Coinbase reported third-quarter revenue of $1.9 billion, a figure that surpassed analyst expectations and highlights a significant resurgence in trading activity. The performance was driven by a sharp increase in transaction fees, which climbed to $1 billion during the period.
The results, released Thursday, show a 26% increase in revenue compared to the previous quarter and a 50% jump from the same period last year. This growth comes as the company continues to diversify its business beyond simple trading fees, with substantial contributions from its stablecoin and staking services.
Key Takeaways
- Revenue Beat: Coinbase posted $1.9 billion in Q3 revenue, exceeding Wall Street's forecast of $1.8 billion.
- Transaction Fees Surge: Revenue from customer transactions reached $1 billion, a 37% increase from the second quarter.
- Diversified Income: Subscriptions and services, including stablecoin reserves and staking, contributed significantly to the bottom line.
- Strategic Growth: The company is expanding into derivatives, its Base network is growing, and it continues to increase its corporate Bitcoin holdings.
Trading Volumes Drive Revenue Growth
The core of Coinbase's strong third-quarter performance was its transaction revenue. The company generated $1 billion from facilitating trades for both retail and institutional clients, a substantial increase from the $764 million earned in the second quarter and $573 million a year ago.
This rebound in trading activity was fueled by a favorable market environment, where both Bitcoin and Ethereum reached new all-time highs. The market volatility encouraged traders to return to the platform after a quieter second quarter marked by broader economic uncertainty.
By the Numbers
- Total Q3 Revenue: $1.9 billion
- Earnings Per Share (EPS): $1.50 (vs. $1.10 forecast)
- Net Income: $433 million
- Transaction Revenue: $1 billion
Despite the strong revenue, net income for the quarter was $433 million, a sequential decrease from $1.4 billion. Company officials attributed this drop to non-cash accounting adjustments related to its crypto portfolio and its investment in stablecoin issuer Circle. Anil Gupta, Coinbase's Vice President of Investor Relations, described the factor as "non-cash noise in the net income number."
"Margins were strong. Revenue growth was strong. Overall, kind of a great quarter for us," Gupta stated, emphasizing the underlying health of the business.
Beyond Trading: A Diversified Business Model
Coinbase has been vocal about its strategy to reduce its reliance on volatile transaction fees. The third-quarter results show this plan is gaining traction. The company's subscriptions and services division is becoming a powerful secondary engine for growth.
Revenue from stablecoin reserves associated with Circle's USDC was a standout performer, bringing in $355 million. This represents a 43% increase from the $247 million earned in the same quarter last year. During this period, USDC's market capitalization hit a record $74 billion.
Additionally, blockchain rewards, which primarily consist of staking services, contributed another $185 million to the company's revenue. This diversification provides a more predictable income stream that is less dependent on daily market swings.
What Are Staking and Stablecoin Revenue?
Staking revenue is earned when Coinbase helps secure blockchain networks by "staking" customer assets, receiving rewards in return. Stablecoin revenue comes from the interest earned on the cash and short-term U.S. government bonds that back the USDC stablecoin, of which Coinbase is a co-founder.
Future Growth Vectors: Base, Derivatives, and Bitcoin
Coinbase is actively building out new business lines to secure future growth. Its expansion into the crypto derivatives market, bolstered by the acquisition of Deribit, is already showing results. The combined platforms handled an impressive $840 billion in notional derivatives trading volume in the third quarter.
The company's layer-2 network, Base, also saw significant user growth. Launched in 2023 to offer faster and cheaper transactions on the Ethereum network, Base has become a leader among layer-2 solutions in stablecoin adoption, holding $4.6 billion in dollar-pegged tokens.
Coinbase has confirmed it is considering launching a native token for the Base network, a move that some analysts believe could be highly lucrative. JPMorgan recently estimated that a Base token could add up to $12 billion in value to the company.
Corporate Treasury Strategy
Coinbase also reaffirmed its commitment to holding Bitcoin on its balance sheet. The company increased its Bitcoin holdings by $299 million during the third quarter through a program of weekly purchases.
As of September 30, the fair value of digital assets held for investment by Coinbase stood at $2.6 billion. CEO Brian Armstrong publicly reinforced this strategy on the social media platform X.
"Coinbase is long Bitcoin," Armstrong posted. "And we keep buying more."
This public commitment, combined with its application for a national bank trust charter and plans to offer tokenized assets, signals Coinbase's ambition to deepen its integration with both the traditional and decentralized financial systems. Following the earnings announcement, Coinbase shares (COIN) rose to $341 in after-hours trading.
