Coinbase Q3 2021 Earnings Report Recap

COIN beat on earnings but missed on revenue

Key Takeaways

  • Total trading volume came in above analysts' expectations.
  • Total trading volume directly impacts Coinbase's transaction revenues.
  • Trading volume was down compared to Q2, reflecting the volatile nature of cryptocurrency markets.
Coinbase Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Pro-forma EPS  Beat $1.62 $1.59
Revenue Miss $1.3B $1.6B
Total Trading Volume Beat $327B $313.6B

Source: Predictions based on analysts' consensus from Visible Alpha

Coinbase Financial Results: Analysis

Coinbase Global Inc. (COIN) reported Q3 FY 2021 earnings that surpassed analyst expectations. The company's pro-forma earnings per share (EPS) came in at $1.62, up more than sevenfold compared to the year-ago quarter. Coinbase's pro-forma EPS is calculated based on the number of post-IPO shares outstanding, which allows for more meaningful comparisons between pre-IPO EPS and post-IPO EPS figures. Coinbase's IPO took place on April 14, 2021. The company's revenue missed analyst estimates, but was up more than fourfold year over year (YOY). Total trading volume, however, came in above expectations. The company's shares plunged in post-market trading. Coinbase's shares are down from their opening price of $381.00 on April 14, 2021. By comparison, the S&P 500 has risen over the same time period.

COIN Total Trading Volume

Coinbase's total trading volume in Q3 FY 2021 was $327 billion, up more than sevenfold compared to the year-ago quarter but down 29.2% from Q2 FY 2021. The company defines trading volume as the value of matched trades that take place between a buyer and seller on its platform during the measurement period. The amount of trading activity directly impacts Coinbase's transaction revenue. The company believes that trading volume helps to gauge the amount of liquidity on its order books, its trading health, and the underlying growth of the crypto-economy.

Institutions were responsible for $234 billion, or 71.6%, of trading volume. Retail investors made up the remaining $93 billion, or 28.4%, of total volume. Bitcoin transactions comprised 19% of total trading volume while Ethereum accounted for 22% and all other crypto assets made up the remaining 59% of total trading volume. Both Bitcoin and Ethereum hit new all-time highs earlier this week.

Coinbase stressed in its letter to shareholders the volatile nature of cryptocurrency markets and the impact that has on its transaction revenues. The drop in trading volume compared to the previous quarter reflected softer crypto market conditions, including low volatility and declining prices for crypto assets. Total transaction revenue in Q3 was down 43.6% compared to Q2, but was up 295.0% compared to the year-ago quarter.

Coinbase Earnings Call Recap

During an earnings call after results were released, the company discussed plans to add new services, including a platform for trading non-fungible tokens (NFTs). “We are very excited about NFTs, this is going to be a very large area for crypto in the future, and it already is today,” said Coinbase Chief Executive Officer (CEO) Brian Armstrong. “It could be as big or bigger."

Coinbase's next earnings report (for Q4 FY 2021) is estimated to be released on Feb. 10, 2022.

Article Sources

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