Coinbase Shares Are Flat After Earnings, Revenue Top Estimates

(Bloomberg) -- Coinbase Global Inc. shares rose less than 1% in extended trading after the largest U.S. cryptocurrency exchange guided for lower monthly users and trading volume in the third quarter.  

• The company reported second-quarter revenue of $2 billion, while analysts polled by Bloomberg expected $1.88 billion. It had net income of $1.6 billion, while analysts expected $683.3 million.
• Coinbase, which doesn’t provide forward financial guidance, said it expects lower monthly transacting users and lower trading volume in the current, third quarter. The company still boosted its full-year 2021 average monthly transacting users estimates vs prior guidance.

Key Insights

• Coinbase said its total trading volume grew nearly 38% sequentially in the second quarter, even as Bitcoin dropped from its all-time high. Institutional trading volume rose 47% sequentially, while retail trading volume rose 21%. Retail investors pay higher fees than institutional traders, and accounted for nearly 95% of Coinbase’s transaction revenue in the quarter.
• Coinbase said it added 1,000 institutional customers in the quarter. About 10% of the largest hedge funds have begun using the company’s services, Coinbase said. “In the past cycles we saw much more correlation between investment behavior,” Alesia Haas, chief financial officer at Coinbase, said in an interview. “Now we are starting to see that there could be client growth during different business cycles.”
• Coinbase said it is providing services to Elon Musk, and his companies SpaceX and Tesla.
• In the second quarter, Coinbase added more assets for trading than in all of 2020. It now supports 83 assets for trading and 142 for custody.
• The company added 450 employees in the quarter, to end with a total of 2,176 workers.
• The company ended the quarter with $4.4 billion in cash and cash equivalents. It continues to look for appropriate acquisitions, Haas said.

Market Reaction

• Coinbase’s shares are down about 20% from their closing price of $328 on its first day of trading on the Nasdaq back in April.

Get More

• See the earnings statement.
• Get analyst estimates.

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