Coinbase shares experienced a nearly 3% increase on Thursday following the company’s announcement of stronger-than-expected financial results, reflecting a revival in both retail and institutional cryptocurrency trading. This positive performance comes as Coinbase expands its offerings beyond tokens, aligning with its vision of becoming an “everything exchange.”
For the quarter ending September 30, Coinbase reported a net income of $432.6 million, equating to $1.50 per share, a substantial rise from the $75.5 million, or 28 cents per share, recorded the previous year. This performance surpassed analysts’ expectations, which had predicted earnings of $1.10 per share, according to LSEG data. Revenue also saw an impressive leap to $1.87 billion from $1.21 billion in the same quarter last year, exceeding forecasts of $1.8 billion.
A significant factor in this growth was the 37% rise in transaction revenue, which totaled $1 billion compared to the second quarter. This uptick follows a wave of increased crypto trading activity, spurred by U.S. federal regulators easing regulatory pressures on digital asset firms during the Trump administration, coupled with improved U.S.-China trade relations over the summer.
Furthermore, Coinbase experienced a marked boost in institutional trading on its platform, which may be attributed to its nearly $3 billion acquisition of the derivatives exchange Deribit. Consumer trading on Coinbase surged to $59 billion, marking a 37% quarter-over-quarter increase. Retail transaction revenue amounted to $844 million, a 30% rise compared to the previous quarter. Meanwhile, institutional trading revenue soared to $135 million, reflecting a staggering 122% growth from the second quarter, with trading volume from institutions reaching $236 billion.
Despite these gains, CEO Brian Armstrong emphasized that cryptocurrencies are merely one aspect of Coinbase’s broader strategy. During the earnings call, he highlighted the company’s commitment to its “everything exchange” concept, which aims to incorporate a diverse range of assets. The number of tradable assets on the platform rose dramatically to 40,000, up from 300 in the previous quarter. Armstrong stated, “Every asset class is going to come on chain, and our customers are asking for this, too.”
Coinbase’s strategy includes integrating prediction markets and tokenized equities in addition to various other financial instruments. This expansion is critical for Coinbase’s future growth in a rapidly evolving and competitive digital asset market, particularly in light of recent regulatory developments. Armstrong noted the importance of regulatory clarity, stating that it is beginning to positively impact the total addressable market for cryptocurrencies. He added, however, that increased competition in the sector necessitates top-notch execution from the company.
For further details, Coinbase has released its full shareholder letter outlining these developments.
