Key Points
- Revenue for Q2 2024 came in at $1.38 billion, missing estimates.
- Transaction revenue dropped 27% quarter over quarter.
- Subscription and services revenue increased 17% quarter over quarter.
Coinbase Global (COIN -1.63%), a major cryptocurrency exchange platform, released its Q2 2024 earnings on 2024-08-01. The company reported revenue of $1.38 billion, missing analyst estimates of $1.40 billion by $18.46 million, or about 1.3%. Net income was $36 million, but no specific adjusted earnings per share (EPS) data was provided. The quarter was marked by a significant decline in transaction revenue, dipping 27% quarter-over-quarter, but robust growth in subscription and services revenue, which rose 17% quarter over quarter.
| Metric | Q2 2024 | Analyst Estimate | Q2 2023 | % Change YoY |
|---|---|---|---|---|
| Total Revenue ($ million) | $1,380 | $1,398 | $662.5 | 108% |
| Net Income ($ million) | $36 | — | $(97.4) | N/A |
| Adjusted EBITDA ($ million) | $595.6 | — | $188.7 | 215% |
Source: Analyst estimates for the quarter provided by FactSet.
About Coinbase Global
Coinbase Global is a major cryptocurrency exchange platform that offers trading, custody solutions, and staking services. The company’s primary focus is on diversifying revenue streams, regulatory compliance, and product innovation. Its trading products cater to both consumer and institutional clients, generating significant transaction revenue. Lately, Coinbase’s focus has broadened to include subscription and services revenue, which saw noticeable growth in the latest quarter.
Recent strategies include enhancing its staking infrastructure and expanding its innovative product offerings. Key success factors for Coinbase are its strong legal compliance, high-security custodial solutions, and effective engagement through its evolving suite of services.
Quarterly Highlights
During Q2 2024, Coinbase faced several shifts in key metrics and introduced new products to drive growth. Notably, transaction revenue fell to $781 million, down 27% from the previous quarter. This decline was attributed to reduced trading volume and a softer spot market. Total trading volume was $226 billion, a 28% drop quarter-over-quarter.
Despite challenges in transaction revenue, subscription and services revenue showed promise, rising 17% to $599 million in the quarter. This growth was significantly aided by higher average on-platform balances of USDC (a type of stablecoin) and its expanding market capitalization. Blockchain rewards revenue, included under subscription services, also increased by 23%, totaling $185 million, reflecting the growing acceptance and engagement in staking activities.
Regulatory efforts saw key advancements. The company achieved compliance for its USDC stablecoin under the European Union's MiCA regulatory framework. In the US, crypto legislation made bipartisan progress, elevating regulatory clarity and potentially supporting future business stability. Custody services received further backing with new partnerships, aiming to strengthen Coinbase Prime’s standing as the go-to platform for institutional clients.
On the product innovation front, Coinbase's 'Base Layer 2 Solution' showed promising performance, leading in contracts deployed and transactions processed. The integration of USDC with Stripe to facilitate faster global transfers showcased its strategy to broaden USDC's adoption. Additionally, the introduction of smart wallets, aimed at reducing user friction, highlighted the company's commitment to enhancing user experience and expanding its market reach.
Looking Ahead
For the upcoming quarter, Coinbase’s management has set guidance with a subscription and services revenue target ranging from $530 million to $600 million. Transaction revenue is projected at approximately $210 million for July alone. On the expense side, it expects technology and development, along with general and administrative costs, to range between $700 million and $750 million, and sales and marketing expenses to range between $160 million and $210 million.
Investors should pay close attention to Coinbase’s ability to maintain momentum in subscription and services revenue. Additionally, the progress within regulatory frameworks will be critical as it could significantly influence future operations and market trust. Expense management will also be crucial in navigating potential headwinds anticipated for Q3 2024.
