Coinbase Global (Nasdaq: COIN), the crypto trading exchange company, reported strong earnings in Q3, exceeding analysts’ estimates due to its higher trading volume and cryptocurrency prices.
In the quarter ended Sept. 30, Coinbase’s total revenue rose 54.5% to $1.87 billion from $1.21 billion in the same quarter last year, beating Bloomberg consensus estimates of $1.8 billion. Net income rose to $432.6 million, or $1.5 per share, from $75.5 million, or 28 cents per share, a year ago. Earnings topped the Bloomberg Consensus estimate of $1.16 per share.
Shares rose 8% on Friday following the results. Coinbase stock is up more than 34% this year as of Nov 3.
“The main driver of Coinbase’s results is trading volume, particularly retail trading volume, since the firm’s largest revenue line item is still trading,” said Michael Miller, an analyst from Morningstar. “Now cryptocurrency prices have performed well, so I expect this to be a much stronger quarter.”
In October, crypto investors were eager to see more gains, as Bitcoin and other digital assets tend to perform strongly during what’s known as “Uptober.” Bitcoin did manage to reach $126,000 record high in the month, however, different economic and trade tensions between the U.S. and China triggered sharp price swings, making it one of the most volatile months in cryptocurrency history.
Coinbase’s transactions revenue was $1.05 billion, higher than the estimated $992.1 million, and trading volume $295 billion, slightly lower than the estimate but still a strong result.
The strong earnings results show Coinbase is benefiting from a favorable regulatory environment for digital assets firms under President Donald Trump. At the same time, institutional investing is picking up alongside Coinbase’s solid retail cohort. The recent acquisition of Deribit, a European crypto exchange specializing in derivatives trading, directly contributed to higher derivatives volume and helped boost transaction revenue this quarter.
“The most important thing continues to be the take rate,” said Dan Dolev, an analyst from Mizuho Securities. “We are always looking for it quickly to the founder, and also like the retail volume to see whether or not they’re gaining or losing share.
Although most of the revenue in the quarter was gained from crypto-related transactions, CEO Brian Armstrong sees a strong contribution from institutional investors.
“Deribit plus Coinbase saw over $840 billion in total derivatives volume in Q3,” said Armstrong, “driven by stronger participation from institutions and advanced traders.”
Armstrong added that Coinbase is adopting stablecoins as global payments shift to the assets, which allow people to send money anywhere in the world in less than one second. In the quarter, Coinbase’s stablecoin market capitalization hit $300 billion, driven by companies and financial institutions using them for payments and treasury. Policy tailwinds like the GENIUS act should accelerate this growth, Armstrong said.
“Regulatory clarity for cryptocurrency and stablecoins will remain a positive tailwind for volume,” said Miller, adding that it could also add to competition. “Coinbase’s scale and first-mover advantage should give it a strong position.”
Looking ahead, the company expects October transaction revenue to be approximately $385 million. Subscription and services revenue to be in the range of $710 million to $790 million, driven by higher average crypto prices and continued growth of the Coinbase One subscriber base. Pointing to slower trading activity from last quarter’s $1.6 billion, but steady growth in subscription from $641 million.