Coinbase Q2 Revenue Beats Estimates, Shares Rise Amid Crypto Industry Recovery

Coinbase (COIN), the leading cryptocurrency exchange, reported better-than-expected second-quarter revenue, signaling a continued recovery

Written by: Arslan Butt • Friday, August 2, 2024 • 2 min read

• Last updated: Friday, August 2, 2024

Coinbase Q2 Revenue Beats Estimates, Shares Rise Amid Crypto Industry Recovery

Coinbase (COIN), the leading cryptocurrency exchange, reported better-than-expected second-quarter revenue, signaling a continued recovery in the crypto industry following a prolonged downturn. The company’s shares climbed in after-hours trading on the news.

For the second quarter of 2024, Coinbase posted total revenue of $1.45 billion, surpassing Wall Street analysts’ average estimate of $1.4 billion, according to FactSet. However, the adjusted EBITDA of $596 million fell short of the consensus expectation of $607.7 million.

The company’s primary revenue source, transaction fees, experienced a 27% decline from the previous quarter, dropping to $781 million as trading volume decreased by 28%. Despite this setback, Coinbase saw significant growth in its subscription and services revenue, which increased by 17% quarter-over-quarter to $599 million.

In a letter to shareholders, Coinbase attributed the growth in subscription and services revenue to “higher average USDC on-platform balances and USDC market capitalization, as well as higher average crypto asset prices – notably SOL and ETH.”

As part of its strategy to diversify revenue streams, Coinbase has been positioning itself as a key player in the spot bitcoin and ether (ETH) exchange-traded funds (ETFs) market. The company has been listing these products and acting as a custodian for them.

Recent reports suggest that Coinbase is also venturing into real-world assets (RWA) by planning to create a tokenized money-market fund. This move follows similar initiatives by asset management giants BlackRock and Franklin Templeton, who have tokenized their own funds earlier this year.

The crypto exchange also highlighted its progress in advocating for clearer crypto regulations in the United States. The company supported the “Stand With Crypto” initiative, which has attracted over 1.3 million advocates. Coinbase views the approval of ethereum ETFs in the U.S. and USDC’s compliance with the European Union’s MiCA framework as significant milestones in establishing a more defined regulatory landscape for the crypto industry.

Despite the positive revenue report, Coinbase faced challenges during the quarter, including $319 million in pre-tax crypto asset losses, primarily unrealized, due to fluctuations in crypto asset values.

Following the earnings release, Coinbase’s stock rose approximately 2%. The company’s shares have gained about 48% since the beginning of the year, reflecting growing investor confidence in the crypto sector’s recovery.