Coinbase Q2 earnings miss estimates as shares slide after hours
Coinbase posted a wider-than-expected Q2 loss and lower revenue, sending shares down more than 5% in extended trading.
By Dev Ramirez · Crypto Correspondent
· 3 min read
Coinbase Q2 earnings came in below Wall Street expectations, and the stock fell more than 5% in after-hours trading Thursday. For everyday investors, the report shows how closely the crypto exchange’s results still track trading activity, even as Coinbase tries to build revenue streams beyond buying and selling digital assets.
For the quarter ended June 30, Coinbase reported a loss of $1.36 per share, compared with the 17-cent loss analysts expected, according to LSEG estimates cited in the company’s results coverage. Revenue was $1.2 billion, short of the $1.3 billion analysts were looking for.
The company posted a net loss of $359.5 million, or $1.36 per share. A year earlier, Coinbase earned $1.43 billion, or $5.14 per share. Revenue also declined from $1.5 billion in the year-earlier quarter.
The miss marked Coinbase’s third straight quarter of falling short of Wall Street forecasts for both revenue and earnings, according to the reported analyst comparisons.
Why did Coinbase shares fall after earnings?
Investors reacted to the gap between Coinbase’s results and analyst expectations. A wider loss and lower-than-expected revenue can pressure a stock because they signal weaker profitability and business momentum than the market had priced in.
Coinbase’s reported net income can also swing for accounting reasons. The company’s crypto holdings must be marked to their value at the end of the quarter, which can move earnings sharply even when Coinbase has not sold those assets.
The market backdrop did not help. Bitcoin traded mostly in a narrow range during the second quarter, and bitcoin ETF flows moved into a sustained stretch of outflows after earlier strength, according to the report. An ETF lets investors buy a basket of investments in one trade, and flows into or out of those funds can reflect investor demand for exposure to an asset class.
Higher interest rates and broader market volatility also weighed on appetite for risk, according to the report. Crypto exchanges tend to benefit when more investors trade actively, so quieter or weaker markets can reduce transaction revenue.
Coinbase’s revenue mix is changing
Coinbase generated $599 million in transaction revenue during the quarter. Subscription revenue was close behind at $555 million, making up a larger share of the overall business.
That mix matters because transaction revenue is tied to trading volume, which can rise and fall with crypto prices and investor activity. Subscription revenue comes from products grouped under Coinbase’s subscription business and is meant to be less exposed to short-term swings in trading.
Both major revenue categories still missed Wall Street expectations and were lower than a year earlier, according to the reported results. That leaves Coinbase with a mixed picture: more evidence of revenue diversification, but continued pressure from the broader slowdown in crypto activity.
Coinbase CEO Brian Armstrong pointed to market share as a sign of progress. In the company’s earnings release, Armstrong said Coinbase reached another all-time high for crypto trading market share and argued that the company is no longer tied only to Bitcoin’s price.
Armstrong said financial services including trading, payments and lending are being changed by crypto, and that Coinbase is positioned to support that shift. Investors will now weigh that long-term pitch against the near-term reality of missed estimates, weaker revenue and an unprofitable quarter.
This story draws on original reporting from CNBC.
