RESOLVING THE LEDGER
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The company missed expectations across nearly every major financial metric, reporting $1.22 billion in revenue and $208 million in adjusted EBITDA as lower crypto prices and subdued trading volumes weighed on both transaction revenue and its growing subscription business.
Guidance for the third quarter also came in below consensus, prompting several firms to cut estimates and price targets.
Even bullish analysts acknowledged the quarter was soft. Cantor Fitzgerald called it "another soft quarter" driven by depressed crypto prices and weaker spot trading volumes, while Oppenheimer said the miss stemmed from broader market weakness rather than operational problems.
Benchmark struck a similar tone, arguing the headline numbers obscured progress in Coinbase's long-term strategy to diversify beyond retail trading fees. William Blair likewise said investors should view the post-earnings selloff as a buying opportunity, arguing Coinbase remains the largest beneficiary of any eventual crypto market recovery.
The strongest point of agreement across bullish firms was that Coinbase continued taking market share even as the industry contracted.
Coinbase said it captured a record 10.3% share of global crypto trading volume during the quarter, its third consecutive quarterly gain. Analysts at Benchmark, Oppenheimer, Clear Street and Cantor all highlighted the figure as evidence that trading activity is consolidating onto larger regulated exchanges during periods of market stress.
Several also pointed to derivatives, where Coinbase reported flat trading volumes despite management saying the broader derivatives market declined by double digits.
Analysts viewed Coinbase's push beyond spot trading as encouraging, even though the newer businesses remain too small to offset weakness in core trading revenue.
Still, there was broad agreement that diversification has not yet become large enough to replace lost trading revenue.
Clear Street noted new businesses continue gaining traction but remain "optionality" rather than meaningful earnings contributors. Barclays was more critical, arguing prediction markets and retail derivatives "did not" provide the boost they offered last quarter. Compass Point similarly said emerging businesses "barely moved the needle."
The sharpest divide centered on what investors should expect over the next few quarters. Barclays, which rates Coinbase Underweight, said July transaction revenue and management's third-quarter guidance imply consensus estimates remain too high. The firm expects earnings forecasts to fall substantially unless trading activity rebounds.
Compass Point also warned that hopes surrounding the proposed CLARITY Act may be overstated, arguing Coinbase's shares could weaken further if crypto market legislation stalls in the Senate.
More optimistic firms focused beyond the current cycle.
William Blair argued stabilizing crypto exchange-traded-fund (ETF) flows could signal the worst of the downturn has passed, while Cantor said investors are likely waiting for "green shoots" before returning to the stock. Oppenheimer and Benchmark also emphasized Coinbase's growing exposure to stablecoins, derivatives and tokenized assets as drivers of longer-term growth.
Despite widespread price-target reductions following earnings, most bullish analysts maintained Buy or Outperform ratings.
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