Coinbase Reports Profit in Q3 Despite Crypto Market Downturn

Despite the prolonged slump in the crypto market,

Coinbase surpassed expectations in the third quarter, revealing favorable net income and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in their recent shareholder letter. The publicly-traded cryptocurrency exchange disclosed a net income of $2 million and an adjusted EBITDA of $181 million for the quarter ending on September 30, 2023.

Coinbase’s Q3 Performance Amid Crypto Winter On November 2, 2023, Coinbase (Nasdaq: COIN) published its earnings report in a shareholder letter. Despite a decline in total revenue to $674 million from $736 million in the second quarter, the company outperformed market expectations. Coinbase attributed this decline to lower crypto asset volatility and decreasing global spot trading volumes. Transaction revenue, the primary revenue source, fell 12% sequentially to $289 million.

The decline in overall crypto market capitalization by 9% and the average crypto market capitalization by 3% during the third quarter impacted Coinbase’s revenue. The price of BTC, which accounts for approximately half of the crypto market capitalization, decreased by 12% during the same period.

Stablecoin revenue increased by 14% to $172 million, driven by higher interest rates, while blockchain rewards revenue decreased by 15% and interest income dropped by 21%. Operating expenses decreased by 4% sequentially to $754 million, with technology and development, sales and marketing, and general and administrative expenses collectively falling by 1%.

Looking Forward Coinbase reported generating about $105 million in transaction revenue in October and projected subscription and services revenue to remain relatively flat sequentially. The company anticipates lower expenses due to reduced stock-based compensation and expects to achieve meaningful positive adjusted EBITDA for the full year 2023.

Despite market uncertainties, Coinbase remains focused on product development and international expansion. It highlighted progress in bringing regulated crypto derivatives to market and continues to advocate for clear legislation in the United States. The company’s court battle with the U.S. Securities and Exchange Commission (SEC) is progressing, with oral arguments scheduled for January 2024.

Coinbase emphasized the need for clearer regulation in the United States, noting that 83% of G20 nations have implemented crypto regulations, highlighting an area of improvement for the U.S.

What are your thoughts on Coinbase’s performance in Q3? Share your opinions in the comments below.

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