Coinbase Q2 Revenue Falls Short as Crypto Trading Slows, $COIN Slips ~5%

Coinbase reported second-quarter revenue of $1.22 billion, missing consensus estimates of $1.29 billion and down 14% from the previous quarter, as a broad decline in digital asset trading weighed on the company's largest revenue source. The crypto exchange posted a net loss of $359 million and earnings per share of -$1.36, well below estimates of -$0.42. Shares of Coinbase (COIN) fell roughly 5% in after-hours trading after the results, paring an earlier drop of as much as 7%, with the stock changing hands near $155.

Transaction revenue came in at $599 million against expectations of $628 million, while subscription and services revenue totaled $555 million, below estimates of $599 million. Subscription and services represented 48% of net revenue, and stablecoin revenue totaled $292 million. Coinbase said total crypto spot trading volumes fell more than 20% quarter-over-quarter as prices declined and volatility hit multi-year lows. Bitcoin ($BTC) fell roughly 14% during the quarter to $64,714.55, while ether ($ETH) lost about 25%.

The company added 819 BTC to its balance sheet during the quarter, bringing total holdings to 17,211 BTC, up 5% from the prior quarter. Coinbase said its crypto trading market share reached a record 10.3%, the third consecutive quarter of market-share gains, with increases in both spot and derivatives. CEO Brian Armstrong, writing on X, pointed to growth in stablecoins, Base and prediction markets, noting Coinbase's record share of global crypto trading volume. CFO Alesia Haas said crypto market conditions were challenging, with industry spot trading volumes down more than 20% and total crypto market capitalization falling by double digits, contributing to the 14% sequential decline in total revenue.

Subscription and services revenue came in below Coinbase's prior forecast range of $565 million to $645 million because certain USDC-related commercial agreements closed later than expected and lower crypto asset prices reduced staking revenue. Average USDC held across Coinbase products reached a record $20 billion during the quarter, representing more than 30% of USDC in circulation at quarter-end. Coinbase said 88% of net revenue came from sources other than Bitcoin spot trading, compared with 45% in the second quarter of 2020. Prediction markets contracts and revenue grew 106% from the previous quarter and exceeded a $100 million quarterly annualized net revenue run rate, while average Borrow/Lend balances rose by more than $1 billion from a year earlier to $1.49 billion.

Coinbase ended the quarter with $8.6 billion in cash and cash equivalents and $10 billion in total available resources, and repurchased 814,000 Class A shares during the period. Year to date, the company has repurchased nearly 7 million shares for $1.2 billion, leaving about $2 billion remaining under its share repurchase authorization. For the third quarter, Coinbase said transaction revenue totaled approximately $130 million through July 26 and expects subscription and services revenue between $500 million and $580 million. Coinbase's results follow a separate earnings miss from Bitcoin treasury firm Strategy, which posted Q2 revenue of $122 million against estimates of $124.48 million and an EPS of -$24.45 versus estimates of 3.07, with MSTR shares down less than 1% in after-hours trading.