Coinbase Swings to Q3 Profit With $719 Million Net Income

Coinbase swung to a profit in the third quarter, though most of the gain came from mark-to-market gains on crypto assets held on its balance sheet.

Crypto outlet Decrypt reported on October 29 that Coinbase posted third-quarter net income of $719 million, or $2.51 a share on a diluted basis. Analysts surveyed by Zacks had expected a loss of 15 cents a share. Of that profit, $715 million came from valuation gains on crypto assets the company holds for investment. Excluding those gains, adjusted net income was $78 million.

Total third-quarter revenue was $1.22 billion, in line with market expectations. That was unchanged from the previous quarter and down 35% from a year earlier. Transaction revenue fell 1% to $590 million, topping analysts' estimate of about $527 million. Subscription and services revenue rose 3% to $570 million, of which stablecoin-related revenue accounted for $307 million. Average USDC balances across Coinbase products reached a record $22 billion.

Prediction markets were the standout business line this quarter. Coinbase said annualized revenue from prediction markets exceeded $200 million, calling it one of the fastest-growing products in the company's history. Daily active traders rose more than 60% from the previous quarter, while quarterly revenue growth since launch reached 82%. Chief Executive Officer Brian Armstrong said the growth continued even during the sports off-season.

Coinbase shares closed down 1.1% at $160.59 before the earnings release and were little changed in after-hours trading. The stock remains down more than 55% from its 52-week high of $361.40.