CryptoSlate
Coinbase reported $719 million in third-quarter net profit, reversing a $359 million loss in the prior quarter, even as spot trading revenue fell. Revenue was $1.216 billion, down 35% year over year, and spot trading volume declined 8% quarter over quarter to $134.5 billion. The company added 643 BTC and 2,370 ETH to its investment holdings.
Why it matters
The results show Coinbase building revenue streams beyond conventional crypto trading. Prediction markets exceeded $200 million in annualized net revenue, and prediction markets and derivatives together made up about 25% of transaction revenue. Subscription and services generated $570 million, or 49% of net revenue. CFO Alesia Haas said prediction-market revenue is less correlated with crypto volatility, offering a different source of activity when spot trading slows.
USDC growth came with a margin challenge. Average USDC balances across Coinbase products reached a record $22 billion, up 49% year over year, but revenue after disclosed rewards expenses fell 16.6% to about $177.7 million. Lower interest rates weighed on reserve income, while rewards costs rose.
Market impact
Crypto investment gains were central to the headline profit: Coinbase recorded about $715 million in gains on investment-held crypto, while adjusted net income excluding those gains and certain other items was $78 million. Its BTC and ETH investment holdings increased during the quarter, and its digital-asset investment portfolio rose in fair value from $1.47 billion to about $2.22 billion.
That exposure cuts both ways. Coinbase estimated that a 50% move up or down in crypto prices would change its investment portfolio's fair value by about $1.1 billion, with the gain or loss flowing through earnings. The quarter therefore paired progress in business diversification with continued sensitivity to crypto prices and the economics of USDC rewards.
Frequently asked questions
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How much did Coinbase earn from crypto investment gains in Q3?
Coinbase recorded about $715 million in gains on crypto assets held for investment. Adjusted net income, excluding those gains and certain other items, was $78 million.
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How large was Coinbase's prediction-market business?
Prediction markets surpassed $200 million in annualized net revenue. Together with derivatives, they accounted for about 25% of transaction revenue.
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Why did Coinbase's USDC revenue after rewards decline?
USDC rewards expenses rose 15.8% to $129.2 million, while lower interest rates weighed on reserve income. Revenue after disclosed rewards expenses fell 16.6% to about $177.7 million.
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How much BTC and ETH did Coinbase add to its investment holdings?
Coinbase's investment holdings increased by 643 BTC and 2,370 ETH between the end of June and September.
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How sensitive is Coinbase's investment portfolio to crypto prices?
Coinbase estimated that a 50% increase or decrease in crypto prices would change the fair value of its investment portfolio by about $1.1 billion, with the gain or loss flowing through earnings.
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