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coinbase Shares rose nearly 3% on Thursday as the digital asset company reported better-than-expected financial results, largely driven by a resurgence in retail and institutional cryptocurrency trading on its platform, even though the token is now just one of several assets at the center of the company’s “everything exchange” vision.
Coinbase’s net income for the quarter ended Sept. 30 rose to $432.6 million, or $1.50 per share, from $75.5 million, or 28 cents per share, a year ago. Earnings beat the consensus estimate of $1.10 per share reported by LSEG.
Revenue rose to $1.87 billion from $1.21 billion in the same period last year, beating analysts’ expectations of $1.8 billion.
Transaction-related revenue increased 37% from the second quarter to $1 billion.
The rise of centralized crypto exchanges comes amid a resurgence in crypto trading due to continued efforts by U.S. federal regulators to gradually roll back regulations on digital asset companies under President Donald Trump. Investor sentiment also improved as trade relations between the US and China stabilized over the summer.
Coinbase also benefited from a notable increase in revenue related to institutional investor activity on its platform after acquiring Deribit exchange Deribit for about $3 billion.
Consumer trading activity on the platform soared to $59 billion, an increase of 37% sequentially. Transaction revenue from retail was $844 million, an increase of 30% sequentially.
On the institutional side, Coinbase recorded $135 million in revenue in trading in the third quarter, an increase of 122% sequentially. Meanwhile, institutional trading volume on exchanges increased 22% sequentially to $236 billion in the third quarter.
Coinbase has made significant profits from crypto-related trades, but CEO Brian Armstrong told investors that the tokens are just one part of the company’s “exchange anything” strategy announced earlier this year.
“Everything Exchange is really central to the next chapter of what we’re building,” Armstrong said on the earnings call. He said the company has increased the number of tradable assets on its platform to 40,000 from 300 in the third quarter. “Right now, we’re really focused on the next part of that, because we think every asset class is going to be chained, and our customers are asking for this too,” he said.
As part of its strategy, Coinbase is integrating prediction markets, tokenized stocks, and other services into its platform. Broadening the exchange’s focus is paramount to future growth, Armstrong said, as the market for digital assets of all types not only expands but also becomes more competitive with regulatory tailwinds.
“We’ve spent a lot of time clarifying the regulations…and that’s starting to bear fruit, which is great.[The entire addressable market for]cryptocurrencies is growing,” Armstrong said. “But that means a lot of new competitors coming in, so we need to make sure we’re doing our job properly.”
Read Coinbase’s full shareholder letter here.
