Coinbase Q3 FY2025 Earnings Call Transcript
Coinbase Global, Inc. (NASDAQ:COIN) reported its third-quarter financial results and held its earnings call on Thursday evening.
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Below are the transcripts from the Q3 earnings call.
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Anil Gupta (Vice President of Investor Relations)
Good afternoon and welcome to the Coinbase third quarter 2025 earnings call. My name is Anil Gupta and I’m Vice President of Investor Relations at Coinbase. Joining me on today’s call are Brian Armstrong, Co Founder and CEO Emily Choi, President and COO Alicia Haas, CFO and Paul Grewal, Chief Legal Officer. During today’s call we may make forward looking statements which may vary materially from actual results. Information concerning risks, uncertainties and other factors that could cause these results to differences is included in our SEC filings. Our discussion today will also include certain non GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our investor relations website. Non GAAP financial measures should be considered in addition to not as a substitute for GAAP measures. We’ll start today’s call with opening comments from Brian and Alicia and then take questions from our retail shareholders and our research analysts. With that, I’ll turn it over to Brian for opening comments.
Brian Armstrong (Co-Founder and CEO)
Thanks Anil. It was another great quarter for Coinbase. We continue to drive strong financial performance and build the everything exchange that we announced last quarter. Financially, Coinbase’s core business is incredibly strong and we’re very well positioned for the opportunities ahead of us. Our strong financial performance in Q3 was driven by continued product execution. Total revenue was 1.9 billion, adjusted EBITDA was 801 million. We ended Q3 with 11.9 billion in USD resources and another 2.6 billion in long term crypto investments. So just a quick refresher. Our mission is to increase economic freedom in the world at Coinbase and crypto is the technology that we’re going to harness to get there. Crypto Rails will power more and more of financial services over time because they’re faster, cheaper and more global. With just a smartphone for instance, anyone in the world can access trading and payments, raise money to start a business or get access to credit. Coinbase is the most trusted brand in crypto with deep technical expertise. And as finance moves to these Rails with increasing regulatory clarity, we’re uniquely positioned to lead and capture the upside of this paradigm shift. In Q2, we introduced the Everything Exchange, a one stop shop to trade every asset class. Customers want one venue to trade spot crypto assets, derivatives and options, but also equities, prediction markets, commodities and more. In Q3 we executed on that vision by expanding spot coverage, growing our derivatives offering and laying the groundwork for new asset classes on our platform. In terms of spot coverage, we enhanced our trading platform in Q3 by adding decentralized Exchange or Dex integrations which expanded access to tradable assets from about 300 to over 40,000 assets in the U.S. with DEX integrated under the hood, customers get day one access to new tokens as they are created and we capture the upside when one of those takes off. We’ve also made strong progress in growing our derivatives product. As a reminder, derivatives account for about 80% of all crypto trading volume and in Q3 we were the first to launch CFTC regulated 24.7 perpetual style futures in the US. Early traction is strong for our US style perpetuals production which helps drive all time highs in U.S. derivatives volumes and market share. We closed the Deribit acquisition bringing the number one crypto options venue into Coinbase and Deribit plus Coinbase saw over $840 billion in total derivatives volume in Q3 driven by stronger participation from institutions and advanced traders. Next let’s touch on how we’re accelerating stablecoin adoption by improving payments. The majority of global payments will shift to stablecoins over time because they allow you to send money anywhere in the world in under 1 second for less than $0.01 no other payment rail can match. This adoption is already well underway as stablecoin market cap hit 300 billion driven by companies and financial institutions using them for payments in treasury and we expect policy tailwinds like the Genius act to continue to accelerate this. In Q3, Coinbase customers held on average $15 billion of USDC on platform, making us the largest contributor to USDC’s all time high $74 billion market cap. USDC continues to be the top performing major stablecoin in the crypto ecosystem, growing more than 2x as much as the largest competitor. In closing, with regulatory clarity accelerating crypto rails are set to power more and more of global GDP for trading payments and every financial service. Coinbase is well positioned to be the partner of choice for companies and financial institutions including Citi, which we just announced last week who are looking to come on chain through the end of the year. We’re heads down building the Everything Exchange and scaling stablecoin payments with usdc. Speaking of which, I’m super excited to share that on December 17th we’re hosting our H2 product event where we’ll go through everything we’ve built in the second half of this year. Tune into the live stream for a closer look at the next phase of the Everything Exchange. I’ll now turn it over to Alicia.
Alesia Haas (CFO)
Thanks Brian and good afternoon everyone. As Brian shared, it was a strong quarter For Coinbase, we had total revenue of $1.9 million, net income of 433 million, adjusted EBITDA was 801 million and adjusted net income was 421 million. So let’s dive deeper into our Q3 results. As always, any comparison I’ll share is going to be on a quarter over quarter basis. Unless I note Otherwise. In the third quarter our US and global spot market market trading volume increased 29 and 38% respectively. This is global market. Against that, our Coinbase’s Q3 consumer spot trading volume grew 37% to $59 billion and consumer transaction revenue grew 30% to $844 million. The main difference between the growth rate in volume and revenue was due to a higher mix of advanced trading volume which has a lower fee rate. A couple of call outs on what drove this growth. First, as Brian mentioned, we made progress on growing the number of assets available to our customers both in terms of spot and derivatives assets. Second, our advanced trading volumes were supported by price increases in the long tail of assets as well as our concerted effort to attract and retain high priority traders through a new white glove service offering. Our institutional business had strong results across the board. Total institutional Transaction revenue was $135 million up 122%. The primary growth driver was derivatives. We closed Arabit on August 14 which contributed $52 million to revenue driven by continued growth of options trading which led to all time high notional volumes. Additionally, we saw revenue growth in both our Exchange and Coinbase prime businesses in the third quarter. Now turning to subscription and services revenue which grew 14% quarter over quarter to $747 million. We saw strong native unit inflows across USDC balances in Coinbase products, average loan balances across our institutional financing products and assets under custody. We ended the third quarter with $516 billion in assets on platform. Total operating expenses decreased 9% to $1.4 billion. Technology and development, general and administrative and sales and marketing expenses collectively increased 14% to $1.1 billion, largely driven by headcount and USDC rewards growth. I note that Daribit contributed $30 million to total operating expenses in the third quarter including 16 million in deal related amortization, the majority of which was recorded in sales and marketing. We ended the third quarter with 4,795 full time employees, up 12%. I want to turn your attention to two below the line items that affected our GAAP profitability. First, we had a $424 million gain from the ongoing fair value remeasurement of our crypto investment portfolio. Second, we had a $381 million expense in other expenses, largely driven by unrealized losses related to our investment in Circle, as their stock price was lower as of the end of third quarter as compared to the end of second quarter. Including both of these items, net income was $433 million. Excluding both of these items, adjusted net income was $421 million. Now let’s turn to our Q4 outlook. The fourth quarter is off to a strong start and we expect October transaction revenue to be approximately $385 million. We expect subscription and services revenue to be in the range of 710 to $790 million, driven by higher average crypto prices and continued growth of the Coinbase one subscriber base. On the expense side, our expense range is higher quarter over quarter for Tech and Dev and GNA in the range of 925 to $975 million, up approximately 100 million at the midpoint. Approximately half of this increase is due to the recent acquisitions of Deribit and Echo. The remainder of the quarter over quarter increase is largely due to headcount growth, which we expect to grow at a slower rate in the fourth quarter as compared to the third quarter. Sales and marketing is expected to be in the range of 215 to 315 million dollars. Where we land in this range will largely be determined by performance, marketing, spend opportunities and USDC balances in Coinbase products which drive USDC rewards. Included within the above outlook ranges is approximately $70 million of total depreciation and amortization for Q4. This is an increase from historical averages which has been driven higher due to amortization of intangibles. From our recent acquisitions over the course of 2025, we’ve made a significant investment in headcount to capitalize on the many opportunities we see and accelerate our vision on the Everything Exchange. As we look to early 2026, we plan to absorb the employees we’ve brought into the company and focus on execution and anticipate that our sequential rate of operating expense growth will slow as compared to our Q4 rate. With that, let’s go to questions.
OPERATOR
Thanks. So let’s begin with pre submitted questions from retail shareholders. Many of the top questions touch on similar topics. So for efficiency we’ll group by theme. The first topic is about competition. What’s the plan to improve product innovation and velocity and increase market share? How are you thinking about listing stocks and prediction markets given the success of others. Brian?
Brian Armstrong (Co-Founder and CEO)
Yeah, so on this question I’d say that we’ve spent a lot of time investing in policy and getting regulatory clarity both in the US and a number of countries around the world. And that’s starting to bear fruit, which it’s great. It’s growing the TAM of crypto, it’s making it trusted and regulated even as more and more people come into the space. We’re able to power a lot of that with our infrastructure services. But it does mean that lots of new competition is coming in so we need to make sure we’re executing well. And We’ve talked since Q2 about this everything Exchange vision. We’ve made really substantial progress toward that already. Areas where I think we’re best in class, like I mentioned the Dex integrations where we went from 300 tradable assets to 40,000 tradable assets assets in Q3 and we were the first to launch these CFTC regulated US perpetual style futures contracts which have been growing really well. So there’s a lot to like there. 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. Prediction markets and tokenized stocks and every on chain asset you can imagine. So the Everything Exchange is really central to the next chapter of what we’re building and, and I’m really excited that we’ll have more to share that on December 17th at our product showcase. So please tune into the live stream for that. And I’d say that Everything Exchange is really a perfect complement to all the other features that we’ve built into Coinbase including DeFi, Borrow, Lend, USDC Global Payments, Coinbase Card. People really love that. Product base is having really strong momentum and so I think these are all going to come together to be our goal long term is to be the number one financial app and that’s what we’re working on.
OPERATOR
Thanks Brian. So the second topic is base. Brian, can you elaborate on how you’re thinking about a base network token and in particular how shareholders could be beneficiaries of the distribution. And Alicia, can you talk about the monetization of the base network and how that might evolve over time?
Brian Armstrong (Co-Founder and CEO)
Yeah, so I’ll start it off. You know we’re still early on exploring a base network token but, but the high level goal is to help bring a billion people on chain and just to really grow the developer and creator ecosystem around base. So there’s not any Specifics that we’re going to announce today on the governance or distribution model or the timing of it exactly. But we are going to build this in the open and just continue talking with our customers, investors, regulators, to make sure that we get it right. So, Alicia, anything you want to add?
Alesia Haas (CFO)
I’ll just speak about monetization. So on the base chain, we monetize through sequencer fees and we’ve talked historically about how we have direct monetization through sequencer fees. But we also monetize indirectly. As those who are building apps on base often will then incorporate usdc, they will often need to be able to buy other crypto, they may need custody solutions. And so we do monetize the other products and services by the growth of the overall ecosystem and the growth of on chain developers. What I would share though is the base app that we are building, then on base will have other monetization opportunities. The base app is monetizing through …
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