Coinbase Global, Inc. Q3 FY2025 earnings call

• The Everything Exchange vision is central, with progress made in Q3 including DEX integrations expanding tradable assets to over 40,000 in the U.S. and launching CFTC-regulated U.S. perpetual style futures. - Deribit acquisition brought the #1 crypto options venue into Coinbase, contributing to high derivatives volumes. - Stablecoin adoption is accelerating, with Coinbase customers holding an average of $15 billion of USDC on platform, and USDC being the top-performing major stablecoin. - Institutional business had strong results across exchange, Coinbase prime, and derivatives, with total institutional transaction revenue up 122%. - The firm is heads down building the Everything Exchange and scaling stablecoin payments, with a product event scheduled for December 17.

Coinbase's core business showed strong financials in Q3 with total revenue of $1.9 billion and adjusted EBITDA of $801 million. The firm ended Q3 with $11.9 billion in USD resources and $2.6 billion in long-term crypto investments. In spot trading, Coinbase's consumer spot trading volume grew 37% to $59 billion, and consumer transaction revenue rose 30% to $844 million. Institutional transaction revenue was $135 million, up 122%, driven by derivatives growth, including the Deribit acquisition which contributed to high derivatives volumes. S&S revenue grew 14% QoQ to $747 million. The firm ended Q3 with $516 billion in assets on platform. Revenue contribution: Derivatives account for a significant portion of trading volume, with institutional business showing strong growth, and S&S revenue contributing notably.

• Q4 transaction revenue is expected to be approximately $385 million. - Subscription and services (S&S) revenue is projected to be in the range of $710 million to $790 million. - Operating expenses for tech, development, general and administrative are expected to be higher in Q4, with headcount growth slower than Q3. - Plans to absorb employees and slow operating expense growth in early 2026 as execution focuses.

• Potential impacts from cloud service provider outages, such as AWS outages, and the trade-off between multi-cloud investments and other priorities. - Regulatory uncertainties that could affect the pace of innovation and market entry. - Market volatility leading to liquidations and potential operational errors that could cause deleveraging events.

Q: What's the plan to improve product innovation and velocity and increase market share?

A: Focus on the Everything Exchange vision, with progress in DEX integrations and CFTC-regulated futures, and more to be shared on December 17.

Q: How is Coinbase thinking about a Base network token and shareholder beneficiaries?

A: Still exploring a Base network token to grow the ecosystem, with no specific details on governance or distribution today.

Q: How will Echo help expand the network?

A: Echo acquisition is for easier capital formation, combining with Coinbase's infrastructure to accelerate economy.

Q: Assess Coinbase's operating infrastructure and investments?

A: Impacted by AWS outages, using multi-clouds, investing in automation with 65% of customer support automated and LLM agents for compliance.

Q: Talk about the white glove service for advanced retail traders?

A: White glove service for high-value advanced traders provides concierge support, and trading volume exceeded U.S. spot volume.

Q: Thoughts on Coinbase's payment capabilities and merchant adoption?

A: Coinbase's developer platform powers 264 institutions, with payments APIs and partnerships like Shopify, seeing early traction with businesses.

Q: Deribit integration and future product development?

A: Deribit is market leader in options, integrating products to grow overall trading volume on Coinbase platform.

Q: Timeline for Everything Exchange milestones?

A: More to be shared on December 17 at the product showcase.

Q: Impacts of crypto liquidations on October 10?

A: Coinbase platforms withstood volatility well, and market rebounded nicely with transparency helping reduce risks.

Q: Stablecoin adoption timing and economics?

A: Payments using stablecoins growing fast, with potential to reduce transaction fees and increase activity, but economics still early.

Q: Take rates and margin management for derivatives?

A: Scaled back derivatives incentives, seeing more liquidity and profitable growth in international derivatives.

Q: Hiring and OpEx guidance?

A: Still growing headcount in Q4 but at a slower rate, with Q4 OpEx higher due to acquisitions and headcount.

Q: Payment adoption incentives?

A: Payments in crypto growing in B2B cross-border transactions, with higher adoption in underserved areas.

Q: Deribit share gain and margin structure?

A: Deribit has over 75% options market share non-U.S., and margin structure varies by product.

Q: Competitive environment in September-October?

A: Always facing competition, focusing on delivering trusted products and growing market share.