1. Coinbase's main source of revenue is its transaction fees. Due to the platform's ease of use and commitment to compliance, the fees are often higher than other exchanges, but it still has 8 million monthly active users. Other revenue comes from crypto cards (only a 2% fixed fee), financial services, wallets, institutional custody services (8 institutions' ETFs are all hosted on Coinbase), Base Chain (TVL has reached $7 billion in one year since its launch), and other strategic cooperation (such as with Circle).
2. Before the Q2 earnings report came out, analysts had predicted that its revenue and EPS would decline due to the decline in trading volume across the industry. FactSet predicts that Coinbase's revenue will fall to $1.37 billion. JPMorgan Chase and Barclays have similar forecasts, expecting revenue to be between $1.36 billion and $1.43 billion. Barclays also rated Coinbase as an "underweight" stock, citing the possible impact of upcoming US regulatory policies.
3. After the Q2 financial report came out, it was very close to Barclays' forecast. Q2 revenue was $1.4 billion, down 11% from Q1. Transaction fees were $781 million, down 27% from Q1. Transaction volume fell from $312 billion in Q1 to $226 billion, a decrease of 28%.
4. Expenses in Q2 were staggering, totaling $1.1 billion, up 26% from Q1. The largest portion of expenses was $850 million, which was spent on technology development, administration, and sales and marketing. This increase was mainly due to USDC reward payments, increased marketing efforts, and political donations.
5. Despite this, Coinbase's subscription and service revenue grew 17% in Q2 to nearly $600 million. The company also reported $596 million in adjusted EBITDA, marking its sixth consecutive quarter of positive EBITDA.
6. Despite the decline in trading volume and revenue, Coinbase has made significant progress in other areas. Coinbase’s Ethereum Layer 2 solution, Base Chain, saw transaction volume increase by 300% in Q2. Introducing a smart wallet that simplifies the user registration process through biometrics. Partnered with Stirpe and strengthened its position in the institutional market with Coinbase Prime.
7. Looking ahead to Q3, Coinbase expects to further expand its international market. Its expenses are expected to increase, with technology development and administrative expenses between $700 million and $750 million. Sales and marketing expenses are expected to rise to between $160 million and $210 million. Trading revenue is forecast to be around $210 million, and subscription and service revenue to be between $530 million and $600 million.
Personal opinion:
1. Although trading volume and revenue declined in Q2, expansion plans for Q3 indicate a positive outlook for the short-term prospects of cryptocurrencies. Revenue forecasts also show the potential for growth, especially if the Federal Reserve lowers interest rates and USDC continues to be adopted globally.
2. Coinbase founder Brian has also been very active in promoting the legitimacy of cryptocurrencies, including donating to Pro Crypto candidates. If the United States reaches regulatory clarity, it will pave the way for institutional investment, more retail investors will join in, and trading volume and stock prices will rise to a higher level.
3. Last week, a series of factors, including the unexpected rise in the US unemployment rate, Japan's interest rate hike, and the Democratic Party's replacement of Harris as a candidate, exacerbated market uncertainty. Although market sentiment has stabilized somewhat this week, it is still on the sidelines.