Coinbase Returns To Profit With $715M In Crypto Investment Gains

Coinbase returned to profit in the third quarter, reporting net income of $718.7 million after three quarters of losses. But the results released on 29th October show that the recovery depended heavily on gains in crypto assets the exchange holds as investments.

Those investments produced a $715 million gain. Coinbase's adjusted net income, removing investment gains and their related tax effects, was $77.7 million. The difference matters as the profit includes changes in the value of Coinbase's investments, alongside money earned from running the business.

Chief financial officer Alesia Haas said in the earnings presentation that unrealised gains drove much of the quarterly profit. Unrealised gains reflect an increase in an asset's value before it is sold.

Trading Has Yet To Recover

Total revenue was $1.22 billion, almost unchanged from the previous quarter but down 35% from a year earlier. Transaction revenue, the money Coinbase earns from customers' trading activity, fell to $590.2 million from $1.05 billion a year earlier, according to its financial tables.

Reuters reported that lower expenses and investment gains helped offset the weaker trading business. Total operating expenses fell about 17% from a year earlier to $1.15 billion. The exchange's return to profit therefore came with lower revenue.

Stablecoins And New Products Add Revenue

Coinbase is earning more from businesses beyond conventional crypto trading. Haas said subscription and services revenue rose 3% from the previous quarter to $570 million, making up 49% of net revenue. Stablecoin revenue rose 5% to $307 million.

Average USD Coin (USDC) balances held in Coinbase products reached $22 billion. Haas attributed the stablecoin revenue increase to higher balances and interest rates, which more than offset lower balances outside Coinbase's products.

Prediction markets, where customers trade contracts tied to an event's outcome, also grew. Coinbase’s earnings press release said they exceeded $200 million in annualised revenue, expressing the business’s revenue pace over a year.