Coinbase Global (COIN 4.13%), a pioneering platform in the cryptocurrency exchange space, delivered Q3 2024 earnings on October 30.
The report unveiled mixed results with an Adjusted Earnings Per Share (EPS) of $0.30, trailing the analyst consensus of $0.447. Total revenue reached $1.2 billion, consistent with past business trends but 17% lower than the previous quarter.
Despite these challenges, the company saw net income of $75 million. Operating expenses rose 37% to $1.0 billion.
| Metric | Q3 2024 | Analyst Estimate | Q3 2023 | % Change YoY |
|---|---|---|---|---|
| Net Income (Loss) Per Basic Share | $0.30 | $0.45 | ($0.01) | N/A |
| Total Revenue | $1.21 billion | N/A | $674 million | 79% |
| Net Income | $75 million | N/A | ($2 million) | N/A |
| Operating Expenses | $1 billion | N/A | $754 million | 37% |
Source: SEC filings. Analyst estimates for the quarter provided by FactSet.
Understanding Coinbase Global
Coinbase Global is a leading cryptocurrency exchange that allows users to buy, sell, and hold various cryptocurrencies. It serves both consumer and institutional customers, making it a versatile player in the crypto market. Key to its offering is providing a platform that blends simplicity and security, catering to both novice and experienced crypto investors.
Recently, Coinbase has focused on expanding its ecosystem beyond traditional trading. It is betting big on services like staking, which allows users to earn rewards by holding certain cryptocurrencies, and custodial solutions for institutional clients looking for secure storage. These services are crucial as they provide stable revenue streams compared to the often volatile trading fees.
Quarter Highlights
Coinbase faced several challenges this quarter, notably a downturn in transaction revenue, which fell 27% from the last quarter, reflecting the volatility within the crypto markets. Despite lower crypto asset trading volumes, the company maintained total revenue by leveraging its wide range of ecosystem products. Specifically, subscription and service revenues of $556 million, though down 7%, highlighted the sustainable nature of the company's diversified offerings.
Financial control was evident as operating expenses were cut by 6%. This efficiency played a vital role in recording a net income of $75 million. Coinbase also emphasized strategic capital allocation through share buybacks, reinforcing its focus on shareholder value. The balance sheet showed $8.2 billion in cash resources, a $417 million increase from the previous quarter.
On the product side, Coinbase's Base network led the Layer 2 protocols by launching new products and refining existing services. Additionally, significant growth in international markets like Singapore and Canada's crypto adoption portrayed successful strides outside the US market.
The quarter was also marked by non-recurring pre-tax losses in its crypto asset investment portfolio, impacting earnings magnitude. The increased emphasis on cost management translated into solid adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $449 million.
Regulatory developments continue to be crucial as Coinbase navigates many global jurisdictions with distinct demands. Its ongoing advocacy for clearer crypto legislations could foster an environment conducive for future growth, especially with hints of pro-crypto legislation in the US post-elections 2024.
Looking Ahead
Management forecasts Q4 revenue from subscription and services to range from $505 million to $580 million, signaling anticipated market volatility but suggesting potential growth avenues through expanded services like stablecoins. This forecast indicates management's cautious optimism. They expect upcoming quarters to solidify this revenue stream as a wealth buffer against traditional trading revenue fluctuations.
Investors should note any regulatory updates or legislative support, as these may significantly influence the operational capabilities and expansion areas for Coinbase. Management's outlook focuses on maintaining a proactive approach to regulatory compliance while diversifying its revenue streams through innovative product offerings.
