San Francisco, CA – Coinbase Global (Nasdaq: COIN) has announced its third-quarter financial results, surpassing market expectations with a reported revenue of $674.1 million and an adjusted loss of $0.01 per share. However, the positive earnings report was met with a nearly 5% drop in the company’s shares, mainly due to lower-than-anticipated total trading volumes.
Q3 Performance Overview
In its official disclosure yesterday, the company revealed that total trading volume for the period from July to September amounted to $76 billion, missing the estimated figure of $80.1 billion. This marked a decrease from the $92 billion reported in the preceding quarter.
Transaction revenue for the third quarter reached $288.6 million, reflecting a 12% decline compared to the previous quarter. Coinbase attributed this drop in transaction revenue to the overall downturn in the cryptocurrency markets and the increased market volatility.
Despite beating revenue estimates, Coinbase, which went public in April 2021, reported its seventh consecutive quarter of losses. Notably, the net loss was significantly reduced to $2 million, down from $97 million in the prior quarter. Adjusted EBITDA for the quarter stood at a positive $181 million, a slight decrease from the $194 million recorded in the previous quarter.
In a letter addressed to Coinbase shareholders, the company stated, “We anticipate that we will generate meaningful positive Adjusted EBITDA in full-year 2023, revised from our prior goal of improving full-year 2023 Adjusted EBITDA in absolute dollar terms versus full-year 2022.”
Coinbase also managed to reduce its operating expenses by 4%, totaling $754 million. Costs associated with technology and development, sales and marketing, as well as general and administrative expenses collectively decreased by 1% to $654 million.
Recent Developments
Despite the market’s reaction to Coinbase’s earnings, the cryptocurrency exchange revealed that it generated approximately $105 million in transaction revenue in October, coinciding with the recent rally in the cryptocurrency markets.
Coinbase’s performance has a direct impact on its share price as a publicly listed company on the Nasdaq. Following the close of Thursday’s trading session, COIN gained approximately 9%. However, in after-hours trading after the financial results were released, the company’s shares experienced a decline of around 5%.
Legal Battle with the SEC
Coinbase is currently entangled in a legal dispute with the U.S. Securities and Exchange Commission (SEC). The SEC has accused the exchange of operating an illegal trading platform and listing unregistered securities, further complicating the company’s regulatory challenges.
In response to regulatory hurdles in the United States, Coinbase is expanding its international footprint. The company has designated Ireland as its primary global regulatory hub and has submitted a license application to the Central Bank of Ireland. Additionally, it has obtained licenses in jurisdictions such as Singapore and Bermuda.
