Earnings beat as trading gains market share
The results, released October 29, showed diluted earnings of $2.51 per share, compared with the $0.15 loss forecast in the Zacks analyst consensus. Revenue met expectations at $1.22 billion, little changed from the previous quarter. Adjusted EBITDA reached $333 million, a 60% quarterly increase and the 15th straight quarter of positive results.
The large contribution from crypto valuations leaves reported earnings exposed to asset-price swings. Some observers questioned whether Coinbase's efforts to reduce its reliance on transaction fees would translate into better earnings quality.
Chief Financial Officer Alesia Haas said marketwide crypto trading volume dropped 10% from the second quarter as volatility fell to multiyear lows. September brought an improvement: Total crypto market capitalization rose 37% from its second-quarter-end level, and volatility picked up through the end of the quarter.
Against that backdrop, Coinbase captured 10.7% of global crypto trading volume, twice its share a year earlier. Its share increased for a fourth consecutive quarter, with growth across spot and derivatives trading. Coinbase attributed the expansion to stablecoin demand and a broader product offering that includes perpetual futures, futures and options.
Transaction fees generated $590 million, down 1% from the previous quarter but above analysts' roughly $527 million estimate. Prediction markets and derivatives together supplied about a quarter of transaction revenue, the company said.
Stablecoins anchor subscription and services revenue
Subscription and services revenue increased 3% from the second quarter to $570 million, including $307 million tied to stablecoins. Haas said the segment represented roughly 49% of net revenue. Membership in the paid Coinbase One service also set a record, rising 24% from a year earlier.
Average holdings of USDC, a Coinbase-supported stablecoin, climbed 49% year over year to $22 billion within Coinbase products. That marked the 14th consecutive quarter in which the holdings set a record.
Haas said Coinbase receives about 50% of the economics associated with USDC, while approximately 30% of all circulating USDC is held as assets on its platform.
Prediction markets expand beyond sports
Coinbase's prediction-market business exceeded $200 million in annualized revenue. The company described it as one of its fastest-growing products, reporting a quarterly increase of more than 60% in daily active traders and quarterly revenue growth of 82% since launch.
CEO Brian Armstrong said activity continued to grow during the sports offseason. More than half of the contracts traded in the third quarter concerned non-sports events, according to Haas, who described prediction markets as a new revenue source with little correlation to crypto price movements.
Armstrong also said Coinbase had secured CFTC approval to list its own prediction-market contracts. He expects that permission to improve the business's economics.
Bitcoin holdings, agent trading and Armstrong's sale plan
Armstrong said Coinbase had recently purchased its 18,000th bitcoin for its corporate balance sheet. He also identified bitcoin-backed collateral in decentralized finance and trading as a developing use case.
Trading volume through Coinbase for Agents was growing about 20% per week, Armstrong said, although it remained small compared with the company's overall trading activity.
Coinbase shares finished the session before the earnings release at $160.59, down 1.1%, and traded roughly unchanged after hours. The closing price was more than 55% below the stock's 52-week high of $361.40. Separately, Armstrong disclosed in an SEC filing that he planned to sell as many as 8.17 million shares worth $1.31 billion.
Fourth-quarter guidance and available resources
Haas said Coinbase closed the third quarter with cash and cash equivalents of $8.6 billion and total available resources of approximately $11 billion. About $2 billion remained under its share-repurchase authorization.
For the fourth quarter, Coinbase forecast subscription and services revenue between $550 million and $630 million, with adjusted expenses of $1.07 billion to $1.157 billion.
The company also lowered and narrowed its full-year 2026 adjusted expense forecast to $4.15 billion to $4.3 billion. At the midpoint, that would represent a decline of roughly 1% from the previous year.
