Coinbase Global (COIN) 11 Aug 212021 Q2 Earnings call transcript

Good afternoon. My name is Maria, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Coinbase Second Quarter 2021 Earnings Call. Call lines have been placed on mute to prevent any background noise. After the speakers' presentation, there will be a question-and-answer session. would first to President speaker, Relations. I over the of And your to Anil instructions] now turn like call Investor [Operator Gupta, Vice

may You conference. your begin

earnings the Good welcome Coinbase call. Second afternoon to Quarter and XXXX

earlier me was and Haas, the published Investor CEO, opportunity on Joining Co-Founder read our all website hope Alesia today's our Brian CFO. call Armstrong, today. on shareholder and you've to I had are letter Relations which

we may you statements. Before in call, from available we included and our is that our like may could results differ remind website, started, Information that forward-looking results cause letter uncertainties, today's on IR forward-looking get during make SEC vary I'd to risks, other from filings Actual factors statements shareholder @investor.coinbase.com. these to statements. today's materially concerning and

include our condition will not of non-GAAP certain to should management and as trends references believe from financial addition Non-GAAP a for, in GAAP investors useful to a be adjusted isolation results measures We measure. measures considered non-GAAP measures. or to, information financial today in regarding discussion and to Our the financial of that operations. financial substitute provide results EBITDA, relating

QX investors? quarter What ahead you and are questions, to last shareholders additional all to that, comparable we and Form enable go reconciliation them. I'll including adjusted regarding started. most of net income, our quarter, our are do team. are posted Brian, summarize shareholder to With to to opportunity which management X-K, We using analysts had the technologies Coinbase website. and the find so trends EBITDA, to current IR can GAAP You was Similar our several disclosures for in thematic on upload highlight SEI measure, submit think a for letter strong and questions report let's our important Coinbase. on a get some

Anil. Thanks,

our platform, in to of You're really We users had correct. growth us. the strong And assets users. platform, also, about lines revenue, a for just on diversification amazing and terms everything. QX revenue across was the added quarter great

really this people all Economy, good more and world. individuals, using is and More the So, crypto to Crypto businesses, developers over using see. the are

strong Coinbase, here because think Now, it's we call. about on theme a earnings longer-term to always that we crypto. This a at remember cycles just this had about you're talk hear to quarter, lot a of important is us going

down. our influencing came economic technology, really freedom in eventually last mission economy So, we to don't that, about too how I We're looking growing, trends quarter mind as there's for crypto excited that of So, quarter. try the creating trends are really at in how's how asked question any or the to being and is the new me about this using get particular about that long-term up well, more always think, were world? the important the X people

is crypto trading. The we're one people this and to continuing see of that things beyond for first more more trend using

one our ago. have X.X XXXX, had on staking. we million just X.X now that year type -- for your example, to we this letter in less think probably And activity, back retail up now staking For if total. yield earn shared than users is zero million XXXX, go of in I number late crypto, a have users MT to assets. we from And a in Coinbase we that the on million which you would a doing basically, a way doing And is side

trading. things that's more of crypto, with people do whether and then, card, money and crypto, more and with earning staking, using seeing borrowing lending, we're So, Coinbase course,

then there not just which wrote decentralization. the That's economy a second time, that forming, percentage up trend platform. is a I continue decentralization, to for over we'll people in of crypto how on startups be the and being think go focusing going truly embracing apps crypto to seeing a Coinbase today. are And eventually to make is I NFT's so, to of trends this there need the DeFi, every that of list are idea be is And big There it's legal. see means that Really assets, And -- This is want for great. are that want a and going we're crypto out the to this. big that of created decentralization. and to more being thousands we two listing that We of more with what believe integrate them. Coinbase I'm connect all it to we of about There going it to under post millions decentralized. account, We're Those embracing primary theme us be blog third-party wallets are there this these financial the is so just Amazon now more be that's apps There's them and this assets. to built. more and asset and industry today. are form easy to where is are the their also future out -- the is international people their of third-party another of connect and trading happening; all hundreds expansion, of seeing

dive the can we questions? Alesia, you highlights Great, investor thanks. recap into financial And before

Anil. Thanks,

X.X percent that engaging To the Separately sought million user adoption. though, also our during have users earn saw broad quarter. side, products me, that partners. how on the is with users of million and from retail is platform. on growth our really this quarter our institutional things we're for Coinbase, in and multiple using really seeing we elaborate XX% our shared second on Brian campaign underlying strong notable XX% spoke board now the quarter on and now products on the but a metric The the MTUs in about, QX, was MTUs I number we staking, focus Coinbase. Brian we X.X for are to growth first have the we quarter. the our users when multiple retail look many up we in just What's ecosystem what at some just used MTUs, across was with institutions, of The

that things we economy. the XXX now crypto all AUM, of by you the now we is that clients measured engaging have XX% Coinbase of hedge with of for the funds top One and highlighted

want to the a Just year. ago within like quarterly we're net hedge QX, that and billion buying MTUs revenue be the our million participating outcomes $XXX and crypto. which really had pleased and we our current everybody of volatility inputs ago, I few volatile few where growth potential to generated in see our that EBITDA. X% to total And revenue. totaled which of of making of We continue theme and is very do and our stackers, billion revenue. We and XXXX are on our year crypto We those full-year forecast. funds more in future outlook new were not hedge roughly a transaction believe This take economy we Combined, any moment for full subscription shareholder year the scenarios letter, billion shares of $X asset remind just our that very our adjusted results. $XXX hard seeing, a more of engaging services are years $X.X platform. a in heavily to possible users ago, very the this trading influence these to like revenue our multiple shared funds weren't few prices volume about led assets allocation in and Crypto that also to of or extrapolate

Great. Okay. Thanks.

several that questions we've regulatory the SEI to turn analysts analysts. investors received questions from around now centered and the the through Let's We from platform. landscape had our our technologies

So, Bernstein, Lisa and James at Rosenblatt, Rippetoe at all Patrick Will [Indiscernible] about topic. at Sachs, Horgan Sean Nance Rich O'Shaughnessy in at Goldman Sandler, MoffetNathanson, asked this Piper and Ellis at Raymond

or likely off overall? So, relative of actions environment. with be on view you is And industry Brian, mean viewed and should kinds events let's does it fewer from start competitors? commentary? for the the What perhaps current conservative What regulatory do recent to that coming the view for how your Coinbase proposals

the but has globe Crypto of as around that's order to the really community in a which million XX now U.S. valuable happen has exactly, environment participant gotten along if the interesting are becoming it the of is who couple come efforts from of actually powerful the and taken things they eventually. on and A that lot super been I've one Infrastructure that social news first following been of Language Bill, with recently the a has going like vote we think the and away I constituent, Yeah, around the U.S., know recently policy you've the the out attention. Senate which so has on don't media in the have kind crypto, a just this. regulatory mean, in on I people something

policymakers frankly really that really there The gap of potential have there We're bit a quite big lack understanding. in or of community what a thing understanding. other others our crypto a a it technology, go-to seeing of for can out the the and understand is and do, this who back still still is number of skepticism just

for and and an to for with like course, around just world I happen to of crypto that us innovation benefit internet, of the some think from go that's economic there there's to so risks educate. huge opportunity a the could mitigated the out And and birth growth with need governments here be the just opportunity of but, the

is out to invest from it really felt there top. and we would Company dividends was Coinbase business a on, path this well, that with days kind we approach the an that doing of was a the government, go when the long-term regulators that right decision enabler be in Coinbase to but what most for to of us. difficult founded, go pay So, and that more wanted there and try compliance, be tone earliest be and trusted was the And like we from crypto really resource educational have really in made folks it out

that who's Affairs The continued Council of approach. Goldman Government was Sachs, The And We Policy in ways. Security a Shirzad that Faryar and he's previously Co-Head hired our National We're Chief he recently so, House -- White the also at and we've former a just was Officer doing variety of member.

the called great can started, quite out group he's days. busy And advocacy number that companies there as that's where having an something Crypto a on. he's imagine, come vehicle is investing to which and Council we're using in in you building as his of these just have also that a other We're So industry Innovation, for team educate. been -- the together go out

our then We I on waited maybe they unlike reluctantly think always services some and topic, a role before think happen, advise just to level government, which we in basically adapt to with this can companies go I have and that crypto traditional are view leaders be Bank space. with front this. on field a And how tech as the is up, other want resource, issue engaged hot finance Central traditional a ministers it really with playing welcomed currencies I out something kind any educational think regulation they there opportunity go the we've financial on any in be lead there. sensible treated bad economy. the out economies comes capture of their of to proactively for digital to China, that world companies competitiveness taking

the but And people's a front we have And that's it can of they risks, as important to so, not risks about mitigate those deal shifting to thinking opportunity. us. crypto of with of actually yes, from about thing an in it's as thinking most mentality set

we're policy side. that's So doing the on what

action follow-up and just but top Chairman for seems companies. states as great for SCC other that for as Okay. taken Alesia against particular, Gemzar, have well in not lending, a mind regulations? talk about remaining scaled types have Coinbase any currently Could forthcoming concerns do with engaged and in efforts lending what compliant while you of you is these what activities around also of

a It's We've our a Today, and question. out institutional post-trade great lending to bilateral credit begun robust we build clients. financing Anil. Thanks, to business. offer

offered through many It's we On the to borrow the lend our customers retail have. side, allow products up These their seen important to today, Coinbase own our crypto we we to sheet. and that against credit holdings. growth $XXX,XXX under that product of lending off licenses funds are Stateline our balance has note retail borrow

SEC has impact and may that the to statements. attention careful those are we if to he for and paying are understand roadmap. the product framework public And Gothenburg's eager legal raised our concerns Chairman how We

bring product to and As reality staff our said, more to provide engaging we just we commitment looking Brian and attention clarity, with enable forward engaging and growth. are are to our with to market the regulators regulation, to reiterate their to drive

Okay.

our that from and of We including DeFi, NFTs, with a understand Let's some you the talk we the that shift like ones decentralization others. and questions about Web investments this that Coinbase had about investors. bit to deal some a investors questions is received making could turn applications topic the of help quarter, of number Brian, our and top-voted X.X, more here?

Yeah, probably about is aside sure. Coinbase long what -- seeing ask always news X and up good pop cases people trading. years use was these is founded the And ago, crypto. cases a time, of funny for tons It's now founded the it that are me we're in from

internet team. or VCs NFTs, era. a them being by basically funded of are of this like DeFi, and startups apps Some founding Web X.X There's we're there literally It's the concept. great the dot-com mentioned, hundreds top-tier the startups all third-party really of out with

financial are being With for of the use many Crypto with Coinbase these with go primary course, there, these are these those that different they people want storing there the used us Economy, of created. applications. And take and of third-party new out to so, as participating them cases they, applications in out assets count there tons all

So, -- that. taking has users? are thing we app, enable a that's to advantage of But our on. sure majority of Coinbase can do the NFTs, of third-party next participate make what we're app, you the to can the that of is that Wallet one our customers we do bring self-custody and go applications, working with Well, which to the Well, our Coinbase all main how functionality that that's DeFi, today, the need do in things, these number we that?

third-party month to doing bigger in concept And doing of multiparty be that's embracing it's or some hot which is really rearchitect you to work FTs, or a mindset. store, if applications. work app is so, thing compatible some And there. with about important a MPC, global our the architecture There's right in we're these whatever dabs wallet decentralization us this happening engineering hot hottest just that called also to or going or using our computation, crypto wallet app. a DeFi, will, -- the just happening crypto, embracing that's is built than We're the also with make technology

we was really assets in doing added expansion. to Company the people Amazon that assets lot scaling earlier, need to want We to all the are mentioned keep the of a are over I access added that. in assets. all the we created ever also of we quarter, enabling enables so Like crypto. It's great, the the trying being be build We XX actually in a in world that but which economy effort most we're crypto QX, international about to that was new

there's think crypto be there. going I eventually of to assets millions out

there's money, that get created and create NFTs crypto there's support if startup millions imagine to these. to eventually asset need of new or wants being be every could who crypto for coin, we a to are so individual raise assets wants You that many to going every There might or a of and created kind if like.

so, and And ready we sure work going into lot how that of scale growth. making internally there's we're that for all a process

Great bit. about got asset switching a We question gears listing. a

changed and Sean over on those Horgan if after that you expand as on engagement and quarter, can at approach approach new asset Rosenblatt So, asked Brian, has in overall has look at listings Securities of general. approach Coinbase that And -- the our about assets. introduction to how last just activity we

to various evaluation we our legal And we've was the XX and we standards, every QX. volume, support assets to compliance, make once with of process major is make Ethereum in about cybersecurity those the those overall listing, meet created mean, with list No win, changes that XX% assets sure we want are just rigorous Bitcoin that that want going customers. on one still approach agnostic but these as get asset the tends we to month, it's the our the they long-tail our to that, and that very other volume really about I listing be the that a and asset our and up of there's for legal criteria. in is but comply active trend of we to which a entire assets of assets we're the that's comfortable trading we assets a assets that Yeah. one one we there. result happening more we did -- need support. customers. of we set accounts assets out there and ecosystem them, XX% never support really long to of that starting for of in which so other out of No given our or up going XX% of or than one of those all the know week is know trading know week, something down. one to that single to there, interesting to but quite need become tail diverse We for any And have

Brian, shareholders also how differentiated players market Great. time providers product over the as Coinbase our institutional could the is talk evolves to and in you about today that? more do and enter offering about service a how is not asked business only several little other bit believe you established but space, relative the

sure. Yeah,

have adoption earlier, now PNC about The our Prime asset Coinbase? full SpaceX, and think product, institutional What's than I'm assets, we're pension asked XXX not also in well. have treasuries seen. defensible the brokerage it's XX it? custody suite terms now onboarded corporate our It's about, these about platform crypto of now that super get The only we of and using institutional excited going dominant product. they AUM into here. of really just basically choosing is products best us quieted connects the are products, main excited store funds. our our People thing managers, but customers router, We're to venues and We've more that the the have Tesla, XX% product. order serving about a hedge really top which this And smart mentioned funds of the liquidity. by integrated they defensible lot I we've products WisdomTree. really really institutional integrated, and we out so Third Point, there are become to So, there. Bank, why with the question solution fully also like are do Alesia trust

some a like post-trade services do We of credit. -- want these to all for number features they way also We've earn are the a for. providing ask assets of and If that customers on-chain integrated these blockchains. on a and they analytics our products in of our lot or them market also want participate it's to data that in governance of staking value. These have if institutional products them yield,

can you we earn trade so, one all this credits, And where that do one-stop and like things have your crypto, post-trade store in basically that it, shop needed yield, place. are

for Company and We we future, private the enter think consensus that mechanisms, space and redundancy, and audited, of then transaction to different want that's a helps People what's the first I really are asked to players to substantial tested. all part as of all is companies it economy Company the has done It's we've space. don't going offering we're the This a now the all, -- as established keys question last blockchains, public of product established us, this part with more larger because really kind crypto happen you first enter this be service. that. much this excited more mean, I of single services there these sometimes of really and -- for really huge to believe it's think going way core so us. I monitoring we've work distributed financial difficult. these in integrating a every is about is The the And portion the realize also out really about material compliance, a that so global globally ourselves that we're differentiator really it is and GDP. trading in storing create crypto with comfortable doing

want there Fintech financial crypto already. if so, every And integrate we Company, service bank haven't and out to they started

a called it's [Indiscernible], that things an our we're had blockchains, the for think I is all way of exposing those interest a opportunity can and third-party monitoring, any product. those Coinbase players, to we're market from those get top I those of competition this taking this partially on services, in seeing number instance. and is crypto partially It's AWS and everything, we've custody, but faster. because those things to is a building and actually to us, build APIs difficult transaction also one Cloud, build mentioned, through for And APIs financial that service for of that So, and the

an And not think a that and and space create truly the of have out may be more as so, I we competitive. big more people that business to opportunity actually have enter it just

outline Thank often marketing of you for and the our quarter. the efforts in we've what about clarification our Coinbase? for year any efforts and the remainder marketing investment ask like you. the on we date? looked Could spoke Alesia, marketing beyond the wake to What And strategy of learned? they've investors incremental last about

definitely this date, grew growth was on quarter. XX% centered Yes, of quarter-over-quarter, we channels. marketing ramping so grown, up step-up our paid key our the believe the component in Anil. here. MTUs about spend And on To we're our efforts and has the Thanks, digital has primarily our marketing we of media spending

we look investments up As we additional forward, X to really ways. ramp in though, plan marketing

global customer our globally. the acquisition, increasing With awareness, growing customer driving and retention brand

is to-date. for them us, of the You're and are move channels off the focused in digital and to the new new or look TV venture marketing could awareness Coinbase, sponsorships. see a which include These optimized than of test. do to be here partnerships scenario like brand strategic going out-of-home What looking will to and going performance going all and new learn drive differently we channels between perform We're to growth, core the fundamentally new we're our to driving space. for investor channels to economy, expect growth on the and long-term people the the into optimizing is and into crypto, more in billion drive full and investments which freedom. iterate balance and people believe funnel bring investments venture to increasing We to need goal to channels new more channels our additional of estimate and right campaigns over crypto get economic strategic these really time. return a marketing We brand

our to we the believe XX% we full the year as As look XX% unchanged we've net left range spend, XXXX of between terms outlook of rest of percent in the a of and revenue year sales for to and marketing expense net revenue. will our our

opportunities, About we a to to about may principles, returned capital capital half to opportunities, understand our be topics if framework for helping our capital and a Coinbase dozen investment shareholders. investors can Alesia, shareholders allocation ultimately, these related evaluates allocation? and how provide fund you inquired how when approach

Happy to.

billion the global earliest a massive bring to of as and think what to a are Company, a of are days in We we opportunity we people. crypto high-growth

XX% resource investments, to a core we build to it's best to to platform, the our in platform, assets flywheel, product ideas. We development, percent to such, have. new with work we invest strategic innovative As think XX-XX-XX work, then our capital in and roadmap thinking about our a new and put XX% our add framework, add the users growth product to for opportunity this XX% to to exciting towards

think to capital acquisition our cash organically for about operations. of opportunistic using use potential about we the think fund then, And service in for think the inorganically. our both product investing roadmap. it's just overall, about our of operations, business also core and When We our we

We're strategic of a lastly, also we that able is goals. and have grow purposes. ensure for we execute prolonged would winter weather mindful to for resources on think is business to cycle, volatile investment we to cash. and and what crypto able We And our our still any be cash business crypto and want bit think very enough

form a shareholders repurchase. have As to return intention we the of in any dividend of of said share capital previously, we or near-term no

for of our Okay, tell thanks. issue state you concerns? shareholders and important at consumers. service a Brian, to and a would Coinbase, about are continues to service address topic ongoing the what of shareholders What customer be very and customer hot-button many we doing customer

headcount the we there's -- Well, can focus are for phone Xx or happening via do. since also there that type chat working more increased the a Yeah. doing more now of January much always year people Proud customers live specifically. to has That this We're with this been this We've in customer so X,XXX this to in but couple support rolling in solving support for than fashion. issues. are imagine to last us. out quarters, of year robust growth better on all later you dedicated of report a support big means and more

the latest investments these help things to date up all I we'll Some of features, these improving center along just all happening to continue are make with our making the sure that and with there. -- think our are education is progress resources,

learnings few those those with vision Borrow. recently on Coinbase how brought like, to consumers intend market we've them, Brian, honed programs? investors in how the consumer expand when from early engaging to talk are the offerings, products can you and and Bitcoin about A for financing and Card we

Yeah. Sure.

and So examples to accepted. that things with money, way eventually?" might crypto a great The people a and something anywhere and Coinbase as trend Card we Borrow we've that It's expanding talked economy, I collateral, that people to in were we've product all doing economy card thought actually debit loan? the crypto Can as to can allowing that get with money trading. using of go do feature Can Bitcoin participate Coinbase started of I their customers broader this with both spend spend it? do way are is the Can Bitcoin they crypto crypto loans, Card crypto is primarily else is where And been this? a about on Visa USD "What great I Coinbase I what in think secure that roll out. the right? earn a about, it's as allowed then, Borrow customers

and economy the So, is few do that one on things in you One a get goods to is commerce and that we're to of that transactions so to we more crypto. be some goals and our more for are get services work for how in there's happening that. is with get scalable, everyday terms happen. need need long blockchain more place there to doing the And

get The set to set who a that other crypto. of and merchants consumers both both of is spend to need we want a

chicken that's a So two-sided kind marketplace, and problem. egg a of

of market don't is two-sided one a as card your need crypto. as crypto merchant way can them. can us Visa, you And to by so accept the Coinbase allowing side specifically the spend for -- with long dial -- to they up They you

crypto. And see dial once then that. we'll fees we to and to up you'd in what maybe And most merchants kind get go payments like side crypto accepting are hey and one things then see people the crypto. those and the of want spending that think we accepting can can merchants directly to market, who we say, about be So, go directly can of larger, their the save you

do do people for crypto some don't more it things the and little using a under economy. money that traditional have think all things? the direct of would how fits ones, equivalent use in All for traditionally, probably about also, a which for more concept and we they how crypto value the broadly of bit we but new grow the that's So economy? How we it. this And get

great. Okay,

fees fees spread last well on mentioned Lau I going here, on which could for enough one from Oppenheimer but think at comes QX, our about before, fees. both question have thoughts on reported you Owen fees, Alesia, Coinbase elaborate forward? in and as you as compete doesn't we time

Yes, you're correct.

have like And we platform, of for lowest-priced value is not compete before on we to trade instead in on focusing security execution, in said through bear the to the crypto. that being most on customers custody, instruments do We fees. storage, focus our providing which addition critical our

these retail on We're suite. the based competing services fee. On for really our these transaction into are bundled side, users product the though

ways new These with are to As to earlier, non-trading crypto types engage engage continue what the and further crypto new of services, products economy our shared we assets, with staking to Coinbase. users like earn. attract users in

fee, volume at revenue retail between were relative see QX. saw in pro mix trading X.XX% QX. X.XX% look in by our I'd also versus our more on remind weighted transaction our you customers, you will consumer reporting transaction Driven as to shift to average we're compared volume, that we fees volume. retail retail a sorry, If matched investors

On liquidity the and and Brian the of earlier, integrated our as spoke as suite well heritage us that security compliance. deep are customers about institutional side, for choosing products

in weighted transaction to was our basis QX average trading Tier-based in as to higher basis pricing If that our you X by fee that you'll volume, see saw relative points the driven X volume look QX. revenue we our compared at institutional institutional in our points

haven't our models. pricing constantly and testing better customer made running are modifications we broad different serve some experiments but different to any if pricing are there We in pricing segments time to with opportunities

Great. you. Well, thank

again and next talk so, we'll we're that, the everybody, to call done. you us today think I quarter. And with Thanks, on joining for

for And Thank you this today's participating. concludes conference call.

You lines. may your now disconnect