Coinbase exceeds analysts’ expectations in the second quarter, but trading revenue declines

Coinbase surpasses Q2 expectations, but trading revenue drops

Author: Nelson Wang, CoinDesk; Translation: Song Xue, LianGuai

Coinbase (COIN) Q2 revenue exceeds analyst expectations, with revenue of $708 million and adjusted loss per share of $0.42, higher than analyst expectations of revenue of $628 million and loss per share of $0.76.

However, Q2 trading revenue was $327 million, lower than Q1’s $375 million, and total trading volume dropped to $92 billion, lower than Q1’s $145 billion. In a letter to shareholders, the company stated that the poor trading revenue results “reflect the multi-year low volatility of cryptocurrencies.” Interest income decreased from $241 million in Q1 to $201 million. Of the interest income in Q2, $151 million came from its holdings of USDC.

Regarding the outlook for Q3, Coinbase stated that it generated approximately $110 million in trading revenue in July and expects subscription and service revenue for Q3 (which was $335 million in Q2) to reach at least $300 million.

After the financial report was released, Coinbase’s stock initially rose by 9%, but recently fell by 1.4% to $89.48. So far this year, Coinbase’s stock has risen by about 160%, while the price of Bitcoin has risen by over 75% during the same period.

In a statement to CoinDesk, CEO Brian Armstrong said, “Q2 was a strong quarter for Coinbase as we executed well and demonstrated resilience in a challenging environment.” “We have cut costs, are operating efficiently, and remain well-positioned to build the future of the crypto economy and help drive regulatory clarity.”

Regarding these results, Berenberg analyst Mark LianGuailmer wrote in an email, “Coinbase’s revenue exceeds market expectations, largely due to interest income and staking revenue, given the ongoing decline in USDC market cap and the regulatory challenges facing its equity plan, these two areas seem to be at risk.” Interest income from USDC decreased by 25% compared to the previous period.

“Meanwhile,” Palmer added, “management’s guidance for the current quarter is low-key, and the company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) includes significant adjustments to stock-based compensation—due to negative feedback from investors, management has stated that it will reduce this area.”