Coinbase reports 104% year-over-year revenue growth in Q2, revenue exceeds $1.4 billion

In short

• Coinbase reports Q2 revenue of $1.45 billion, topping analyst estimates of $1.4 billion
• Total trading volume increased by 146% year-on-year to $226 billion
• Transaction revenue increased 138% to $780.9 million, while subscription and services revenue increased to $599 million
• Coinbase reports net income of $36 million, marking its third consecutive profitable quarter
• The company’s shares rose 3-5% in after-market trading following the release of its earnings report.

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Coinbase, a leading cryptocurrency exchange in the United States, reported better-than-expected second-quarter results on August 1, 2024, demonstrating the continued recovery in the cryptocurrency market. The company’s shares rose 3-5% in after-hours trading following the announcement.

In the second quarter of 2024, Coinbase reported total revenue of $1.45 billion, surpassing Wall Street analysts’ estimates of $1.4 billion. This figure represents a 104% increase compared to the same period last year, underscoring the significant increase in cryptocurrency trading activity.

The firm’s total trading volume saw a significant year-on-year increase of 146% to $226 billion. This growth was primarily driven by institutional clients, with institutional trading volume increasing by 142% to $189 billion. Retail trading volume also saw significant growth, increasing by 164% to $37 billion.

Coinbase’s transaction revenue, its primary source of income, rose 138% to $780.9 million. The increase was largely attributed to a 130% increase in consumer transaction revenue. However, the result fell slightly short of analysts’ forecasts of a 141% increase in total transactions.

Subscription and services revenue, which includes stablecoin revenue, blockchain rewards, and fees, rose to $599 million. That was a 17% increase from the first quarter and nearly a doubling from the second quarter of 2023. Coinbase attributed some of the growth to its role as a custodian for several asset managers issuing spot bitcoin ETFs.

The company reported net income of $36 million for the quarter, marking its third consecutive profitable quarter and sixth-highest adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

However, this amount includes $319 million in pre-tax losses on cryptocurrency holdings in the investment portfolio, mostly paper losses due to lower market prices at the end of the second quarter compared to the first quarter.

Despite the overall positive results, Coinbase’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $596 million fell short of the consensus estimate of $607.7 million. The company’s earnings per share came in at 14 cents, improving from a loss of 42 cents a year ago but missing FactSet’s expectations of 95 cents a share.

Coinbase forecasts subscription and services revenue in Q3 to be between $530 million and $600 million, up from $334 million in the same quarter last year.

The company’s CEO, Brian Armstrong, highlighted the progress made in increasing regulatory clarity for the cryptocurrency industry in the U.S. and globally during the second quarter.

“Cryptocurrency legislation has become a mainstream issue in the U.S., gaining bipartisan support, and there is real energy in both the House of Representatives and the Senate to pass meaningful legislation,” he said in a letter to shareholders.

Coinbase’s role in the emerging crypto ETF market was also highlighted. The exchange serves as custodian for most of the US spot Bitcoin ETFs that launched in January, as well as a number of spot Ethereum ETFs that began trading on July 23.