Coinbase Q3 revenue up despite slump in trading volumes

Coinbase’s revenue climbed to $674 million, marking a 14% increase compared to the same period last year. This revenue boost comes amidst a challenging period for crypto markets, characterized by lower investor engagement and regulatory scrutiny.

However, trading volumes at Coinbase saw a downturn, with the third quarter registering $76 billion, falling short of the expected $80.4 billion. The figures also dipped compared to the second quarter’s $92 billion in trading volume, reflecting a cooling off in market activity.

Despite these headwinds, the crypto exchange managed to reduce its net loss for the quarter to $2.3 million, a considerable contraction from the $545 million loss recorded in the same quarter of 2022.

Coinbase said in a statement that the Q3 results reflect its efforts to streamline operations and manage costs amid the crypto winter. These measures have allowed the exchange to maintain a competitive stance and report a positive adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for the third consecutive quarter.

Coinbase’s performance, particularly in subscription and service revenues, has been robust. This category, which largely comprises stablecoin and blockchain rewards, contributed $334.4 million to the total revenue.

However, the overall trading environment remains subdued. Total trading volume at Coinbase fell to $11 billion, down from $26 billion in the same quarter the previous year. Institutional trading also decreased to $65 billion from the previous quarter’s $78 billion.

Earlier in October, America’s largest crypto exchange suspended trading on 80 non-USD trading as part of its strategy to improve overall market health and concentrate liquidity. These coins will no longer have access to some of Coinbase’s core services, including trading on platforms like Coinbase Pro, Coinbase Exchange, and Coinbase Prime. This move is in line with Coinbase’s strategy to consolidate liquidity on its platform, and it follows a similar step taken in mid-September when the exchange removed 41 non-USD trading pairs.

As Coinbase navigates the final quarter of 2023, the company has already generated $105 million of transaction revenue in October and anticipates generating “meaningful” positive adjusted EBITDA for the full year.

Before the earnings announcement, Coinbase’s stock surged 148% year-to-date. Nonetheless, it still hovers 27% below the 52-week high, indicating the volatility and investor caution that continue to characterize the crypto market landscape.