The Coinbase (NASDAQ: COIN) stock increased 8% in trading on Thursday after the crypto exchange disclosed Q3 results that surpassed initial expectations.
The COIN stock closed trading on Thursday at $84.60, elongating its gains for 2023 to over 150%.
Coinbase’s Q3 Results
Coinbase’s disclosure of third-quarter revenue of $674.1 million, representing a 14.2% increase over the corresponding period last year but a 4.7% decline compared to the preceding quarter, surpassed analysts’ expectations.
According to data from FactSet, analysts had projected quarterly revenue of $651 million.
Coinbase disclosed a net loss of $2 million for the quarter, which stands in contrast to the $545 million loss incurred in the corresponding period of the previous year.
The organization addressed its shareholders in a letter as follows:
“Q3 was a strong quarter for Coinbase. While we have generated a net loss through Q3, we are on track to deliver meaningful positive Adjusted EBITDA for 2023, reflecting the direction we set at the beginning of the year to be a company that can generate Adjusted EBITDA in all market conditions.”
Coinbase disclosed that it obtained new licenses during the third quarter in order to introduce new products and enter new markets.
Furthermore, they underscored their continuous endeavors to improve the transparency of regulations in the United States.
In addition, Coinbase conveyed a sense of optimism regarding attaining a substantial net income from operating expenses in 2023.
This signifies a modification of their prior objective, which sought to enhance the absolute dollar value of Adjusted EBITDA for the entire year of 2023 compared to the figures for the same period in 2022.
Notably, Coinbase generated $172 million in USDC stablecoin interest income during the third quarter, an increase from the $151 million generated in the previous quarter.
Additionally, Coinbase anticipates an acceleration in the tokenization of financial assets such as the US Treasury and bonds over the coming year.
Concerns Regarding Trading Volumes Persist
Coinbase continues to be significantly troubled by declining trading volumes despite the stern regulatory action taken by the US SEC.
Quarter over quarter, Coinbase’s trading volume decreased from $159 billion to $76 billion in the third quarter.
For the purpose of increasing trading volumes, Coinbase has also introduced BTC and ETH futures to US retail merchants.
Coinbase also experienced a decline in its overall transaction revenue during the third quarter, reporting $288.6 million as opposed to $365.9 million during the corresponding period in 2022.
Moreover, the transaction revenue for this quarter was diminished in comparison to the preceding quarter.
The organization ascribed these decreases in performance to a significant decrease in market volatility, which had an adverse effect on their revenue.
According to Coinbase, the volatility of crypto assets, which is a substantial source of revenue, decreased consistently throughout the third quarter and peaked at its lowest level since 2016.
In relation to forthcoming projections, the organization foresees a comparatively consistent level of transaction revenue in the fourth quarter in comparison to the third quarter. For October, the organization generated an estimated $105 million in transaction revenue.