Coinbase Global (COIN) 30 Oct 242024 Q3 Earnings call transcript

Good afternoon. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Coinbase Third Quarter 2024 Earnings Call. [Operator Instructions] Anil Gupta, Vice President, Investor Relations, you may begin your conference. .

to Third welcome Call. XXXX and afternoon, the Quarter Coinbase Earnings Good

and Legal me Brian and Choi, CFO; are today's COO; Grewal, Co-Founder Haas, Joining call Emilie Armstrong, on Officer. and CEO; Alesia Paul Chief President

I earlier shareholder on which our to letter, all hope Relations was website had you've Investor opportunity read the our today. published

uncertainties may in during and differ Information may make we we started, like I'd call, could results. that get factors is filings. actual to statements, other today's vary which cause Before concerning to from risks, remind our you that results materially forward-looking these SEC included

Relations Our most Non-GAAP be should certain in directly discussion non-GAAP financial provided substitute addition include financial considered the to, GAAP measures. Investor to are measures GAAP Reconciliations letter website. today comparable shareholder also in for measures financial as will a not the measures. our on

ask shareholders once are enable to We our using platform again questions. Technologies Say to the

And questions In I'll addition, live over take comments. turn we'll research from with Brian opening it that, to for analysts. our

I'm share our our priorities. XXXX to Anil. excited progress on Thanks,

XXXX do reminder, a of beyond number a three, number a people's case as clarity. lives; just for and really two, were, which it priorities our number trading one, driving going crypto for and then use we driving utility, make Just how revenue; is ordinary part driving regulatory

. in touch we'll turn. of each So these on

revenue fee which more it's as big made it We many was us away driving of adjusted is more from with consecutive from Coinbase. effort revenue. it's transaction our It heard we've positive some revenue, fourth you've as but And seventh years had solid income. predictable, a was really dependent. consecutive EBITDA. to our softer in quarter overall, of starting quarter diversify So our the conditions net It a market volatile, market QX, quarter not over was positive for times,

to we've on this And of made subscription revenue services more that shifted year. incredible progress that We've and over time.

$X really this around resources surpass invest regulatory in from clarity. us and services on billion And revenue in up subscription pace steps $X.X XXXX. in those So has to the That's given next utility XXXX. we're now just in of and some to billion

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stronger a at a which that's $X.X financial given now flexibility. and in resulted sheet, balance has is this billion, us So lot of

authorized things buyback, We can use can But $X well. Board which do at lots as stock of has our is also something a that. discretion different we with our billion

Okay.

every This crypto driving was world regular for trade. the actually moving benefit of utility. financial are We want second to around started people. to things it, doing someone actually So that want the want priority as really economic on system. increase because an in update the We off to the wanted asset We freedom to world. to class important is people people's is it lives. everybody that do daily And more disposable in need to not day, to to make part frequent with a they from be trading income

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useful faster One is Smart to payments, people second world, for inflation make the remittances. people of is wallets high them move want for money cheap do These stablecoins. in are the one. They're around useful fast, who markets.

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think these on So let's coming each use touch to together they're of cases. just and about new enable how

right I'd those trend that's payments. it's a And a payments say of really now of a use is underappreciated. crypto. cases having moment One bit is important in

-- XXXX. volume. last So already of or payments in we're Xx about actually we've trillion $XX And year, stablecoin that saw transactions, we

will So it already. year. by of this end $XX the trillion course, It surpassed be of larger,

now so stablecoins into all one of USDC. is having And with to building a of blocks. those made things big Coinbase possible a It's that really trusted effort different really integrate stablecoin that's X We've making at of products. important the our

of cap stablecoin, actually major year-to-date And up the I fastest growing QX. up driven way. out XX% at $XX the major And growth in a dollar now billion $XX of USDC that's there. from billion one actually at U.S. USDC it's to believe start The That's year. is least market this in backed

double also market stablecoin QX, and stablecoin. become We now is the support launched backed a to euro-backed for which on cap Base. were EURC, help that's We its able Euro largest in

going currencies. to is fiat no different We're phenomenon. in see dollar many stablecoins this just So longer a

So important block an that's stablecoins. with building

smart through, The interface Wallets. support And revolutionizes to Smart second user onboard really last we to the launched with for self-custodial go one, I people This mentioned wallets actually crypto. that especially quarter, wallets. was

always down. they phrase to do recovery longer phrases, need So or and no it People remember that. these this they no longer have losing recovery were worried about to write

a they or called keys And in or the remember network eliminate pass didn't up have to to create was to that. of wallet have the also clever people now or network of a where They fees. or second don't use pay There's it sort with crypto can to came have the just because situation to around X. there the forget. solution a We nothing or biometrics that fee something lose and some helps often write-down chicken-egg

of positive this. seeing there. still our really early all integrated Not So days, signals have we're but products it's

some of we metric time-to-first being minutes in the track down hours it a some we about of we've But instead where go of using have, transaction, more X wallets. X.X seen is which to the traditional the ones

on we have our wallets And smart then is Base, now -- made onboarding X have these and helped the X that whether is count value and solution there. solutions Layer simpler. solution #X the X #X platform. it's X measure become you by pioneer So the there. been process the huge is transaction out It's which Layer solution now Layer contributor a decentralizing It's been the total incredibly that's the successful Layer out that lastly, or

from think in went X is than way the the And with It second, this default so Base, people going $XX become our year. world. of pay $X.XX, that Layer has trillion anywhere And continued $XX to X, to really trillion to I it's Base less USDC, this year in quickly. to volume on front innovate of last of volume starting eyes. It's happen really

name these you identity is complex. which of So just called Onchain easier names, use makes readable can crypto if to product. send which -- wallet human Base it is a for addresses, look instead they a something it instance, little This to added makes an more

coin-based for Ethereum or is as they've DeFi launched for of in that but Bitcoin such that version a to Bitcoin applications, that people in Base. use all use value We called -- borrowing something cbBTC They Coinbase the in -- this Bitcoin, And essentially also on lending. of wrapped allows launched accumulated it and BTC.

here. So been important the innovating Base has team a pace just really at

building these about are just it, I you started, of Internet you see the sort blocks together happening consumer all analogy give of an So crypto. of And really think utility right. really start where to can coming how in how to

through of go you about was to e-commerce. XXXX, GDP of X% half If year only back global happening the

running And about e-commerce. global today, XX% it's GDP of through

on X% GDP think -- so to global I on going to a thing global, the really more want they're of It's water. that X.X to We estimates of rails. cheaper. we've occurring crypto They're free. going -- more follow faster, to XX% internal crypto GDP of We resistance, least get fair. is own that path by And are it's of running done of flow to a global but more tough They're payments rails. they're trend. they're estimate, about like just similar to is We've guess think this, best and our be our of crypto is kind

as it creates these the the It economic prosperity payment rails want benefits financial refuge Many And globally a around this inflation, from freedom, other the infrastructure. -- best world. just in good people world. are

more crypto so see think that and have global rails on the going coming over years. foundation run more I to now And -- we in to place we're GDP

Okay.

utility. driving that's So

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regulatory and utility revenue, driving on summary clarity. our That's yes. So

think EBITDA really We've in X macro all we're to environments now. quarters here, close well Just adjusted consecutive got for positive I positioned.

more expenses, can business I go in of and be and hopefully, X us this billion managing view, resources the think or regulatory chapter a to crypto clarity, a from is driving this, healthy that's which really utility to time. place cost really the grow fund given the next to point users of over

end to there pass Haas I'll Alesia and So it over

Thanks, Brian.

company just Brian that have So X shared for as we goals this the year.

quarter. We X made have the goals, also of each third in financial we these progress and on

expense maintaining market and our discipline; The to EBITDA generating to first revenue; all adjusted is in diversify continue second, third, positive conditions.

dive we our into then results. why introduce So don't but deep those

last $X.X ranges billion, adjusted revenue we total are $XXX outlook EBITDA within million. the and QX provided was our expenses was Our quarter,

resources to Our balance USD strengthened at total sheet . quarter quarter-over-quarter X% and billion. grew our end $X.X the

transaction starting with revenue. Now

total $XXX down saw was quarter-over-quarter. during Our million, XX% turn, revenue asset volume our driven XX% asset was was and average billion, by volatility crypto that This total In trading we transaction the quarter-over-quarter. down $XXX quarter. lower prices

the You rates volume trading in can growth in and difference transaction observable QX. our see our revenue

So I trends to these highlight wanted a partly explain to few results.

First, importantly, majority in was volume of revenue of trading derived consumer U.S. Fiat steady the was share quarter-over-quarter. our to crypto our where the

little-to-no way growth stablecoins advanced grew driven In was pair by trading Second, what was which we an for of we significantly stablecoin generate update, easier specifically, our stablecoin core strategy, our though we via USDC USDC monetize on we volume and the did to is product consumer while issuer with traders believe of see a fees growing And trade quarter-on-quarter. platform. this stablecoins part, trades, enabled our commercial relationship and adoption usdc. pair to on

consumer we Third, a nontrading transaction decrease saw revenue. in

while and for revenue the yet pleased the a we're to to our revenue beginnings business. transaction our see in relative of institutional broker from And over Switching fees. to derivatives So not the We see revenue quarter-over-quarter, our saw nontrading continue ] the decline our and to efforts of revenue sources minor prime side. spot includes growth [ Derivatives did but be really a diversify consumer DEXs as us. priority material, institutional we outperformance of revenue

to and down in revenue, and pleased were to subscription X% grow We really native was staking Turning which million, $XXX quarter-over-quarter. units services custody.

However, native revenues lower was impacted growth average prices, during quarter. these unit this by offset crypto asset the which

rates. stablecoin as exceeded Our USDC growth X%, interest the growth QX of grew lower impact and USDC market cap balance on-platform revenue our

share and paid the in third finish To to the number continue wanted all to subscribers One I out that saw quarter. Coinbase revenue, highs of all-time we grow, new

QX billion, Total expenses. to quarter-over-quarter. now X% were Turning down $X operating expenses

Our Net pretax million million $XXX which EBITDA crypto investment impacted was million. losses portfolio, $XXX was vast majority by adjusted was net the of and $XX unrealized. income was income on our asset in

ended about We losses in up the These $XX Resources, reflecting tax after billion quarter million the USD were X% impact. third $X.X quarter-over-quarter. with

$X repurchase As earlier, shared first our Directors no of up we billion Board today with Brian announced our program that expiration. stock of has to authorized

consecutive we objectives program meeting we quarters us financial conditions, of looking and tool strategic we've all positive As look allocation, and our be now seen are increasingly gives market X to adjusted EBITDA use to that capital will opportunistically. our with this and another

will efforts to wanted off services and our our out, in lower Meanwhile, pace reflects to outlook. these our this Finally, revenue adoption we continue a really few we're offset diversification growing in to year. $X I and exceed help Ethereum headwinds. to outlook on growing rates. to close, October decline well Zooming to services see and compared certain headwinds, is as price QX a platform things subscription paying as the subscription on XX% on units revenue product long-term pleased billion to on native as interest QX QX highlight average including work Nevertheless,

on technology and expenses. Second, administrative and development general and

We continue to structure. to fixed in disciplined expenses our adding be cost

We of to million be are G&A range $XXX expecting $XXX to expenses and tech in dev QX million. and the

USDC the over USDC we last be rates QX, on-platform higher to and variable and and by million, Third performance sales brand marketing, million reward spend. and marketing. In and between driven year, increased and have balances expenses $XXX $XXX sales on marketing we finally, notably higher expect

that, go let's Anil, With to questions.

Thanks. Great. Okay.

the it from analysts. then the turn some we'll take to questions questions voted X live and So over on Say, we'll from top

one, asked first shareholders same had who micro -- a strategy question like So a X theme would the similar Coinbase questions Alesia? consider the reserve other X Bitcoin, with or we strategy. Ethereum

the $X.X invest do an have market The We was of on balance third and investments our news. billion Good investment sheet. about the crypto at we the quarter. crypto, fair in of value end portfolio

our XX% investments. to long-term to Ethereum be $X.X balance. That purposes. in a cash You our we for are of is debt. investment crypto in about We keep but way crypto our These can mix to One more net assets. hold Bitcoin this cash is of filings, on contextualize a portfolio detail addition intended see other hand our minus of that of billion total do need cash is variety to and

First, capital entities. legal requirements for regulated our

not clear, increasing such We opportunities keep grow crypto going are investment for opportunities absolutely activities. want and so. To an to an to to to cash be and we and on look hedge operating transactions, we transact operations hand But company and for time, amount that our with M&A over operational ventures our company. we and an hold are do of we

right. All

Second to Base, Coinbase's AWS crypto. Wallet drive onboard question, become CDP Smart cbBTC Base LXs? are how How adoption what evolving? performance are relative and for how to the Brian? Coinbase? LXs is or Could of do it see other revenue you and driving users plans Also, more

Yes.

to with try think just But it more technical going that help could simplifying products for sequencer maybe growth, really onboarding each self-custodial platform. up Base, to as could one it over start or brings fees, also meaningful especially accelerate earnings right but wallets, assets time. process by user it of fees but these just not over onboard drives of new of it is in those the really, take those transaction Wallet we're about And CbBTC, that usage to keeping via other open just folks. I'll to So time, then scale. on less groups part, Smart very one. now low be revenue Base

lending. different opportunities in use potential to monetize DeFI to want There they borrowing that applications are bitcoin and have that. People like

I building going but somewhat all really crypto. say, that growth their are stage, drive enable us the to in of So these are early blocks, utility phase these to would are the

-- You by #X solution the Base processed would I ask now opening mentioned statement, platform. the Layer in about how value #X transactions total and it's X on doing, is the and

Just to give a detail little on that. more

increased pretty actually the we And actually, $X.XX. quarter-over-quarter. of number incredible transactions fee, now. Base a It's that the XX% it below kept transaction -- pace The all growth while median right on well, of was

to trying growth. we're So low with to help really keep that

third the take to That's trying anybody to do and You could asked this for products them parties. It's in help We're built shovels AWS challenges the create whatever want in about crypto lot over companies to like familiar. and technical a companies of or analogy you start Developer kind use. of And ways own think rush think picks I that crypto Platform crypto. we've thousands to hopefully selling gold internally Coinbase our that this who's become to noncrypto different make the or even CDP. just I of not time. really of hard, integrate really available could

building embedded a developers agents have lot seeing is seen we've that for CDP trend. crypto think actually very AI use big of I that. wallet, a start-ups a Recently, interesting which surge we're an of And

pretty cool. that's Yes. So

think decentralized all infrastructure, help of global be if will more we to sound economic possible kinds people in that freedom So of coming different these there's together get over to and pieces help X all with I rails, conclusion, monetize good that billion I ways don't there. time. -- say we'll in are monetize I'd know can financial drive just But things identity us systems, them utility money,

answers question. And so yes, your that hopefully

to in And Alesia? future. shareholders then from plans provide the question final our to dividends any Say,

Thanks for question. the

way about shares. allocation. is returning wanted while to a billion a of that rationale to I in about think up capital today to capital this to we shareholders. bit and $X our authorization dividend, an we little not we a repurchase talk did have So And how announce

now I fair billion years, our earlier. value balance over that sheet . we $X.X few $X.X past of to strengthen assets market to As in USD addition crypto the in have continue about the resources in we billion investment mentioned

is to internationally, expand in want business. development. fund products. new Our do We primary product to invest want goal our we We to want to

like But buyback other balance been available years, And ventures our business, us. institutional capital opportunities over the help debt authorization. for prime past a the area sheet we lending cash opportunistically today, that use our to and within shareholders focus made also resources. converts. our notably product We our M&A repurchases see with our few would we we're suite. returning to a to start beyond have of announcing business that, utilize number to We always now scale XXXX exploring some the opportunistic financing

look no but opportunity So strategic being an more to we repurchases. this return and dividends, are to with create capital through capital our

you. Thank

question, so that, Sara, with first let's our And please. take

first with question line Christiansen the Citi. of from comes Your Pete

year, overall since quite I'm of guess Alesia, I share curious percentage volume. on on earlier at XX if your a And maybe come much look other crypto all higher Brian, I QX this points. a QX, guess, Coinbase's of views assets, was then, bit we It's coins. your it down

Just in meaningful some of curious share drive if any there to in shifts see ability Coinbase's lesser-traded tokens? the

oftentimes start on that Emilie long very trading is we me Pete, much and especially add correlated Let can then can tail volatility. with or is with thoughts. with see Brian one, the What

when in to traders volatility get QX hedge And as that tail, long we came to long well compared Crypto as in QX. tail. trading advanced that so down market tend asset as more more volatility funds makers, there's

bit that of we so little a did shift. volume see And

more post The has our to have and been more the been focus all we've volume is ETFs tide The Ethereum. the and well. come Ethereum seen that has there's own as other that and thing on platform Bitcoin getting ships, that just as volume lifts approved, ETFs on Bitcoin driven

comes next Lau from with question of Oppenheimer. Owen Your the line

please you fee on know X of Alesia, the more retail points. the I Could And rate? the add key you mentioned driver color

trade, stablecoin core And about peers? for other towards sequential pair which trending fees? little-to-no it's driven the fee mix the how by decline So generates the shift mainly

appreciate an this. thanks because focus. clarify area is Yes, that This to Owen. of Thanks, opportunity for I the

to first, material changes, changes the our no So consumer we no fee rate made app. structure in

quarter-over-quarter see to you key drivers. is that change average blended the due So X

saw we First more payer stable trading. mix shift is where

the as see in did transaction types. we much is from revenue not nontrading QX Second

quarter-over-quarter, that the no led to those mix in revenue average nontrading change but product to the as fees so fee to blended and changes . X the per underlying drivers And changes.

of Your with Ken next JPMorgan. Worthington from line comes the question

Okay. to the regulation focus I want on election. in

So on position success leadership had making this the for issue first, year. you've congratulations elections crypto the and

friendly And not that now? expand list with more the regulatory what's friendly I'd U.S. U.S. start less there's things of crypto the for better expectation a And in environment? Coinbase. your that or environment it's friendlier doing terms accommodative on jump to the high on then to regulatory a top-down In that backdrop. priority can House perspective. Paul, that makes the more to in more bit have litigious of states regulatory more . Apart From a a the what diminish the have friendly benefit can White does be election, currently will activity. environment a is perspective, that oversight dig their sense a this regulatory being SEC, of stepped for like have restricting from deeper with bottoms-up federal staking Coinbase do Coinbase an example, Coinbase roles the a up states in a

the regulation see industry looking by Ken, is me not than rather accommodation. this what of clarify current administration, the that ultimately, on not environment of what in we're clarity is candidate for the focused new new just Thanks question. and news so and U.S. an that let The we administration and be an the either fair approach treatment you'll with presidential a enforcement To improvement, a start, that going alongside step that's we've for really is is regulation. to our stifling absolutely we're administration good faced an towards upgrade We're think innovation. improved -- many Paul towards Grewal. an a to really

across federal from critically, is our in America, well of for industry looking that federal unlock the to system innovation looking built that the make and determine large federal financial states part. would at absolutely at beyond regulators And the are perspective, sure the to road. clarity as impact, we're the rules level The absolutely the least in

achieve were well at be state as to regulators. level we So there our effects follow-on would that the positive with clarity if federal

one in have we the all auspices of goal we us sure which our consumers would this states. have are to why supported not The of from the make that It's bill, that perspective, consistency to all is, the reasons afforded protections allow across in to XX FIT and the to of critical register authority encouraged everything of do spot a benefits positive of from trading also establish business been protection only range but with of elements we've follow. CFTC, side-by-side the certainty come as whole market our of and to would under

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to the what this for One, we're larger there's rulemaking. with our were seeking and serve examples. few if do mean that we a a growth significant portion products. clarity that give a Now turn the trading, respect market clarity just legislation achieve And to to we bit through a just to could think to of opportunity to

trading, all types more be comfortable are ultimately drive of traders confident and much we to because think happen would revenue. going increased and would that that just And do

laws You'd we see our listing well. which to as of to also we securities license list able tokens, federal the activate And assets that implicate accelerate. would think time, be over

before players So online. in think also plunging at clarity significant course, way because, for also looking into question payments is that cryptosecurities scale benefits would that no come There's we that could the of for we see would really are benefit. likely. Stablecoins entirely

could is know, temporarily we as states, paused would in incremental I'm bring staking we and sure think number Staking a you right benefit now, that of back.

apps who going to in to trusted continue more opportunity, and large crypto. that, growth e-commerce, a use payment lead be provide partners just and an crypto of to we strong support to offer are and and of likely much that, would would would banking off-ramps and And all to course, that. there's that much course, attract and to to of ecosystem better think, that positioned attract on-ramps partner be from And grow. support a So to

significant it's right all One the social crypto. advertising, we But that integrating other We think do networks, they're quite in here. platforms, be interested category, would think now, also the on clarity. creator waiting

And so major a be with would think we clarity, there unlock.

John the Company. comes question from next of with Your & Todaro Needham line

drill into bit guess wanted stablecoin more. I to stuff little down the a I

I be volume is hasn't we that just same on Or the increased a believe looking shift Tether to that Tether away that? at platform But wondering, to way. from seeing a XX%. out towards So USDC? broken way are wrong USDC

what's reported Tether we where in we've terms I would of of volume. a volume. platform. stable that easier So I made Tether, in quarters just around we've trade pairs shared had broken on it earlier out, is trading our trading our that to couple disclosures And comment

And Tether increase overall you're seeing trading stablecoin in pairs so reflected in volumes. that part, in

stablecoin stablecoin no, XXXX. we What financial It's hit But shift. with of It you the a adoption we U.S. and would the to put think and crisis and the $XX We're believe don't a that a is deeply product integrating the have post into QX we there highest across forth more continue it gain world. more consumer our to that here market QX billion. major in share USDC fastest-growing in is was around new trusted year-to-date. And we all-time the family. reached significant upside

from Your comes Ryan the line next JMP. Devin of with question Citizens

as we on question here expenses approach XXXX. a Just

you plans, kind growth. based of a into? to back there also longer-term items on between a to expense the way areas expect pull expense you on if relationship in lean that to I get or some relative sense there's to and revenue And any spending variable the great fixed Just And about environment. investment, but some think can will of growth be little lean then just you of bit appreciate have

Sure.

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our spend flexing and support consumer we are volumes We to against match our variable that and see around to marketing, muscles customers support areas.

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from of Barclays. question next Budish line Your comes the with Ben

from capital We've balance wanted seen benefit question. their crypto cap having from I perspective another ask market on company another Bitcoin a sheet. to allocation

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