Coinbase Trading Revenue Down 44% After “Mixed” Third Quarter

America’s largest crypto exchange, Coinbase, has unveiled its Q3 2022 earnings report – and the results are a bit jumbled.

While the firm had a roughly $300 million drop in expenses from last quarter, the company’s total revenue also fell by 24%.

Slow Trading Season for Coinbase

The third quarter shareholder letter showed transaction revenue at $366 million, taking a substantial 44% slash versus Q2. Meanwhile, total trading volume on the platform fell about 27%, from $217 billion to $159 billion.

Coinbase claimed this was largely due to macroeconomic and crypto market headwinds, alongside trading volume moving offshore.

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As the firm put it, much of its retail base has changed behavior from trading to “hodl’ing.” Its monthly active user base dwindled by another 500,000 customers this month, down to 8.5 million. 

Revenue in other areas was stronger, however. Subscription and services revenue rose 43% from $147 million to $211 million, with interest income being the biggest contributor. Once again, the rising interest rate environment was responsible for this.

“When applying constant Q3 average crypto asset prices to prior quarters, subscription and services revenue would have grown approximately 82% in Q3 compared to Q2,” stated Coinbase. 

Coinbase has also been focused on reducing its operating expenses, which fell by 22% minus the impact of non-cash impairment charges. Some efforts that contributed to this included the company’s 18% staff layoff in June, and its “discipline in marketing spend.”

The exchange ended its third quarter with $5.6 billion in USD resources and another $483 million in crypto assets. While the bear market has affected many key metrics, Coinbase claimed to see strong signs of positive consumer sentiment and institutional adoption in Q3.

“Under the surface of a challenging market, an innovation and adoption spring is coiling,” it said. 

How Do Other Firms Fare?

Much like Bitcoin’s price, CashApp’s bitcoin revenue stayed relatively flat in Q3, down to $1.76 billion from $1.79 billion in Q2. Year over year, Bitcoin revenue has dropped by 3% – but was up 36% in total revenue when excluding Bitcoin. 

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MicroStrategy’s Q3 earnings numbers, published on Tuesday, showed that its Bitcoin holdings left the company with a significant impairment loss. While the carrying value of its Bitcoin as of September 30th was $1.993 billion, its impairment losses amount to $1.990 billion since their acquisition.