Coinbase shares fell sharply in after-hours trading, losing roughly 5% of its stock price, after missing on earnings estimates for the quarter. The company was expected to bring in $1.29 billion in Q2.
According to Coinbase, total crypto spot trading volume declined more than 20% from the previous quarter as crypto asset prices fell and market volatility reached multi-year lows. Transaction revenue totaled $599 million—lower than the expected $628 million.
Subscription and services revenue totaled $555 million, representing 48% of net revenue. Coinbase said the figure was below its previously forecast range of $565 million to $645 million because certain USDC-related commercial agreements closed later than expected and lower crypto asset prices reduced staking revenue.
Stablecoin revenue totaled $292 million. Average USDC held across Coinbase products reached a record $20 billion during the quarter, representing more than 30% of USDC in circulation at quarter-end. Coinbase also said 88% of net revenue came from sources other than Bitcoin spot trading, compared with 45% in the second quarter of 2020.
Coinbase said its crypto trading market share reached a record 10.3% during the quarter, its third consecutive quarter of market share gains. The company said it gained share in both spot and derivatives trading.
In a bright spot for the company, prediction markets contracts and revenue grew 106% from the previous quarter and exceeded a $100 million quarterly annualized net revenue run rate, according to Coinbase. Average Borrow/Lend balances increased by more than $1 billion from a year earlier to $1.49 billion. The company also said the conditions for its commercial agreement with Circle to renew in August automatically had been met.
The earnings report follows a busy second quarter for Coinbase.
Coinbase ended the quarter with $8.6 billion in cash and cash equivalents and $10 billion in total available resources. During the quarter, the company repurchased 814,000 Class A shares. Year to date, it has repurchased nearly 7 million shares for $1.2 billion, leaving about $2 billion remaining under its share repurchase authorization.
For the third quarter, Coinbase said transaction revenue totaled approximately $130 million through July 26. The company expects subscription and services revenue between $500 million and $580 million and adjusted expenses between $980 million and $1.08 billion.
Despite the weaker-than-expected earnings report, Coinbase CEO Brian Armstrong remained optimistic about the future of the company.
