Coinbase Beats Earnings Estimates In Q2 As Cryptos Rise

Crypto exchange Coinbase's shares rose as much as 2.1% in extended trading Tuesday after reporting second-quarter revenue that was stronger than analysts had expected.

During the quarter, Coinbase’s total revenue reached $2.23 billion, which helped the company generate a 4,900% increase in net income to $1.61 billion in the three-month period. The company benefited from a one-time line item worth $737.5 million, which stemmed from what Coinbase described as a “tax benefit” from its direct listing earlier in the quarter.

The U.S.’ largest cryptocurrency exchange grew to 8.8 million monthly transacting users (MTUs) and 68 million total users in the quarter, versus analyst estimates for 6.7 million monthly users and 62.8 million total users. The exchange’s take rate – or retail trading revenue divided by retail trading volumes – was 1.24%, up from 1.21% last quarter.

The company did note that MTUs in July had declined significantly to 6.3 million and trading volume was only $57 billion in the month. While August’s numbers were slightly higher than this, Coinbase warned that MTUs and trading volume would be lower in Q3 compared to Q2.

The exchange also slightly lowered its yearly forecast range for active users, a key metric, from a range of 5.5 million to 9 million by the end of the year, to a range of 5.5 million to 8 million.

Coinbase, which has benefited from the growing adoption of digital assets, said the reported quarter illustrated the volatility of the still-nascent sector that faces calls for more regulation.

The company reported that total trading volume diversified beyond bitcoin into ethereum and other crypto assets. Approximately 24% of the company’s total trading volume for the quarter was concentrated in bitcoin, down from 39% in Q1.

Chief Financial Officer Alesia Haas said Coinbase is paying close attention to the U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler's comments, who called on Congress last week seeking more authority to better police cryptocurrency trading, lending and platforms.