separate amount for those gains.

Coinbase said macroeconomic headwinds had begun to shift and that crypto prices rebounded in September. Those comments describe the company’s assessment, rather than a guarantee that trading conditions will remain favorable.

New businesses broaden revenue mix

Prediction markets generated more than $200 million in revenue during the quarter, Reuters reported. Chief Financial Officer Alesia Haas said the company’s investments in diversifying revenue were benefiting the business. Subscription and services revenue accounted for roughly 49% of total net revenue, according to the report.

The figures point to a broader product mix, but transaction revenue remains exposed to changes in crypto prices and market activity. Coinbase’s official investor announcement had scheduled publication of the third-quarter results after market close on October 29.

Sources

• Reuters report — profit, per-share earnings, transaction revenue, operating expenses, prediction-market revenue, revenue mix, executive comments and after-hours share move.
• Coinbase investor announcement — official scheduled release date and company disclosure information.