Coinbase Shares Dip as Trading Volume Slides Despite Q3 Revenue Exceeds Expectations

Key Insights

• Coinbase narrowed its net loss to $2 million in Q3 2023, a sharp decrease from more than $500 million in Q2 and Q3 2022.
• Coinbase's total revenue rose 14.2% year-on-year to $674.1 million, driven by the subscription and services segment.
• Coinbase's trading volumes fell for five consecutive quarters, due to the bear market, increased competition, and regulatory challenges.
• Coinbase achieved a positive adjusted EBITDA for the third consecutive quarter, at $131.9 million.
• Coinbase launched several new features and services in the quarter, acquired several companies and entered into strategic partnerships.

Coinbase, one of the largest cryptocurrency exchanges in the world (also the largest in the US), released its third-quarter earnings report on Nov. 2.

And according to this report, the company's net loss and revenue have significantly improved, compared to the same period last year.

At the same time, this report also reveals something interesting.

Despite net loss and revenue improving, there is still a downward trend in both consumer and institutional trading volumes.

With this, we can conclude that the crypto market is going through a significant lack of volatility.

Coinbase Narrows Net Loss To $2 Million

According to the earnings report mentioned above, Coinbase as a company, incurred losses of about of about $2 million in Q3 2023.

These losses come as a sharp decrease from more than $500 million in net losses recorded in both Q2 and Q3 2022.

The company attributed this improvement to how it has increased its revenue and also decreased its operating expenses at the same time.

The report also states that Coinbase's total revenue rose 14.2% year-on-year to $674.1 million. This is more than the $653.2 million estimate by the London Stock Exchange Group.

The rise in generated revenue was mainly driven by the subscription and services segment, which accounted for about $334.4 million, or 49.6% of the total revenue.

This subscription and services segment also includes stablecoin and blockchain rewards, custody, and other recurring revenue streams according to the report.

The transaction-based revenue segment, which consists of fees from trading and other transactions, contributed about $288.6 million, or 42.8% of the total revenue.

Coinbase Sees Falling Trading Volumes For Five Quarters In a Row

Coinbase's trading volumes are an important way to determine how much crypto has been traded on the platform (and in a way, the crypto market at large).

The report shows that in Q3 2023, the consumer trading volume was $11 billion, down from $26 billion in Q3 2022. The institutional trading volume was also $65 billion, down from $133 billion in Q3 2022.

The company explained that the lower trading volumes were mostly due to the bear market, which reduced the trading activity.

Coinbase also noted that it faces increased competition from other crypto platforms, as well as regulatory uncertainty and challenges in some of its key markets (from the ongoing SEC lawsuit).

Coinbase Remains Optimistic About Its Long-Term Growth

Despite the challenges in the quarter, Coinbase stated in the report, that it is "pleased with its financial results". 

The company also highlighted on page 16 of the report, that it achieved a positive adjusted EBITDA for the third consecutive quarter.

For the unaware, the EBITDA measures how profitable a company is, before accounting for interest, taxes, depreciation, and amortization.

The adjusted EBITDA for Coinbase in the report for Q3 2023, was $131.9 million. This also stood at a significant increase from 13.7 million in Q3 2022.

The company launched several new features and services in the quarter, such as Coinbase NFT, Coinbase Prime, and Coinbase Wallet.

It also added support for more crypto assets, such as Shiba Inu, Solana, and Avalanche.

Moreover, it acquired several companies and entered into strategic partnerships to enhance its capabilities and reach, such as Zabo, Greenlight, and Mitsubishi UFJ Financial Group.

And in terms of financials, Coinbase's share price has rallied with the report's release, rising 8.7% to $84.6 during the trading hours.

Coinbase's stock has the potential to rally further upwards soon, and even retake $115.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.