Coinbase reported Q3, so here's the full rundown and how my 3 tells did.
the headline numbers: net revenue was $1.16B, basically flat on last quarter but down 34% on last year. transaction revenue was $590M (down 44% YoY) because consumer spot trading volume fell 59%, and monthly transacting users dropped to 7.4M from 9.3M a year ago. subscriptions and services held up better at $570M, which is now 49% of revenue, so the diversification story is actually showing up in the numbers.
the new stuff is doing real work. prediction markets only launched in February and already passed a $200M annualised run-rate, and together with derivatives they're now about 25% of transaction revenue. trading market share went up for the 4th quarter in a row to 10.7%. the not-so-new stuff is weaker: staking (blockchain rewards) fell 54% to $86M because Solana and Ethereum prices are down.
the $719M net profit looks amazing until you see that $715M of it is Coinbase marking up the crypto it holds. adjusted net income was $78M and adjusted EBITDA was $333M (up 60% QoQ). for Q4, October transaction revenue was about $165M as of Oct 25, and they guided subscriptions and services to $550-630M. stock was down about 2% after hours.
my 3 tells:
✅ USDC on Coinbase averaged $22B, up 49% YoY and about 30% of all USDC. stablecoin revenue went up to $307M from $292M last quarter
❓ what Circle pays its other partners - not addressed. but the 10-Q's own explanation (+$84.6M from higher balances, -$52.8M from lower rates) leaves a ~$50M gap, and my rough maths says it's the off-platform share shrinking
❓ Coinbase getting onto Circle's chain - not addressed
and after paying out $129M in USDC rewards, the USDC leg kept about $178M, down about 17% YoY, with most of that coming from the off-platform share, which is the part getting squeezed (chart attached).
so i'm still holding the core and still not adding. full reasoning is in part 3, give it a read if you haven't!
https://substack.com/@thewontoninvestor/note/p-222484090?r=g6v1z
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