Coinbase Bites the Bear: Q2 Misses Everywhere as Trading Goes on Vacation 🗞️

Coinbase (COIN) reported second-quarter revenue of $1.22 billion, down 14% from the prior quarter and roughly 19% year on year, missing consensus expectations of $1.29 billion and sending shares down about 5% in after-hours trading. The crypto exchange posted a net loss of $359 million, or $1.36 per share, well below the near break-even result analysts had modeled. Bitcoin BTC $64,714.55 fell roughly 14% during Q2 while ether lost about 25%, and total crypto spot trading volume declined more than 20% from the previous quarter as prices slid and volatility hit multi-year lows. Transaction revenue came in at $599 million versus expectations of $628 million, and subscription and services revenue totaled $555 million, below estimates of $599 million and below Coinbase's previously forecast range of $565 million to $645 million. Coinbase attributed the subscription shortfall to USDC-related commercial agreements that closed later than expected and to lower staking revenue from falling crypto asset prices. Stablecoin revenue reached $292 million, with average USDC held on Coinbase products hitting a record $20 billion, more than 30% of USDC in circulation at quarter-end.

In a post on X, CEO Brian Armstrong pointed to Coinbase's expanding businesses beyond spot trading, including stablecoins, Base and prediction markets, noting that the company reached a record 10.3% share of global crypto trading volume during the quarter, its third consecutive quarter of market-share gains in both spot and derivatives. Prediction-market contracts and revenue grew 106% from the previous quarter and exceeded a $100 million annualized net revenue run rate. CFO Alesia Haas struck a more measured tone, saying crypto market conditions were challenging as industry spot trading volumes fell more than 20% and total crypto market capitalization declined by double digits, contributing to a 14% quarter-over-quarter decline in total revenue. Coinbase added 819 BTC to its balance sheet during the quarter, bringing total holdings to 17,211 BTC, an increase of 5% quarter-over-quarter, and ended the period with $8.6 billion in cash and cash equivalents and $10 billion in total available resources.

Coinbase repurchased 814,000 Class A shares during the quarter and nearly 7 million shares year to date for $1.2 billion, leaving about $2 billion remaining under its repurchase authorization. For the third quarter, Coinbase said transaction revenue totaled approximately $130 million through July 26, with subscription and services revenue expected between $500 million and $580 million. Coinbase said 88% of net revenue came from sources other than Bitcoin spot trading, compared with 45% in the second quarter of 2020, and said conditions for its commercial agreement with Circle to renew in August automatically had been met. The company also pointed to its Deribit subsidiary, which in May became the first U.S.-cleared venue offering customers access to offshore crypto perpetual futures, and to the June launches of Coinbase for Agents, tokenized stock trading and new lending and rewards products. Bitcoin treasury firm Strategy (MSTR) also missed estimates, posting Q2 revenue of $122 million versus expectations of $124.48 million and EPS of -$24.45, well below estimates of $3.07, with shares trading around $97, down less than 1%.