Coinbase Global Inc. posted a profit and revenue doubled as this year’s cryptocurrency recovery carried into the second quarter.
The biggest US crypto exchange’s revenue jumped to US$1.45 billion ($1.94 billion), slightly above the forecast of analysts surveyed by Bloomberg. Net income was US$36 million, or 14 US cents a share, after taking in account an impairment charge to writedown the value of cryptocurrencies held in its investment portfolio. It reported a loss in the year-ago period.
Coinbase expects current-quarter subscription and services revenue to be between US$530 million and US$600 million. In July, the company generated approximately US$210 million of total transaction revenue, Coinbase said in a shareholder letter.
Amid a slowdown in trading, Coinbase’s non-trading businesses, such as interest income related to the USDC stablecoin, have gained in importance in driving growth.
“There’s volatility within spot market trading, it’s going to ebb and flow, and our energy is going into creating more and more diversified revenue stream,” chief financial officer Alesia Haas said in an interview. “This was a strong quarter of execution for Coinbase. Our results show we are an all-weather company, with revenue diversification.”
Revenue was down 11% from the first quarter as the rally in crypto slowed. Coinbase makes a large portion of its revenue from trading fees, and many retail traders began to sit on the sidelines as prices went south after Bitcoin hit an all-time high in March.
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The company reduced the value of crypto assets in its crypto investment portfolio by US$319 million. Coinbase adopted a new accounting rule, requiring companies to mark digital assets to market value each reporting period, in the first quarter.
Coinbase is still facing uncertainty over a lawsuit filed against it by the Securities and Exchange Commission last year. US elections this fall add another wrinkle, as Coinbase and other crypto companies try to push new crypto-friendly regulation through legislature.
Coinbase’s shares rose nearly 3% to about US$212 in after-hour trading. The shares are up 22% this year.
“Coinbase’s return to profitability should be sustainable, even with more modest activity and stable crypto prices,” Bloomberg Intelligence analysts wrote in a note.
