Coinbase Opens Lower After Reporting 75% Drop in Q3 Net Revenue

Coinbase (COIN) shares took a hit after it reported a 75% drop in its third-quarter net income.

On Nov. 9, COIN closed at $357.39, up 0.98%, however, the major U.S. exchange released its third-quarter report after the close, with its shares down around 13.10% in after-hours trading (as of this writing hour).

Coinbase posted third-quarter revenue of $1.235 billion, well below the $1.614 billion FactSet analyst estimate. The company's profit totaled $406 million, which was down 74.7% from the previous quarter, although it topped analysts' forecast of $380 million. Coinbase also reported earnings per share of $1.62, missing the FactSet estimate by 10%.

Despite lackluster third-quarter results, Coinbase said in its report that it was a "strong quarter" for the company, noting deepening investor engagement with the platform and the company's development of new products such as its upcoming NFT market. The company also emphasized that it is focusing on the long-term rather than quarter-to-quarter:

“Coinbase is not a quarterly investment, but a long-term investment in the growth of the crypto economy and our ability to serve our users through our products and services. We encourage our investors to take this view.”

The frosty relationship between Coinbase and the U.S. Securities and Exchange Commission (SEC) appears to be starting to soften.

In September, Coinbase CEO Brian Armstrong first highlighted the company's problems with the US SEC. He revealed that the law enforcement agency threatened to sue Coinbase if it launched a USDC lending program. Armstrong made those remarks later that month, saying the SEC was the only government department unwilling to meet with the company.

However, Armstrong said on a third-quarter earnings call today that he had a "very productive" meeting with SEC Chairman Gary Gensley last week.

Coinbase CEO Brian Armstrong said on the third-quarter conference call that he met with SEC Chairman Gary Gensley last week ... calling the meeting "very productive."

— Kate Rooney (@Kr00ney) November 9, 2021

The company reported subscription services revenue rose 41% from the second quarter to $145 million through its ETH 2.0 staking program, custody fee revenue, and token rewards. The company also noted that its 7.4 million monthly transacting users (MTUs) are starting to “engage in use cases beyond the first use cases of crypto.”

“In Q3, approximately 28% of our retail MTUs invested in and participated in at least one other product. Additionally, 49% of our retail MTUs used non-investment products such as Staking, Earn, and Coinbase cards, comprising 2.8 million Users earn income through their crypto assets.”

Trading volume on the platform was $327 billion in the third quarter, down 29 percent compared to the second quarter, with institutional investors trading the most at $234 billion, compared with $93 billion for retail traders.

The transaction volume of ETH surpassed that of BTC for the second consecutive quarter, accounting for 22% and 19% of transaction volume respectively. “Other cryptoassets” accounted for 59% of trading volume, an 18% increase compared to the second quarter.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.