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In the letter, Coinbase confirmed that the total revenue was down 11% quarter-over-quarter and the revenue from transactions was $781 million, down 27% from Q1 2024.
The shares of Coinbase Global Inc (NASDAQ: COIN), the leading digital asset trading platform in the United States, tanked by more than 5% after the company unveiled its Q2 2024 earnings reports. As per a report from Reuters, the exchange was able to surprise investors, surpassing Wall Street expectations and posting a total revenue of $1.45 billion, while analysts expected only $1.4 billion.
It is important to note that Coinbase’s subscription and services unit, which includes all the exchange’s businesses outside of trading, generated a whopping $599 million in revenue, bringing the company’s net income to $36 million. This is a significant increase from Q2 2023 when the unit generated $335.4 million. In Q1 2024, the unit generated $510.9 million.
The Q2 earnings report confirmed that the net income of the exchange had tanked significantly. In the previous quarter, Coinbase reported $1.2 billion in net income, while this quarter generated only $36 million, resulting in a massive slide in the price of the COIN stock.
However, the exchange highlighted partnerships with exchange-traded fund (ETF) issuers, confirming that it is the “trusted partner” and custodian of 8 out of 9 Ethereum ETF issuers, which were approved by the United States Securities and Exchange Commission (SEC) in July. The co-founder and chief executive of the exchange Brian Armstrong said:
“We are increasingly optimistic that the next administration, whether Democrat or Republican, will be constructive on crypto. The rhetoric has shifted.”
In the post-earnings call, Armstrong also added that it has “reiterated the need for regulatory clarity” since it went public and, until now, is the only crypto exchange to be publicly listed in the United States.
Notably, the letter to shareholders confirmed that the reason for the decline in the earnings of the crypto exchange stems from the fall in the price of digital assets and stock-based compensation.
In the letter, Coinbase confirmed that the total revenue was down 11% quarter-over-quarter and the revenue from transactions was $781 million, down 27% from Q1 2024. However, the transaction revenue was significantly up from Q2 2023’s $327 million. Further, the total operating expense was up 26% from the last quarter, at $1.1 billion.
Coinbase Stock Saw a Massive Decline
The shares of Coinbase tanked more than 5% on Thursday but are up by 3.23% during the aftermarket hours, trading at $219.50. The stocks ended Thursday’s market at $212.64 and might open Friday on a bullish note.
“Our balance sheet remains strong, as we ended Q2 with $7.8 billion in $USD resources, up $733 million Q/Q,” Coinbase said while adding that the company will continue to fight for regulatory clarity for digital assets in the United States.
Meanwhile, around 415,000 people joined “Stand with Crypto”, a Coinbase initiative for regulatory clarity of crypto, in Q1 2024. This number has skyrocketed to more than 1.3 million in Q2 2024.
