Coinbase Shares Tumble as Q3 Revenues Fall Well Short of Estimates

Shares of Coinbase (COIN) were falling around 10% after-hours on Tuesday after the crypto exchange reported its third-quarter revenue came in at just $1.24 billion, versus the consensus analyst estimate of $1.61 billion, according to FactSet. Adjusted earnings per share for the quarter also missed at $1.62 versus expectations of $1.81.

• Coinbase posted $1.1 billion in transaction revenue in the third quarter, down from about $1.9 billion in the second quarter, the company said.
• Q3 trading volume was $327 billion, down from $462 billion in Q2.
• Coinbase had 7.4 million retail monthly transacting users (MTUs) in Q3, down from 8.8 million in Q2, but up from 2.1 million in the year-ago quarter.
• As for its outlook, Coinbase said that “while we entered Q3 with softer crypto market conditions, driven by low volatility and declining crypto asset prices, market conditions improved meaningfully later in the quarter which we have continued to see into early Q4.”
• The company had previously warned that its number of multiple transacting users (MTU) and trading volume would be lower in the third quarter than the second quarter.
• Shares of Coinbase were down roughly 10% in after-hours trading on Tuesday to $315 following the release of the results. They are still up roughly 26% from their reference price of $250. But they are still down from their opening trading price of $381.
• Coinbase reported that the percentage of total trading volume coming from bitcoin continued to decline, falling to 19% from 24% in Q2 and 39% in Q1. Ether trading volume dipped from 26% of the total in Q2 to 22% in Q3. Meanwhile, trading volume for other crypto assets rose from 50% of the total in Q2 to 59% in Q3.
• Q3 subscription and services revenue grew 41% quarter over quarter to $145 million, up from about $103 million in Q2.
• Coinbase said on its earnings call that recent activity in cryptocurrency purchases stem more from utility uses than pure speculation.
• Coinbase expects to launch its NFT functionality in the next couple of quarters, adding that the NFT business has potential to become bigger than its crypto business.
• On ETFs, Coinbase has a positive view and says they will increase overall industry interest and adoption. The company added that it is having conversations on how it can support the broader ETF adoption across the industry.

Read more: Coinbase Proposes US Create New Regulator to Oversee Crypto

This is a developing story and will be updated.

UPDATE (Nov. 9, 23:35 UTC): Added conference call commentary, and update of after-hours share move.