Earnings Results: Coinbase posts growing revenue and usage in first report as a public company

United States

Coinbase Global Inc. saw revenue surge in a volatile quarter that it said highlighted the “still-early days” of the “crypto economy.”

The company posted net revenue of $ 2.0 billion in the second quarter, up from $ 178 million a year earlier and $ 1.6 billion in the first quarter. Coinbase COIN, -3.85% had $ 1.9 billion in transaction revenue.

Analysts tracked by FactSet were expecting $ 1.8 billion in revenue.

Shares were up about 1% in after-hours trading following the report, Coinbase’s first since its April direct listing.

Coinbase saw total retail trading volume of $ 145 billion in the June quarter, up 21% from the March quarter, which the company attributed to a higher count of monthly transacting users, strength in the crypto market and its support of more trading assets.

The company has 8.8 million monthly transacting users, up from 6.1 million in the March quarter.

Chief Executive Brian Armstrong noted on Coinbase’s earnings call that the company is seeing growing adoption of products beyond trading, including staking, which lets people earn yield on their crypto assets. Users are also engaging with a crypto debit card that lets them spend their assets in places where Visa Inc. V, -0.80% cards are accepted.

“That tells us that truly a crypto economy is forming,” he said. “It’s not just a trading platform.”

Overall trading volume hit $ 462 million, up from $ 335 million in the March quarter. Of that total trading volume, 24% was concentrated in bitcoin BTCUSD, +0.25%, down from 39% in the first quarter, which Coinbase said reflected in part the “meaningful growth in Ethereum ETHUSD, +0.74% trading volumes” that surpassed bitcoin trading volumes on the platform for the first time, “driven by growth in the DeFi [decentralized finance] and NFT [non-fungible-token] ecosystems,” according to the company’s shareholder letter.

The company is also seeing growing adoption in the institutional space, with Chief Financial Officer Alesia Haas noting on the earnings call that 10% of the top 100 hedge funds by assets under management are now Coinbase clients.

“This is really a new theme that we see where more and more hedge funds are making allocation to the crypto economy and engaging in multiple assets on our platform,” she said.

The company reported net income of $ 1.6 billion, or $ 6.42 a share. It posted net income of $ 32 million a year earlier and didn’t list a per-share earnings figure for the year-ago period on its financial statements in its shareholder letter. Coinbase noted a tax benefit of $ 737 million for the most recent quarter that was mainly the result of tax deductions related to stock-based compensation provided to employees around the company’s direct listing.

“We intend to prioritize reinvestment into the business to continue to grow the
crypto economy through both crypto bull and bear markets alike, and through both
organic and inorganic means,” Coinbase said in its shareholder letter. “Accordingly, we do not intend to issue a dividend or similar return of capital to shareholders at any point in the near future.”

The company disclosed retail monthly transacting users of 6.3 million and total trading volume of $ 57.0 billion for the month of July, “as crypto asset prices and crypto asset volatility declined significantly relative to Q2 levels.” So far in August, Coinbase’s retail monthly transacting users and trading volumes “have slightly improved compared to July levels but remain lower than earlier in the year,” leading the company to believe that the metrics will be lower in the third quarter than they were in the second.