Coinbase Global’s third-quarter profit exceeded analysts’ forecasts, driven by increased volatility in digital assets which boosted trading volumes at the cryptocurrency exchange. This positive result led to the company’s shares rising over 3% in after-hours trading on Thursday.
Digital asset prices climbed in July after crypto-friendly policies from U.S. President Donald Trump attracted institutional investors, pushing Bitcoin to new highs. However, in the following month, poor economic data fueled recession worries, prompting a widespread selloff as investors liquidated riskier assets. Cryptocurrency exchanges typically profit from sector volatility because they earn more from transactions as investors try to hedge their portfolios.
Coinbase’s transaction revenue increased to $1.05 billion during the quarter, compared to $572.5 million a year earlier. The company reported a net income of $432.6 million, or $1.50 per share, for the three months ending September 30. This is a significant jump from the $75.5 million, or 28 cents per share, reported a year ago, and beat the $1.06 per share profit expected by analysts, according to LSEG data.
The company also completed its acquisition of Deribit in the third quarter, enhancing its position in the derivatives market, an area where Third Bridge analysts noted it had historically been weak. Chief Financial Officer Alesia Haas stated on a conference call that Deribit is already the market leader in options, holding over 75% market share. She noted that while this business is currently non-U.S., there is potential to expand the options market in the U.S.
Revenue from Coinbase’s subscription and services unit, which covers non-trading operations, increased by 34.3% to $746.7 million during the third quarter. Stablecoin holdings and related platform activities account for a portion of this revenue, which rose to $354.7 million from $246.9 million a year earlier.
In a letter to shareholders, Coinbase expressed confidence in accelerating payments through stablecoin adoption, anticipating continued growth due to supportive policies and increasing use by financial institutions and corporations for treasury and payment needs. Stablecoins have gained acceptance in traditional finance and have been a focus of legislation, including the GENIUS Act passed earlier in the year, which aims to create a regulatory framework and encourage wider adoption. David Bartosiak, Stock Strategist at Zacks Investment Research, summarized the company’s position, saying, “Coinbase is cash-rich and growth-ready.”
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