Coinbase, a popular crypto exchange, reported lower-than-expected third-quarter earnings and revenue, causing a drop in its stock price during after-hours trading. The company’s total revenue for the quarter was $1.2 billion, missing the estimated $1.26 billion. Additionally, earnings per share were $0.28, falling short of the projected $0.45. The adjusted Ebitda of $449 million also did not meet the estimated $469.2 million.
The decline in earnings was attributed to weaker market conditions, according to a statement from the company. Despite this, Coinbase noted growth in certain areas and expressed overall satisfaction with the results. Anil Gupta, the vice president of investor relations, highlighted the impact of market volatility on trading revenues, particularly in Q3.
To address the challenges posed by market conditions, Coinbase announced a $1 billion share buyback program in October. This initiative does not have an expiration date, and the company plans to repurchase shares based on market conditions. The decision to implement the buyback program was facilitated by the growth of the company’s balance sheet, which increased by over $400 million in the third quarter, bringing the total cash, cash equivalents, and USDC to $8.2 billion.
Coinbase generates a significant portion of its revenue from transaction fees, which declined by 27% compared to the previous quarter due to lower trading volume across U.S.-based exchanges. The company highlighted that crypto asset volatility, a key driver of trading volume, decreased by approximately 5% in Q3 compared to Q2.
Following the earnings report, Coinbase’s stock price dropped by nearly 7%. However, the stock has seen a 22% increase year-to-date amidst positive sentiment towards digital assets. Despite regulatory uncertainties in the U.S., Coinbase has launched various new projects throughout the year, such as enabling Visa debit card holders to transfer funds to their Coinbase accounts instantly.
In an effort to diversify its revenue streams and reduce reliance on trading volume, Coinbase has been expanding its offerings, including custody services and involvement in the tokenization of real-world assets. The company’s proactive approach to innovation and expansion reflects its commitment to long-term growth and sustainability in the ever-evolving crypto market.
