Coinbase shares spike after Q2 earnings beat Wall Street odds

Coinbase’s (COIN) second-quarter revenue topped Wall Street estimates on Thursday, as trade volumes surged due to market excitement amid lowering regulatory barriers, pushing the crypto exchange’s shares up 3% after the bell.

Coinbase shares surged 3.2% after hours on its latest Q2 earnings filing, which showed $1.4 billion in revenue and a significant year-on-year growth in crypto trading volumes.

Crypto markets have received a boost this year after the United States Securities and Exchange Commission (SEC) approved an exchange-traded fund to track the spot price of Bitcoin and ether, putting an end to an almost decade-long battle. CEO Brian Armstrong said on the post-earnings conference call that:

We are increasingly optimistic that the next administration, whether Democrat or Republican, will be constructive on crypto. The rhetoric has shifted […] Since we went public, we have reiterated the need for regulatory clarity.

-Brian Armstrong

Coinbase’s Q2 2024 results showed a mixed economic performance. Despite a 27% quarter-over-quarter fall in transaction revenue to $781 million, the company’s subscription and services revenue increased by 17% to $599 million.

The crypto exchange reported that diversifying revenue streams amounted to a net income of $36 million. However, the quarter was also hurt by $319 million in pre-tax crypto asset losses, the majority of which were unrealized, as the value of crypto assets fluctuated.

According to LSEG data, the company’s overall sales more than doubled to $1.45 billion, exceeding analysts’ expectations of $1.4 billion. It earned 14 cents per share in the quarter, compared to a loss of 42 cents the year before.

In addition to financial performance, Coinbase highlighted its emphasis on product innovation, specifically improving the utility and accessibility of its platform. The company announced a 300% quarterly increase in transactions on Base, its layer two (L2) solution, and expanded its service with the addition of smart wallets.

The developments are part of Coinbase’s larger plan to reduce friction in on-chain transactions and promote wider crypto adoption. Furthermore, the company emphasized its USDC expansion, which was helped by its partnership with Stripe.

Coinbase prides being in the regulatory forefront

On the regulatory front, Coinbase made major strides in advocating for more transparent crypto rules in the United States. The exchange backed the “Stand With Crypto” campaign, which has gained over 1.3 million supporters.

In Q2, we made extraordinary progress toward driving regulatory clarity in the US and around the world. Crypto legislation has become a mainstream issue in the US, garnering bipartisan support, and there is real energy within both the House and the Senate to pass meaningful legislation.

-Coinbase

Furthermore, the exchange regards the approval of Ethereum ETFs in the United States and USDC’s compliance with the European Union’s MiCA framework as significant milestones in developing a more defined regulatory landscape for the crypto industry. Coinbase added that it minted its Q2 2024 earnings report on-chain.

Coinbase reported a profit for the third consecutive quarter and the sixth on an adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) basis. Net income for the quarter was $36 million.