Coinbase Returns to Profit in the Third Quarter With $718.7 Million as Costs Fall

Coinbase reported a third quarter profit on Thursday, snapping a three quarter streak of losses. The crypto exchange earned $718.7 million, or $2.51 per share, for the quarter ended September 30, compared with $432.6 million, or $1.50 per share, a year earlier, according to Reuters. Lower operating expenses drove the return to profit.

Revenue fell even as profit rose

Total revenue was $1.216 billion, down 35 percent from a year earlier. Transaction revenue was $590.2 million, and subscription and services revenue was $570.2 million, according to figures from the company filing summarized by CoinLab. Reuters put the fall in transaction revenue at 43 percent, to $590.2 million from $1.05 billion a year earlier, while the filing figures show a year over year fall of 44 percent.

That split matters for reading the quarter. The two revenue lines were close in size this quarter, at $590.2 million and $570.2 million, so the subscription and services business brought in almost as much as trading itself. A year earlier, transaction revenue alone was $1.05 billion, which shows how much smaller trading income has become in the comparison.

Costs and a large gain on crypto holdings

Total operating expenses fell about 17 percent to $1.15 billion, compared with $1.39 billion in the same period a year earlier, Reuters reported. Adjusted EBITDA was $332.9 million, up 60 percent from the second quarter.

The headline profit needs one clear note. Net income was driven mainly by a $715 million gain on crypto assets the company holds for investment, CoinLab reported from the filing. Adjusted net income was $77.7 million, far below the reported $718.7 million. Readers comparing the two figures can see that most of the reported profit came from that investment gain, while the adjusted figure strips it back to a much smaller profit.

Chief executive Brian Armstrong said: "We continued to execute well on things in our control and compound gains," as TheStreet reported from the earnings call.

Platform numbers and the outlook

Coinbase said its share of global crypto trading volume was 10.7 percent. Assets on the platform were $377 billion. Average USDC held in Coinbase products hit a record $22 billion, according to the filing figures summarized by CoinLab.

For the fourth quarter, the company guided subscription and services revenue of $550 million to $630 million. That range sits just below and just above the $570.2 million the same line produced in the third quarter, so the guide points to a broadly steady quarter for that business rather than a sharp rise or fall.

Shares

Coinbase shares closed Thursday at $160.59, down 1.07 percent, according to TheStreet. In after hours trading the shares edged up 0.41 percent to $161.25.