Coinbase achieved a diluted earnings per share of $0.28, a notable improvement from last year’s $0.01 loss, yet still shy of analyst expectations.
During trading after hours on Wednesday, Coinbase shares experienced a decline. The decline in Coinbase shares occurred because the cryptocurrency exchange revealed lower earnings and sales for the third quarter than what Wall Street experts had predicted.
According to the statistics provided by FactSet, the cryptocurrency exchange reported a total revenue of $1.2 billion for the quarter, which is significantly higher than the average expectation of 1.56 billion dollars.
Crypto Winter Takes its Toll on Coinbase Earnings
Coinbase Global Inc. reported $1.2 billion in revenue for the third quarter of its fiscal year 2024 on Wednesday. This figure represents a nearly twofold increase from the same period in the previous year.
The company reported a significant improvement from the $0.01 per share loss it reported during the same time period last year, reporting a diluted earnings per share of $0.28, excluding those adjustments.
On the other hand, that was lower than what analysts had initially anticipated. After suffering a loss of $2.3 billion during the same period of time last year, the net income for the quarter increased to $75.5 million.
We saw average native unit growth across staking, on-platform USDC, and custody, which contributes to long-term revenue diversification. Despite the relatively weak market conditions, Coinbase managed to achieve this growth.
On its base network, Coinbase has recently deployed artificial intelligence agents that are capable of managing cryptocurrency wallets and interacting with the blockchain. Coinbase’s principal source of revenue, transaction fees, experienced a 27% decrease from the second quarter to the third quarter as trading volumes at exchanges based in the United States continued their downward trend.
When comparing the average for the third quarter with the average for the second quarter, the volatility of cryptocurrency assets, which is a key driver of trading volume, decreased by approximately 5%,” the business noted in its earnings report.
According to the article, the shares of the exchange dropped by roughly seven percent. However, by the end of the year, they had increased by almost 22%, which is reflective of the general positive mood in digital assets.
Meanwhile, Coinbase has introduced several features this year, the most recent being the ability for Visa debit card holders to instantly deposit funds into their Coinbase accounts. This is happening despite the ongoing uncertainty surrounding the regulatory landscape in the United States.
The exchange is diversifying its bets in order to reduce its reliance on large volumes of trading as a source of revenue. Included in this diversification are enhancements to its custody offering and participation in the tokenization of real-world assets.