Coinbase Returns to Profit as Crypto Holdings Drive Quarterly Earnings

Table of Contents

• You might want to know
• Coinbase’s quarterly results and business trends
• Key insights table
• Afterwards...

You might want to know

• How much of Coinbase’s quarterly profit came from gains on crypto assets it holds?
• Which revenue streams are helping the exchange rely less on trading activity?

Coinbase’s quarterly results and business trends

Coinbase returned to profitability in the third quarter, reporting net income of $719 million, or $2.51 per diluted share. The result marked a turnaround after two consecutive quarters of losses and exceeded analysts’ expectations, which had called for a loss of 15 cents per share, according to Zacks. However, the headline profit requires context: approximately $715 million came from gains on crypto assets held by Coinbase as investments. Excluding those and other investment gains, adjusted net income was $78 million.

The distinction matters because investment gains can change substantially with asset prices and may not reflect the performance of Coinbase’s core operating activities. The quarter therefore presented two different views of the company: a strong reported net-income figure and a substantially smaller adjusted figure after investment-related gains were excluded. Both help describe the results, but they answer different questions about the business.

Total revenue was $1.22 billion, matching expectations. Revenue was flat compared with the second quarter and down 35% from the same period a year earlier. That year-over-year decline occurred against a backdrop of quieter crypto markets, with volatility falling to multiyear lows and trading volume across the market weakening. Coinbase’s results thus combined stable sequential revenue with a significant annual decline.

Transaction revenue, which is closely tied to customer trading, slipped 1% to $590 million. Even so, it exceeded the roughly $527 million analysts had expected. The outcome suggests Coinbase generated more transaction revenue than anticipated despite subdued market activity. Yet the modest sequential decrease also shows how sensitive this business line remains to changes in trading volume and volatility.

A more notable development came from prediction markets, which crossed $200 million in annualized revenue. Coinbase described the product as one of the fastest-growing launches in its history. The company said daily traders grew more than 60% from the prior quarter, while revenue has compounded 82% per quarter since launch. These indicators point to rapid expansion, although they describe growth rates and annualized revenue rather than a full-year total already realized.

Chief Executive Officer Brian Armstrong said the product continued “growing even through slower sports months.” That comment highlights the company’s view that demand may extend beyond periods of peak sports activity. Chief Financial Officer Alesia Haas also said prediction markets add another source of revenue and are less correlated with crypto volatility. If that relationship holds over time, the product could help diversify revenue, though its long-term contribution remains to be seen.

Subscription and services revenue increased 3% to $570 million, accounting for nearly half of net revenue. Stablecoins were a leading contributor, generating $307 million. The average amount of USDC held in Coinbase products reached a record $22 billion. These figures show the importance of services connected with digital assets that can be used for payments, trading, and holding value, alongside the company’s conventional transaction business.

Coinbase One, the company’s paid subscription service, also reached an all-time high in subscribers, up 24% from a year earlier. The company’s share of global crypto trading volume rose to 10.7%, marking its fourth consecutive quarterly gain. Together, subscriber growth and a rising share of trading volume indicate progress in customer engagement and market position, even as overall trading conditions remained muted.

Cost management was another part of the quarter’s performance. Coinbase reduced its 2026 adjusted expense guidance by another $100 million at the midpoint, following cost reductions in May. The revised range is between $4.15 billion and $4.3 billion. Adjusted EBITDA rose 60% from the prior quarter to $333 million, offering a measure of operating performance before interest, taxes, depreciation, and amortization. The lower expense outlook and higher adjusted EBITDA point to an emphasis on managing costs while seeking growth in newer and recurring revenue sources.

The company also provided an early indication of fourth-quarter activity: through Oct. 25, transaction revenue stood at about $165 million. This is a partial-quarter figure, not a completed-quarter result, and should be read accordingly. Future performance will depend in part on market conditions, customer activity, and the contribution of revenue streams beyond trading.

The latest results followed a difficult first half. Coinbase recorded a $394 million loss in the first quarter and missed estimates in the second quarter as trading activity slowed. At the time, analysts said they were not worried about the stock’s slide. The return to reported profitability therefore reversed the recent pattern, although the large contribution from investment gains means the quarter alone does not establish that operating earnings have fully recovered.

Coinbase shares closed Thursday at $160.59, down 1.1%, before the results were released, and were little changed in after-hours trading. The stock remained down more than 55% from its 52-week high of $361.40. Share-price performance reflects investor expectations and market conditions as well as company results; it does not, by itself, explain the underlying causes of the stock’s decline.

Overall, the quarter showed a business in transition. Trading continued to generate substantial revenue, but the company also reported growth in subscriptions, stablecoin-related services, and prediction markets. The most important qualification is that about $715 million of the $719 million reported net income came from gains on crypto investments, while adjusted net income was $78 million. This gap makes it important to distinguish headline earnings from results that more closely reflect ongoing operations.

Key Insights Table

Afterwards...

Coinbase’s next challenge is to show whether growth in prediction markets, subscriptions, and services can build a more durable earnings base alongside its trading business. The quarter’s revenue mix and customer metrics offer signs of diversification, while the scale of investment gains behind reported net income calls for careful interpretation. Investors and observers will be watching subsequent results for evidence that operating performance can hold up across changing crypto-market conditions.