Coinbase 2024 Q2 Earnings Analysis

1. Total revenue:

• Total revenue of $1.44963 billion, higher than the forecast of $1.42732 billion.

• Revenue increased year over year, reflecting the company's strong performance in terms of diversified revenue streams and market demand.

2. Earnings per share (EPS):

• The actual value was $1.07, higher than the forecast of $0.9593.

3. Net profit:

• Net profit for the second quarter was $36 million.

Performance of each business unit

1. Trading revenue:

• Trading revenue was $0.781 billion, down 27% year over year, mainly due to reduced spot trading volume due to reduced volatility in crypto assets.

• Increased transaction fees for derivatives and Coinbase wallets partially offset the decline in spot trading revenue.

2. Subscription and service revenue:

• Subscription and service revenue grew 17% to $0.599 billion, mainly driven by stablecoin revenue and blockchain rewards revenue.

3. Operating expenses:

• Total operating expenses were $1.1 billion, up $0.229 billion from the previous quarter, mainly due to changes in earnings from operating crypto assets, increased sales and marketing expenses, and increased policy expenses.

KEY HIGHLIGHTS

1. Regulatory Clarity:

• Coinbase has made significant progress in advancing cryptocurrency legislation, particularly in the US and international markets.

• The Supreme Court overturned the “Chevron Deference” case, which is a positive sign for Coinbase and shows the court's skepticism about the regulator's interpretation of the law.

2. Technology and product innovation:

• The Layer 2-based Base platform makes global transactions as low as 1 cent and can be completed within 1 second.

• Smart Wallet (Smart Wallet) has been launched. Users can log in quickly and securely through biometric technology (such as fingerprints) without having to remember 12 character mnemonic words.

3. Cooperation and market expansion:

• Coinbase partners with companies like Stripe and Shopify to drive cryptocurrency adoption.

• Coinbase is driving the adoption of USDC globally, particularly through Mica compliance in Europe.

Market prospects and challenges

1. Future Revenue Expectations:

• Coinbase expects total revenue of $0.95 billion to $1.03 billion for the third quarter of 2024.

• Subscription and service revenue may face some slight headwinds, mainly due to fluctuations in the price of Ethereum and anticipated changes in interest rates.

2. derivatives Market:

• The derivatives market's share of Coinbase's trading volume is gradually increasing, and although its current contribution is small, it may become an important source of revenue in the future.

3. Cost management and scaling:

• Coinbase plans to increase variable marketing spending in the second half of 2024 to meet market needs and opportunities.

• The company will continue to carefully manage fixed costs and make strategic investments in products and international expansion.

conclusions

Coinbase showed strong financial performance in the second quarter of 2024, with significant progress in revenue diversification and market expansion. The company's efforts in technological innovation and regulatory clarity have laid a solid foundation for future growth. Despite facing market fluctuations and uncertainty in the regulatory environment, Coinbase invests through diversified revenue streams and strategic investments. Coinbase's competitive advantage and long-term growth potential in the cryptocurrency industry.