Crypto exchange Coinbase reported $663 million in net revenue in the second quarter of 2023, boosted by its custody deal with BlackRock and its institutional focus, despite recent action taken against it by regulators.
Net revenue was down 10% compared to Q2 2022 but still beat estimates, thanks to its growing market dominance in the United States, with competitors such as Binance having been bogged down by regulatory trouble.
Coinbase’s net loss was $97 million — the sixth quarterly loss in a row for the exchange — but immensely narrower than the loss recorded in Q2 2022.
Our Q2'23 financial results are in and our letter to shareholders can be found on the Investor Relations website at https://t.co/8ovHEtQp5N pic.twitter.com/03JF6gUS0R
— Coinbase ️ (@coinbase) August 3, 2023
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) — which can provide a meaningful metric when comparing company performance — was $194 million, up from an EBITDA loss of $151 million in 2022.
However, total transaction revenue, which it earns from providing crypto trading services, was down 13% compared with Q1.
The exchange saw $327 million in transaction revenue and a quarterly drop in overall trading volume of 37%.
This was due to consumer trading volume dropping 33%, with institutional volume down 37% in the quarter to $14 billion and $78 billion, respectively.
However, Q2 also saw the exchange’s non-trading revenue surpass its trading revenue, with $335.4 million of net revenue coming from subscriptions and services.
Coinbase CEO Brian Armstrong said on an Aug. 3 earnings call that the company is focused on the non-trading parts of the business over the next three to five years, naming scalability, regulatory clarity and driving crypto utility as focus areas.
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Meanwhile, Coinbase chief legal officer Paul Grewal expressed confidence the exchange would win the court case brought by the U.S. Securities and Exchange Commission, adding that it plans to file an motion to dismiss the case entirely.
Coinbase’s share price remained flat in after-hours trading, trading at just under $91— down over 73% from its $343 all-time high in November 2021, according to Google Finance.
In its outlook for Q3, Coinbase said it doesn’t expect a “material impact” from having to pause staking in California, New Jersey, South Carolina and Wisconsin.
It predicted subscription and services revenue in Q3 to come in at around $300 million.
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Additional reporting by Tristan Greene and Jesse Coghlan.
