Excerpts from Coinbase shareholder letter for third quarter 2024:

Q3 was a solid quarter for Coinbase across our three priorities for 2024: driving revenue, crypto utility, and regulatory clarity. In Q3, we generated $1.2 billion in total revenue and $75 million in net income*.

Q3 was our 7th consecutive quarter of positive Adjusted EBITDA, which was $449 million. And despite softer market conditions, we saw average native unit growth across staking, on-platform USDC, and custody, which helps diversify revenue over the long-run.

Q3 was a solid quarter and marked our 7th consecutive quarter of positive Adjusted EBITDA.

Q3 total revenue was $1.2 billion, down 17% Q/Q. Transaction revenue was $573 million, down 27% Q/Q. While average native units grew Q/Q for staking, custody, and on-platform USDC, subscription and services revenue declined 7% Q/Q to $556 million, largely due to lower average crypto asset prices. Total operating expenses were $1.0 billion, down 6% Q/Q, while technology & development, general & administrative, and sales & marketing expenses were collectively $873 million, up 3% Q/Q.

Net income was $75 million and included $121 million in pre-tax losses on our crypto asset investment portfolio — the vast majority of which were unrealized — as crypto prices were lower on September 30, 2024 as compared to June 30, 2024. These losses were $92 million after reflecting the tax impact. Adjusted EBITDA was $449 million. Our balance sheet remains strong, as we ended Q3 with $8.2 billion in $USD resources, up $417 million Q/Q. Lastly, in October 2024, our board of directors authorized a $1.0 billion share repurchase program.

Coinbase Q3 2024 Earnings

– Revenue: $1.2B (-17% vs Q2)
– Net Income: $75M (+108% vs Q2)
– Adj. EBITDA: $449 (-25% vs Q2)
– Cash: $8.2B (+5% vs Q2)
– $1B Share Repurchase Authorization
– +55% Base transactions vs Q2
– 1.8M+ Stand with Crypto advocates pic.twitter.com/CRmNn763vf

— Ryan Rasmussen (@RasterlyRock) October 30, 2024

Transaction Revenue

Total crypto market capitalization was approximately flat Q/Q when comparing the end of Q3 to the end of Q2, however average crypto market capitalization decreased 10% Q/Q over the same period. Meanwhile, crypto asset volatility* — a key driver of trading volume** — declined approximately 5% when comparing the Q3 average with the Q2 average.

Against this macro backdrop, total trading volume in the US spot market — where the majority of our revenue is derived — declined 18% Q/Q. Total Coinbase trading volume was $185 billion, down 18% Q/Q. Total transaction revenue was $573 million, down 27% Q/Q.

Institutional Transaction Revenue

Q3 institutional transaction revenue was $55 million, down 13% Q/Q. Q3 institutional spot trading volume was $151 billion, down 20% Q/Q, largely driven by lower volume on our spot exchange, which serves market makers and other participants who tend to be less active during periods of low volatility. We saw relative outperformance in both our Prime Broker and our institutional derivatives offering in Q3, both in the US and through our international exchange.

Derivatives

In Q3, we made meaningful progress in expanding our derivatives offerings in both the US and abroad. In the US, Coinbase Derivatives Exchange launched new crypto futures, becoming the only US futures exchange with margin futures outside of BTC and ETH, including DOGE, SHIB, LNK, DOT, and AVAX.

Over the past quarter we have seen our Retail-friendly gold and oil contracts appeal to over 20% of active Coinbase Financial Market (CFM) traders. These improvements contributed to CFM onboarding over 100,000 users to date. Increasing derivatives users is a key area of focus as we have seen that derivatives traders tend to also engage more with spot products as well.

We also continue to scale our Coinbase International Exchange which, as of Q3, has expanded its offering to 89 perpetual contracts, covering over 90% of global perpetual futures volumes, up from 83% in Q2

ETFs

In Q3, the crypto industry experienced another significant milestone when the nine spot Ethereum (ETH) ETF products launched. Coinbase is proud to serve as the primary custodian for 17 of 20 of the BTC and ETH ETFs, which continued to help drive native unit growth into custody in Q3.

International Growth

In 2022 and 2023, we expanded into new markets including Singapore, Canada, Australia, and Brazil. We are pleased to see revenue is growing in these markets, highlighting our focus on high-potential regions. In Q3, we also saw strong international growth in these markets for Coinbase One. We enhanced our benefits with Coinbase One boosted USDC rewards, which increased rewards payouts for subscribers in eligible international markets, including the UK, Singapore, Brazil, and Australia, contributing to higher subscriber growth.

Stablecoins

Stablecoins, like USDC. are seeing increasing adoption and expanding daily use cases by providing a secure, digital alternative to fiat currencies. They’re used for a range of vital financial activities — from cross-border payments and remittances to offering a stable store of value in countries with volatile fiat currencies and powering transactions on decentralized finance (DeFi) platforms. Stablecoins have found product market fit, with global stablecoin volumes reaching $22 trillion YTD in 2024, more than doubling year-over-year,

In Q3, we continued to drive the global adoption of stablecoins, a crucial component in the broader crypto ecosystem.

• USDC’s market cap grew by $3.5 billion, or 11%, to $36 billion by the end of Q3, making it the fastestgrowing major USD stablecoin in 2024. Our platform incentives and the deeper integration of USDC across our products have been contributors, which also led to a more than doubling of USDC assets on platform (AOP) on our international exchange. Additionally, USDC and EURC became the first stablecoins compliant with the EU’s Markets in Crypto Assets (MiCA) regulatory framework in Q3, positioning stablecoins for broader adoption under this new regulatory framework in Europe.

• In Q3, we launched support for EURC, a leading 1:1 Euro-backed stablecoin, and saw its market cap nearly double within the quarter to $69 million. This growth was in part fueled by the introduction of free 1:1 Euro-to-EURC conversions on Coinbase and the native launch of EURC on Base. We hope to see fiat-backed stablecoins continue to expand, as they provide a trusted, stable bridge between traditional finance and the cryptoeconomy,

The full shareholder letter can be read here.

Source: Coinbase