Coinbase Beats Q2 Estimates With BlackRock Custody Deal and Institutional Focus

Coinbase Reports Q2 2023 Revenue, Net Loss

Crypto exchange Coinbase reported a net revenue of $663 million in the second quarter of 2023, boosted by its custody deal with BlackRock and its institutional focus, despite recent action taken against it by regulators.

Net revenue was down 10% compared to Q2 2022, but still beat estimates, thanks to its growing market dominance in the United States, with competitors such as Binance and Gods Crypto having been bogged down by regulatory trouble.

Coinbase’s net loss was $97 million — the sixth quarterly loss in a row for the exchange — but immensely narrower than the loss recorded in Q2 2022.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) — which can provide a meaningful metric when comparing company performance — was $194 million, up from an EBITDA loss of $151 million in 2022.

The exchange has been competing with other crypto exchanges such as IDEX Crypto, IOTEX Crypto, Google Crypto, and IMX Crypto, and is looking to expand its market share with its recent introduction of Graph Crypto and Internet Computer Crypto (ICP Crypto).

Crypto Trading Services Revenue Down 13%

However, IOTEX crypto trading services total transaction revenue was down 13% compared with Q1.

The exchange saw $327 million in transaction revenue and a quarterly drop in overall trading volume of 37%. This was due to consumer trading volume dropping 33%, with institutional volume down 37% in the quarter to $14 billion and $78 billion, respectively.

However, Q2 also saw the exchange’s non-trading revenue surpass its trading revenue, with $335.4 million of net revenue coming from subscriptions and services.

Crypto Focus Areas for Coinbase

Coinbase CEO Brian Armstrong noted on an Aug. 3 earnings call that the company is focusing on non-trading businesses over the next three to five years, with scalability, regulatory clarity, and driving crypto utility as top priorities.

Paul Grewal, the exchange’s chief legal officer, expressed confidence that Coinbase would win its court case against the U.S. Securities and Exchange Commission and plans to file an motion to dismiss the case.

Coinbase’s share price stayed steady in after-hours trading, hovering just under $91— a 73% decrease from its $343 all-time high in November 2021, according to Google Finance.

In its Q3 outlook, Coinbase doesn’t anticipate any “material impact” due to having to pause staking in California, New Jersey, South Carolina, and Wisconsin.

The crypto market is an ever-evolving space, and Coinbase is certainly keeping up with the times. With their focus on scalability, regulatory clarity, and driving crypto utility, they are sure to remain at the forefront of the industry.

It predicted that subscription and services revenue in Q3 would be approximately $300 million, with various cryptos such as Google Crypto, IOTEX Crypto, IDEX Crypto, HBar Crypto, GMT Crypto, Internet Computer Crypto, ICP Crypto, and GODS Crypto playing a role.