Cryptocurrency exchange Coinbase overcame expectations by posting higher than expected revenues in the third quarter, but the company still endured another period of loss amid the ongoing “crypto winter.”

In their third quarter earnings report, Coinbase posted $674 million in total revenue, about 14% higher than the same time last year, beating analyst estimates that the company would earn just over $654 million. Net income came in at a loss of $2 million, much lower than the $545 million incurred a year ago. On a per share basis, Coinbase lost only $0.01, much lower than analyst expectations of $0.70 and $2.43 the company reported in the same quarter last year.

Coinbase’s performance blasted through predictions that it would underperform because of anemic crypto markets, while at the same time reducing expenses to make itself leaner until the downturn ebbs away. 

“They beat our estimate by quite a bit on expenses,” said Owen Lau, senior analyst and executive director in equity research at Oppenheimer & Co. “Management has been doing a good job to take down stock-based compensation to manage the headcount growth, and at the end of the day, they can drive a better bottom line result.”

On the day after Coinbase released it’s earnings, its stock rose 1.4% to $85.80, and Coinbase’s stock last closed 3.8% higher at $89.07.

Crypto markets have remained hobbled this year by lower levels of volatility and trading volumes. In September, spot trading on centralized exchanges as a whole fell 29.2% to $336 billion, the lowest level seen since March 2019, according to a report by crypto analysis firm CCData

For Coinbase, lower trading volumes mean fewer opportunities to collect custody fees for holding traders’ crypto assets, let alone commissions on transactions, which still account for the bulk of its revenue. 

Coinbase's weaker revenues make it the seventh straight quarter of losses after a string of crises that have left cryptocurrency markets bruised. The SEC’s lawsuit against Coinbase in June added to the overhang of the dark cloud of uncertainty that it casts over the company. 

Yet Coinbase may be on the cusp of smoother sailing. Right after the third quarter concluded on September 30, the price of Bitcoin began to take off on suggestions that the SEC would soon approve a spot market ETF. Since the start of October, Bitcoin’s price has shot up almost 24%, closing at $34,743, the highest levels seen in more than a year. 

Another tailwind is the possible approval of an exchange traded fund for Bitcoin spot markets. Coinbase was among the biggest winners of the speculative fervor around, given its reliance on trading in Bitcoin pairings, and its partnerships with many of the main applicants. Excitement for an ETF drove the exchange’s stock up to a peak of about $111 in July, though it has climbed down since. Still, Coinbase’s stock is up about 127% since the start of the year. 

During the company’s earnings call, Chief Operating Officer Emile Choi touted Coinbase's standing as the chief partner for many of the ETF applicants, a whose-who of financial titans from BlackRock to Fidelity, and predicted an approval would be a boon for custody fees. 

“We are ready to hit the ground running,” said Choi. “The primary way that we will monetize ETFs directly in the near term is through custody fees.”