Coinbase on Wednesday reported weaker-than-expected third-quarter earnings, impacted by subdued trading activity in the cryptocurrency market. Following the news, the exchange’s shares fell 4.8% in after-hours trading to $201.50 per share.
The cryptocurrency exchange reported $1.2 billion in total quarterly revenue, falling short of FactSet ‘s forecast of $1.26 billion. Earnings per share reached $0.28, falling short of the $0.45 forecast. Coinbase’s adjusted EBITDA was also lower than expected at $449 million , compared to $469.2 million.
Transaction revenues fell 27% from the previous quarter to $573 million. Subscription and services revenue fell 7% quarter-on-quarter to $556 million, mainly due to a decline in average cryptocurrency asset prices.
On the plus side, stablecoin revenue increased 3% quarter-on-quarter to $247 million . The increase was largely due to an increase in average USDC balances on the platform.
Coinbase highlights diversified revenue shift
In a letter to shareholders, the company acknowledged that it is struggling with “softer” market conditions. Nevertheless, it reported growth in the staking, platform USDC and deposit sectors.
“We have made great efforts over the years to diversify our revenues away from transaction fee revenues, which are more volatile, not as predictable, more market-dependent,” – Coinbase CEO Brian Armstrong said during a conference call on financial results. “Over time, we’ve shifted more of that to subscription and service revenues.”
At the end of the third quarter, the company had $8.2 billion in cash, cash equivalents and USDC, up $417 million from the previous quarter. In addition, Coinbase announced a $1 billion share repurchase program .
Coinbase forecasts subscription revenue growth in the fourth quarter
The company expects a more active fourth quarter, forecasting subscription and service revenues of $505-580 million. However, the projections for the fourth quarter take into account obstacles such as a 10% drop in the average Ethereum price in October compared to the third quarter, along with anticipated interest rate changes.
Recently, Base, Coinbase’s tier-2 Ethereum network, briefly took the lead among all blockchains in terms of stablecoin volume, achieving this on the same day that it set a new record for the number of transactions.
Earlier this week, Armstrong sharply criticized the US SEC, calling for significant changes in its leadership. He suggested that the next SEC chairman should drop the “frivolous” lawsuits and publicly apologize for the damage the agency’s regulations have done to the US cryptocurrency industry.
