Overview
- In the second quarter, Coinbase generated $1.22 billion in revenue, resulting in a net loss of $359 million, falling short of the anticipated $1.29 billion.
- Revenue from subscriptions and services accounted for $555 million, making up 48% of total net revenue.
- Coinbase achieved a record 10.3% market share in crypto trading during this quarter.
On Thursday, Coinbase disclosed its second-quarter earnings, reporting revenues of $1.22 billion, which marks a 14% decline from the preceding quarter, coupled with a net loss of $359 million.
Following the earnings announcement, Coinbase's stock saw a significant drop in after-hours trading, with shares losing about 5% as the company fell short of earnings expectations. Analysts had projected revenues of $1.29 billion for Q2.
Coinbase noted a more than 20% decrease in total crypto spot trading volume compared to the previous quarter, attributed to falling crypto asset prices and a drop in market volatility to multi-year lows. The transaction revenue stood at $599 million, below the expected $628 million.
The company's subscription and services revenue reached $555 million, which constituted 48% of its net revenue. This figure was lower than earlier forecasts of $565 million to $645 million, primarily due to delays in closing certain USDC-related commercial agreements and a decrease in staking revenue from lower crypto asset prices.
Revenue from stablecoins amounted to $292 million. The average USDC held across Coinbase's offerings reached a record $20 billion during the quarter, accounting for over 30% of the total USDC in circulation at the end of the quarter. Additionally, Coinbase reported that 88% of its net revenue originated from sources other than Bitcoin spot trading, a significant increase from just 45% in the same quarter of 2020.
Coinbase's market share in crypto trading hit a record 10.3%, marking its third consecutive quarter of growth in market share for both spot and derivatives trading.
On a positive note, revenue from prediction markets contracts surged by 106% compared to the previous quarter, surpassing a $100 million annualized net revenue run rate. Average borrow/lend balances grew by over $1 billion year-over-year, reaching $1.49 billion. The company also confirmed that the conditions for renewing its commercial agreement with Circle in August had been met.
The earnings report comes after a particularly active second quarter for Coinbase.
In May, the company became the first U.S. crypto exchange authorized to provide customers with access to offshore crypto perpetual futures via its Deribit subsidiary. In June, Coinbase launched "Coinbase for Agents," a platform enabling AI agents to trade crypto, facilitate payments, and manage portfolios on behalf of users. Later that month, it announced intentions to introduce tokenized stock trading, crypto and equities options, along with new lending and rewards products.
By the end of the quarter, Coinbase held $8.6 billion in cash and cash equivalents, and had total resources of $10 billion. During this period, the company repurchased 814,000 Class A shares. Year-to-date, it has bought back nearly 7 million shares for $1.2 billion, leaving approximately $2 billion remaining under its share repurchase program.
For the third quarter, Coinbase reported transaction revenue of about $130 million as of July 26. The company anticipates subscription and services revenue to be between $500 million and $580 million, with adjusted expenses ranging from $980 million to $1.08 billion.
Despite the disappointing earnings report, Coinbase CEO Brian Armstrong expressed confidence in the company's future prospects.
“Coinbase is no longer a bet just on the price of Bitcoin,” Armstrong stated during the earnings call. “All of financial services are getting updated by crypto technology, whether that's trading or payments or lending. And Coinbase is the best-positioned company in the world to power this. And of course, this next frontier is going to be agentic finance, where we're an early leader.”