Coinbase earnings disappointment tempered by USDC interest income

Coinbase earnings disappointment tempered by USDC interest income

Coinbase posted lower-than-expected third-quarter revenue but beat earnings per share after Thursday's close, sending the stock reeling in after-hours trading.

The cryptocurrency exchange reported $590 million for the quarter. Analysts had expected $641 million. Transaction revenue — historically Coinbase's biggest moneymaker — fell 44% from the second quarter.

Like its competitor Robinhood, Coinbase benefited from interest income this quarter. The exchange, which owns the USDC stablecoin together with the issuer Circle, collects interest payments on the stablecoin's reserves. With ever-increasing rates, the payouts have increased.

In the second quarter, Coinbase's interest income increased fivefold to $32.5 million. In the third quarter, the figure rose 213% to $101.8 million.

The number of users with monthly transactions fell to 8.5 million from 9 million in the second quarter.

“Macro conditions deteriorated in the third quarter, causing daily average crypto market cap and volatility to decline 30% and 24% sequentially, respectively,” Coinbase wrote in its letter to shareholders. “This resulted in lower crypto trading volumes and a continued shift in our retail customers’ behavior from trading to ‘hodl’ing’.”

The earnings come a day after Coinbase saw a big exit: Chief Product Officer Surojit Chatterjee said he would be leaving the company after about a year and a half.

“It’s time to get off the ride and catch your breath,” he continued LinkedIn Wednesday.

COIN ended the New York trading session down 8.1%. The stock fell another 2% in after-hours trading on earnings before recovering to gain 7.5% as of 4:35 ET.

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The disappointment of Coinbase earnings disappointment from USDC interest income is not financial advice.