TLDR
Coinbase reported Q2 revenue of $1.45 billion, beating analyst estimates of $1.4 billion
Total trading volume increased 146% year-over-year to $226 billion
Transaction revenue rose 138% to $780.9 million, while subscription and services revenue grew to $599 million
Coinbase reported net income of $36 million, marking its third consecutive profitable quarter
The company’s shares rose 3-5% in after-hours trading following the earnings report
Coinbase, the leading cryptocurrency exchange in the United States, reported better-than-expected second-quarter earnings on August 1, 2024, demonstrating continued recovery in the crypto market. The company’s shares rose 3-5% in after-hours trading following the announcement.
For the second quarter of 2024, Coinbase reported total revenue of $1.45 billion, surpassing Wall Street analysts’ estimates of $1.4 billion. This figure represents a 104% increase from the same period last year, highlighting the significant growth in crypto trading activity.
The company’s total trading volume saw a substantial year-over-year increase of 146%, reaching $226 billion. This growth was primarily driven by institutional customers, with institutional trading volume jumping 142% to $189 billion. Retail trading volume also saw a significant spike, increasing 164% to $37 billion.
Coinbase’s transaction revenue, which is its primary source of income, soared 138% to $780.9 million. This growth was largely attributed to a 130% increase in consumer transaction revenue. However, the result fell slightly short of analysts’ predictions of 141% total transaction growth.
Subscription and services revenue, which includes stablecoin revenue, blockchain rewards, and fees, grew to $599 million. This marked a 17% increase from the first quarter and nearly doubled from Q2 2023. Coinbase partially attributed this rise to its role as a custodian for several asset managers issuing spot Bitcoin exchange-traded funds (ETFs).
The company reported net income of $36 million for the quarter, marking its third consecutive profitable quarter and sixth on an adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) basis.
However, this figure included $319 million in pre-tax cryptocurrency losses in its investment portfolio, mostly paper losses due to lower market prices at the end of Q2 compared to Q1.
Despite the overall positive results, Coinbase’s adjusted EBITDA of $596 million fell short of the consensus estimate of $607.7 million. The company’s earnings per share came in at 14 cents, improving from a loss of 42 cents last year but missing the FactSet expectation of 95 cents per share.
Looking ahead, Coinbase provided guidance for Q3 subscription and services revenue to be between $530 million and $600 million, compared to $334 million in the same quarter last year.
The company’s CEO, Brian Armstrong, highlighted the progress made in driving regulatory clarity for the crypto industry in the U.S. and globally during Q2.
“Crypto legislation has become a mainstream issue in the US, garnering bipartisan support, and there is real energy within both the House and the Senate to pass meaningful legislation,” he stated in the shareholder letter.
Coinbase’s role in the growing crypto ETF market was also emphasized. The exchange is serving as the custodian for a majority of the U.S. spot Bitcoin ETFs that launched in January, as well as many of the spot Ethereum ETFs that began trading on July 23.
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