Detailed Analysis of Coinbase's Q3 Financial Report: Net Profit Decreased by 74.7% Quarter-over-Quarter, Stock Price Dropped Over 13% After Hours
"The results from the beginning of the year to now have clearly shown that our business is unstable," Coinbase said.Author: Richard Lee, Chain Catcher
Coinbase today announced its Q3 financial report. Due to the composition of revenue and market volatility, Coinbase's net revenue for the quarter was $1.235 billion, with a net profit of $406 million, representing a sharp decline of 39.2% and 74.7% compared to Q2, both falling short of market expectations.
As a result of this data, Coinbase's stock price fell over 13% in after-hours trading, currently priced at $310. In the previous weeks, the ARK fund, which had heavily invested in Coinbase stock, has been continuously reducing its holdings by at least $50 million in the company's shares for several weeks.
"The results year-to-date clearly indicate that our business is unstable," Coinbase stated.
In Coinbase's revenue composition, 88% came from trading revenue ($1.09 billion), while subscription and service revenue amounted to $145 million. Trading revenue continues to maintain a high proportion, but the absolute value has significantly decreased quarter-over-quarter.
According to the financial report, Coinbase's trading volume in Q3 was $327 billion, a 29% decrease compared to Q2. Among this, institutional trading volume accounted for 72%, or $234 billion, down 26.2% quarter-over-quarter.
Retail trading enthusiasm has also decreased. Although the total number of users grew from 68 million in Q2 to 73 million, the number of monthly active retail trading users dropped by 16% to 7.4 million. As a result, retail trading volume also fell from $145 billion to $93 billion.
Notably, the preference for cryptocurrencies other than Bitcoin among institutional investors and retail investors has further widened. The report shows that in Q3, the trading volume from Bitcoin, Ethereum, and other cryptocurrencies accounted for 19%, 22%, and 59%, respectively, compared to Q2 (24%, 26%, and 50%), with the trading volume of "other" categories of cryptocurrencies significantly increasing. In Q2, the trading volume of Ethereum on Coinbase surpassed that of Bitcoin for the first time, and this trend continued in Q3.
Yolo, an investment manager at the cryptocurrency exchange BitMart, analyzed for Chain Catcher that on one hand, the rise of the metaverse and memes has led to a continuous decrease in the market capitalization share of mainstream coins. At the same time, Coinbase has strategically accelerated its listing and custody efforts, which has contributed to the further decline in Bitcoin's trading volume share.
Yolo believes that in the long term, due to the increasing complexity of the metaverse and the growing prosperity of multi-chain ecosystems, the reduction in BTC trading volume share is a relatively certain event. However, when the market returns to rationality, BTC will still serve as a resting point for profit-taking, and a short-term recovery in trading volume share is also possible.
In Q3, Coinbase added a total of 30 new trading assets. By the end of Q3, the total number of cryptocurrencies available for trading was 103. "Continuously expanding the variety of cryptocurrencies supported for trading… further strengthens our competitive position as a leading global cryptocurrency exchange," Coinbase stated in the report.
Additionally, Yolo pointed out that Coinbase's technology expenditures have rapidly increased, with a quarter-over-quarter growth rate of 22%, accounting for 35% of total expenditures, while marketing expenditures have contracted in both quarter-over-quarter and structural proportions, indicating that technology has become the core development direction for Coinbase in Q3. "This is undoubtedly linked to the prosperous scene of the multi-chain ecosystem," Yolo stated.
By the end of Q3, the total amount of cryptocurrencies on Coinbase was $255 billion, accounting for 12.2% of the total market capitalization of the cryptocurrency market at that time.
Coinbase stated that subscription and service revenue grew by 41% quarter-over-quarter in Q3, indicating that cryptocurrencies are entering a practical stage. Currently, 49% of retail monthly trading users (MTU) earn income through non-investment products like staking.
Due to the recent increase in market volatility, Coinbase expects its trading performance in Q4 to improve.
