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Coinbase, the prominent U.S. platform for cryptocurrency transactions, disclosed its third-quarter earnings on Wednesday, revealing results that fell short of Wall Street’s expectations, primarily due to sluggish trading activities within the cryptocurrency sector.
The company’s stock experienced a decline of more than 4% in after-hours trading following the announcement.
Here are the key figures from Coinbase’s third-quarter report compared to analyst predictions sourced from LSEG:
Earnings per share: 28 cents vs. 41 cents expected
Revenue: $1.21 billion vs. $1.26 billion expected
In this latest reporting period, Coinbase reported a net income of $75.5 million, translating to 28 cents per share. This marks a significant recovery from a loss of $2.3 million, or 1 cent per share, in the same quarter last year.
However, it is important to note that this net income figure was impacted by $121 million in pretax losses related to Coinbase’s investment portfolio in cryptocurrencies, with most of these losses being unrealized due to a slump in crypto prices as of September 30 compared to June 30.
On a positive note, revenues from retail trading surged by 98%, amounting to $483.3 million year-over-year. Meanwhile, revenues generated from institutional trading saw an impressive increase of 292%, reaching $55.3 million. Overall transaction revenue stood at $572.5 million, reflecting a year-over-year growth of 98%.
Conversely, revenue derived from Coinbase’s subscription and services—which encompass offerings such as stablecoins and staking—declined modestly, by 7%, to $556.1 million in the same quarter.
This year has primarily been characterized by a downturn in the cryptocurrency market, which has remained confined within a range of $55,000 to $70,000, with Bitcoin showing minimal volatility and lacking any substantial price-driving events. Investor activity has been notably cautious, particularly as they observe developments related to the upcoming U.S. presidential election. Coinbase has actively engaged in lobbying efforts, investing considerable resources in political action committees that support pro-crypto initiatives.
Despite the overall market hesitance, stablecoins have emerged as a notable highlight for Coinbase. The market capitalization of stablecoins reached record levels, contributing to a revenue figure of $246.9 million for the third quarter—an increase of 2% from the previous quarter, and up 43% on a year-over-year basis.
Coinbase has a partnership with Circle for the revenue generated from the interest on reserves backing the USD Coin (USDC), the second-largest dollar-pegged stablecoin. Expectations that interest rates will continue to trend downward may pose challenges for this revenue stream in the upcoming quarter.
Additionally, Coinbase announced a significant $1 billion stock buyback as part of its earnings release.
This is a breaking news story. Check back for updates.
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