Detailed Analysis of Coinbase Q3 Earnings Report: Net Profit Exceeds $400 Million, Deribit Contributes $52 Million in Revenue in 47 Days

Chief Editor: Felix, PANews

American cryptocurrency exchange Coinbase announced its third-quarter (Q3) financial results on October 30th local time, reporting total revenue of $1.869 billion, a 25% increase quarter-over-quarter and a 58% increase year-over-year, surpassing FactSet analysts’ expectations of $1.8 billion; net profit was $433 million. Trading revenue reached $1 billion, up 37% quarter-over-quarter; trading volume also increased from $185 billion in the same period last year to $295 billion, a quarter-over-quarter rise.

Coinbase’s revenue growth was mainly driven by a surge in trading activity, a rebound in asset prices, and sustained growth in subscription and services businesses. Following this announcement, Coinbase (COIN) stock price rose 3.61% in after-hours trading.

Trading remains the primary source of income but has significantly declined since the beginning of the year

As of September 30th, Coinbase’s revenue increased from $1.21 billion in the same period last year to $1.869 billion. Net profit rose from $75.5 million (or $0.28 per share) last year to $432.6 million (or $1.50 per share). This earnings exceeded the previously announced consensus of $1.10 per share by the London Stock Exchange Group (LSEG).

Coinbase’s financial report shows that trading remains its main source of income. Coinbase’s Q3 total trading revenue was $1 billion, up 37% quarter-over-quarter. Total trading volume was $295 billion, a 24% increase quarter-over-quarter.

It is noteworthy that the $1 billion trading revenue is still far below the peak at the beginning of the year. For Q4 2024, trading revenue is projected at $1.6 billion, and for Q1 2025, it is expected to be $1.3 billion. This trend indicates that despite Bitcoin prices rising and market activity increasing, trading volume still isn’t enough to support a significant increase in Coinbase’s revenue.

In retail trading, trading volume was $59 billion, up 37% quarter-over-quarter, outperforming the U.S. spot market; trading revenue was $844 million, up 30% quarter-over-quarter. Coinbase attributes this to retail investors chasing meme coins and other speculative assets.

In institutional trading, trading volume reached $236 billion, up 22% quarter-over-quarter; trading revenue was $135 million, a 122% increase quarter-over-quarter. The revenue growth was mainly driven by multiple factors, notably the acquisition of derivatives exchange Deribit completed on August 14th, which contributed $52 million in revenue during Coinbase’s 47 days of ownership.

In asset trading, Ethereum activity significantly increased in Q3, with ETH trading volume accounting for 22% of total trading volume, up from 15% in the previous quarter. Revenue from Ethereum trading also increased from 12% to 17%. Although Bitcoin trading volume and revenue remain the highest, Ethereum’s expanding market share has led to a decrease in its proportion of overall trading volume and revenue.

Stablecoins account for half of subscription and services revenue

Q3 subscription and services revenue was $747 million, up 14% quarter-over-quarter. Stablecoin revenue was $355 million, up 7%, roughly half of all subscription and services revenue. Coinbase’s product USDC held an average balance that increased 9% quarter-over-quarter to $15 billion. Outside the platform, USDC’s average balance also grew 12% quarter-over-quarter to $53 billion.

Other subscription and services revenue totaled $143 million, up 19% quarter-over-quarter, mainly driven by revenue sharing with ecosystem partners and custody fee income, with custody assets reaching a new high of $300 billion.

Q3 other trading revenue was $68 million, up 26% quarter-over-quarter. Coinbase’s supported Layer 2 blockchain Base is a major component of “other trading revenue,” which increased mainly due to rising ETH prices and increased trading volume, although some of the growth was offset by a decline in average revenue per transaction caused by network scaling. Coinbase emphasizes that Base remains a leading Layer 2 network, excelling in speed, scalability, and cost efficiency.

Employee count reached 4,795, with $250 million spent on user rewards in Q3

Total operating expenses in Q3 decreased by $134 million, or 9%, to $1.388 billion. Transaction expenses were $253 million, up 3% quarter-over-quarter, mainly due to increased blockchain reward fees (driven by rising token prices in Q3) and increased customer trading activity.

Research and development expenses were $431 million, up 11%, primarily due to increased staffing, with full-time employees rising 12% quarter-over-quarter to 4,795, including employees from Deribit.

General and administrative expenses were $418 million, up 18%. Sales and marketing expenses reached $260 million, up 10%. The growth was mainly driven by amortization related to the Deribit acquisition and higher USDC rewards.

Other operating expenses totaled $61 million, down 80% quarter-over-quarter, including $48 million related to a theft incident disclosed in May. Equity incentive expenses were $222 million, up 13% quarter-over-quarter.

Overall, Coinbase’s net profit for Q3 was $433 million. Adjusted net profit was $421 million, and adjusted EBITDA was $801 million. After deducting $7.2 billion in long-term debt, Coinbase’s assets totaled $4.7 billion.

Coinbase increased its Bitcoin holdings by $299 million in Q3, adding 2,772 BTC. CEO Brian Armstrong tweeted: “Coinbase will hold Bitcoin long-term. We will continue to increase our holdings in the future.”

Forecasts for prediction markets and tokenized stocks will be announced

Additionally, according to Bloomberg, Brian Armstrong stated during a conference call that Coinbase plans to hold a product showcase on December 17th, where more details about tokenized stocks and prediction markets will be revealed. The company will continue to explore acquisition opportunities, especially in trading and payments.

Regarding next quarter’s outlook, Coinbase told shareholders that it expects approximately $385 million in trading revenue for October. Q4 subscription and services revenue is projected between $710 million and $790 million. The Q4 outlook is based on USDC’s record-high market capitalization in October and growth in Coinbase One users.

On expenses, Coinbase expects research and development and general administrative expenses to range between $925 million and $975 million. The increase of about 50% quarter-over-quarter is due to acquisitions of Deribit and Echo, as well as increased staffing, though the company expects employee growth in Q4 to be lower than in Q3. Sales and marketing expenses are forecasted between $215 million and $315 million.

Previously, Coinbase articulated its “Everything Exchange” vision, increasing the number of tradable spot assets and expanding derivatives products in Q3. Through the DEX integration on the Base platform, over 40,000 assets can now be traded. Currently, Coinbase’s platform covers about 90% of the total crypto market cap. With the launch of U.S. perpetual contracts and around-the-clock futures trading, as well as the acquisition of Deribit, Coinbase’s derivatives market share in multiple markets—including U.S. crypto futures and global crypto options—has reached record highs. In Q4, Coinbase will continue to focus on launching innovative products and building the infrastructure for the “Everything Exchange” vision.

Related: Coinbase’s Ecosystem “Testing Ground”: How are Based APP and x402 Actions Accelerating the BASE Ecosystem?