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Coinbase shares ticked up nearly 3% Thursday as the digital assets company posted better-than-expected financial results, largely fueled by a resurgence in retail and institutional crypto trading on its platform, even as tokens are now just one of several assets at the center of its “everything exchange” vision.
In the quarter ended Sept. 30, Coinbase net income rose to $432.6 million, or $1.50 per share, from $75.5 million, or 28 cents per share, a year ago. Earnings topped the consensus estimate of $1.10 per share reported by LSEG.
Revenue rose to $1.87 billion from $1.21 billion in the same quarter last year, and was higher than analysts’ expectations of $1.8 billion.
Revenue tied to transactions rose to $1 billion, up 37% from the second quarter.
The centralized crypto exchange’s beat came amid a resurgence in crypto trading fueled by U.S. federal regulators’ continued efforts to ratchet back regulations on digital assets firms under President Donald Trump. Also, steadying trade relations between the U.S. and China during the summer months improved investor sentiment.
Coinbase also benefited from a marked increase in revenue linked to institutional activity on its platform following its nearly $3 billion acquisition of derivatives exchange Deribit.
Consumer trading activity on the platform jumped to $59 billion, up 37% from the previous quarter. Transaction revenue from retail brought in $844 million, marking a 30% increase quarter-over-quarter.
On the institutional side, Coinbase notched $135 million in revenue on transactions in the third quarter, marking a 122% increase from the previous quarter, while trading volume from institutions on the exchange came in 22% higher quarter-over-quarter at $236 billion for the third quarter.
Although Coinbase notched considerable gains from crypto-related transactions, CEO Brian Armstrong told investors tokens are just one component of the company’s “everything exchange” strategy unveiled earlier this year.
“The ‘everything exchange’ is really central to the next chapter of what we’re building,” Armstrong said during the company earnings call. He said the company increased the number of tradable assets on its platform to 40,000 from 300 in the third quarter. “Now we’ve been heads down working on the next pieces of that, because we think that every asset class is going to come on chain, and our customers are asking for this, too,” he said.
As part of the strategy, Coinbase is integrating prediction markets, tokenized equities and other offerings into its platform. The exchange’s widening focus is paramount to its future growth as the market for all kinds of digital assets becomes not only larger, but more competitive amid regulatory tailwinds, according to Armstrong.
“We’ve spent a lot of time getting regulatory clarity … and that’s starting to bear fruit, which is great. It’s growing the [total addressable market] of crypto,” Armstrong said. “But it does mean that lots of new competition is coming in, and so we need to make sure we’re executing well.”
Read Coinbase’s full shareholder letter here.