Key takeaways
- Coinbase reported a $719 million Q3 profit, beating Wall Street expectations
- Crypto trading revenue plunged 44% year over year to $590 million
- Prediction markets and subscription services showed strong growth
Coinbase shares fell approximately 2% in after-hours trading on Oct. 29, despite the exchange reporting a surprise $719 million profit for the third quarter of 2026. While earnings exceeded Wall Street expectations, declining revenue and weakening cryptocurrency trading activity raised concerns about the company's underlying performance.
Coinbase reported earnings of $2.51 per share, comfortably beating analysts' expectations of a loss of approximately $0.26 per share. However, total revenue fell 35% year over year to $1.22 billion, matching market forecasts.
Coinbase's $719 Million Profit Came With a Catch
Although Coinbase returned to profitability after three consecutive quarters of losses, much of its reported earnings came from investment gains rather than its core operations.
The company recorded approximately $715 million in gains on cryptocurrency investments during the quarter. After excluding investment-related gains and other adjustments, Coinbase's adjusted net income stood at just $78 million.
(Source: investor.coinbase.com)
Transaction revenue also declined 44% year over year to $590 million, likely due to weaker cryptocurrency trading conditions and reduced market volatility. Nevertheless, Coinbase increased its share of cryptocurrency trading volumes to 10.7%, which was its fourth consecutive quarter of market share gains.
Adjusted EBITDA reached $333 million, representing a 60% improvement from the previous quarter but a 58% decline compared to the same period last year.
Prediction Markets Become a Major Growth Driver
Despite the slowdown in cryptocurrency trading, Coinbase reported impressive growth in its newer business segments. Its prediction markets business surpassed $200 million in annualized revenue, and became one of the fastest-growing products in the company's history.
Daily prediction market traders increased more than 60% quarter over quarter, while revenue from the segment recorded compound quarterly growth of 82% since its launch.
Meanwhile, subscription and services revenue reached $570 million, accounting for approximately 49% of net revenue.
Average USDC balances held across Coinbase products also reached a record $22 billion, increasing 49% year over year. Paid Coinbase One subscriptions climbed 24% over the same period.
What Comes Next for Coinbase Stock?
Coinbase lowered its full-year adjusted expense outlook to between $4.15 billion and $4.30 billion, while projecting fourth-quarter subscription and services revenue of $550 million to $630 million. The company also ended September with approximately $8.6 billion in cash and cash equivalents.
However, investors are still cautious. Coinbase shares already fell approximately 29% since the beginning of 2026 before Thursday's earnings announcement. While its expanding prediction markets, stablecoin services and subscription businesses offer potential growth opportunities, Coinbase's latest results show that there are still challenges facing its cryptocurrency trading operations.
