The Nasdaq-listed U.S. exchange cited "softer crypto market conditions," but said Q4 looks brighter.
Here's a good general rule of thumb for reading the quarterly reports of public companies: When the first paragraph says that the company "is not a quarter-to-quarter investment, but rather a long-term investment," the news isn't good.
Thus it was that the shares of Coinbase (COIN) tumbled about 13.5% to about $310 in after-hours trading on Nov. 9, after the cryptocurrency firm announced net revenue of $1.24 billion for the third quarter, just three-quarters of analysts' prediction of $1.61 billion.
Net income was $406 million, down from $1.6 billion in Q2.
The company cited the "softer crypto market conditions, driven by low volatility and declining asset prices" at the beginning of Q3, but added that "market conditions improved meaningfully later in the quarter which we have continued to see into early Q4."
Coinbase noted that while cryptocurrency trading volume was down 29% in Q3, that was substantially better than the 37% decline in the global crypto spot market trading volumes.
The platform went public in a direct listing on the Nasdaq stock exchange on April 14, becoming the first "pure" crypto company to go public directly rather than through the back door via a reverse merger with a special purpose acquisition company, or SPAC.
Listen to the CoinMarketRecap podcast on Apple Podcasts, Spotify and Google Podcasts
Bitcoin's Declining Dominance
Another interesting result is the declining dominance of bitcoin in both trading volume and transaction revenue as a percentage of Coinbase's overall results.
Bitcoin's trading volume as a percentage of the total dropped from 39% in Q1, to 24% in Q2 and now to 19% in Q3. Trading in other crypto assets excluding Ethereum jumped from 40% to 59% in that time frame.
Revenue from BTC transactions dropped from 41% in Q1, to 26% in Q2, and 21% in Q3.Other non-ETH crypto assets jumped from 40% to 57% this year.
Coinbase cited its "efforts to support more assets for trading" which it said "further strengthens our competitive position as a leading global exchange."
