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Coinbase Beats Revenue Expectations, Expects To Win SEC Legal Battle

Cryptocurrency exchange Coinbase reports Q2 results, anticipates victory in lawsuit against SEC.

Cryptocurrency trading platform company Coinbase Global Inc (NASDAQ: COIN) reported second-quarter financial results after the market close Thursday. 

Coinbase Global (COIN.O) beat second-quarter revenue expectations on Thursday on higher interest income while its executives said the crypto exchange expects to win its legal battle with the U.S. securities regulator.

The company and its rival Binance were sued by the U.S. Securities and Exchange Commission in June. It alleged that Coinbase traded at least 13 crypto assets that are securities without registering them with the regulator according to Reuters.

The SEC action marked a dramatic escalation of a crackdown on the crypto industry. “With respect to the litigation with the SEC, I want to be very clear, we do think we can win. We expect to win,” said Chief Legal Officer Paul Grewal in a post-earnings call.

Photo Illustrating Coinbase. Guidance from the company calls for subscription and services revenue to hit $300 million or more. The company said it had $110 million in transaction revenue for the month of July. COSTFOTO/NURPHOTO VIA GETTY IMAGES. 

Shares in Coinbase were last down 1.2% in volatile extended trading. The stock has seen a blistering rally this year, gaining 156% amid renewed retail interest and sector-wide tech rebound.

Coinbase reported total revenue of $707.9 million, which was down 8% quarter-over-quarter. The revenue total beat a Street consensus estimate of $643.36 million, according to data from Zenger News Pro. The company reported a loss of 42 cents per share, which beat a Street consensus estimate of a loss of 78 cents per share.

Coinbase reported transaction revenue of $327.1 million, which was down 13% quarter-over-quarter. Total subscription and services revenue totaled $335.4 million in the quarter. This was a sharp increase from the 40% and 39%, respectively, seen in the first quarter. 

Bitcoin (CRYPTO: BTC) represented 40% of trading volume and 39% of transaction revenue in the second quarter. Ethereum (CRYPTO: ETH) represented 23% of trading volume and 21% of transaction revenue.

Subscription revenue totaled $335 million in the second quarter, which was down 7% quarter-over-quarter. This marked the first decline for the segment on a quarter-over-quarter basis. Assets on the platform totaled $128 billion, down 1% quarter-over-quarter. The company highlighted several crypto regulation and legal Challenges with bills in Congress.

Photo Illustrating Coinbase. Guidance from the company calls for subscription and services revenue to hit $300 million or more. The company said it had $110 million in transaction revenue for the month of July. COSTFOTO/NURPHOTO VIA GETTY IMAGES. 

“One of Coinbase’s highest priorities is achieving regulatory clarity for our industry,” said the company.

Guidance from the company calls for subscription and services revenue to hit $300 million or more. The company said it had $110 million in transaction revenue for the month of July.

“The crypto industry remains volatile, as evidenced by ongoing uncertainty in the regulatory environment. While we can’t predict what will happen next, we continue to operate towards our goal of improving Adjusted EBITDA in absolute dollar terms versus full-year 2022,” said Coinbase.

Coinbase shares are up 6% to $96 in after-hours trading Thursday versus a 52-week trading range of $31.55 to $116.30. 

Produced in association with Benzinga

Edited by Eunice Anyango Oyule and Judy J. Rotich

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