Coinbase Posts $719 Million Q3 Profit on Bitcoin Gains, but Shares Sink to a Two-Year Low as Trading Slumps

Coinbase made more money last quarter than almost anyone on Wall Street expected, and its shares still fell to their lowest level in more than two years. The largest US crypto exchange reported third-quarter net income of $718.7 million after the market closed on Thursday, 29 October, up from $432.6 million a year earlier.

The catch is where that profit came from. Almost all of it, about $715 million, was a gain on the crypto Coinbase holds as an investment, not money earned from customers trading.

Strip that out and the picture looks thinner. Revenue fell, trading volumes shrank, and the results landed on the same day Binance disclosed a $6.3 billion hack, which dragged the whole sector lower on Friday.

The headline numbers

Total revenue for the three months to 30 September was $1.216 billion, down from $1.869 billion a year earlier, according to Coinbase's quarterly filing with the SEC. That is a drop of about 35%.

Net income came to $2.51 per diluted share. Proactive, writing on Yahoo Finance, said analysts had been looking for a loss of $0.06 a share, while revenue came in just below the $1.23 billion consensus.

Operating income, the profit from actually running the business, was only $61.7 million, compared with $480.5 million in the same quarter of 2025. Adjusted net income, which excludes the investment gains, was $77.7 million, RG.org reported from the earnings release.

Adjusted EBITDA was $332.9 million. That is 58% lower than a year ago, but up 60% from the second quarter and the company's 15th straight quarter in positive territory.

Trading is shrinking, and fast

The core problem is trading activity. Transaction revenue fell 44% year on year to $590 million, according to Proactive, though that still beat the $527 million analysts expected.

In its filing, Coinbase blamed a 59% fall in consumer spot trading volume and a 53% fall in institutional spot volume compared with a year earlier. On the earnings call, CFO Alesia Haas said overall crypto spot volume across the market was down 10% from the second quarter alone.

Subscription and services revenue, the steadier part of the business, fell 20% to $570 million. It now makes up 49% of net revenue, which Coinbase presents as proof that it is less dependent on traders than it used to be.

Stablecoin revenue was $307 million, slightly short of the $314 million forecast. Average USDC held in Coinbase products hit a record $22 billion, and Haas said the exchange holds about 30% of all USDC in circulation as assets on its platform.

Prediction markets are the bright spot

The part of the report Coinbase most wanted to talk about was prediction markets. The product launched in February and has already passed $200 million in annualised revenue, the company said.

Daily prediction traders grew more than 60% from the second quarter, and revenue from the business has compounded at 82% a quarter since launch. Haas told analysts that more than half of the contracts traded in the quarter were not sports-related.

"Prediction markets have been one of the fastest-growing products in Coinbase history, growing even through slower sports months driven by crypto contracts where we have a strong right to win," CEO Brian Armstrong said in the release, as quoted by RG.org.

Haas said predictions and derivatives together now make up about 25% of transaction revenue. She argued the new products are adding to trading rather than replacing it, with customers still trading spot crypto, just less of it.

Derivatives are part of the same push. Coinbase said it finished integrating Deribit in October, and Armstrong said the advanced trading platform will be relaunched under the old Coinbase Pro name. It is the same race for leveraged products that saw ICE strike a deal to bring Hyperliquid-style perpetual futures to the US this week.

Wall Street was not convinced

Investors focused on the shrinking core business. Coinbase shares fell 11.1% early on Friday, Proactive reported, and Stocktwits said the stock dropped more than 13% at one point to levels last seen in February 2024.

Several brokers cut their price targets while keeping their ratings, according to Stocktwits, citing notes reported by The Fly. Barclays lowered its target to $120 from $149 and kept an underweight rating, warning of a "sizeable downgrade" to its near-term EBITDA estimates as the revenue run rate heads lower and costs come in higher.

JPMorgan analyst Kenneth Worthington said the transaction environment was still struggling and that it was hard to put a value on the prediction markets business. Needham cut its target to $197 from $205 but kept a buy rating.

Not everyone was gloomy. Rosenblatt analyst Chris Brendler called the quarter "the clearest evidence yet" that Coinbase's "Everything Exchange" strategy is working, because new products are absorbing weakness that would otherwise have hit revenue directly.

The Binance shadow

The timing could hardly have been worse. Binance's breach, the largest crypto theft on record, sent bitcoin below $77,000 and weighed on crypto stocks across the board on Friday.

Proactive reported that Circle fell 8%, Robinhood lost 7.9% and Strategy dropped 9% in the same session. Needham said the Binance news had roiled crypto markets just as Coinbase reported, and flagged AI-driven hacking as a key risk for the sector heading into 2027.

Coinbase moved quickly to show it was taking the threat seriously. Reuters reported that the exchange made adjustments to the systems that store its crypto keys offline "solely out of an abundance of caution."

Armstrong said Coinbase was blocking transfers to compromised wallets and had offered help to Binance. "Moments like this call for the industry to work together," he said, according to Proactive.

What comes next

Coinbase is tightening its belt. It cut its full-year 2026 adjusted expense guidance to $4.15 billion to $4.30 billion, down from $4.25 billion to $4.60 billion. Headcount fell to 4,204 at the end of the quarter from 4,321 three months earlier, according to The Motley Fool's call summary.

For the fourth quarter, the company expects subscription and services revenue of $550 million to $630 million and adjusted expenses of $1.01 billion to $1.16 billion. It also bought back 10.2 million shares for $2 billion during the quarter and has another $2 billion left under its authorisation.

Armstrong also said Coinbase had just bought its 18,000th bitcoin for its own balance sheet. Holdings like that are why the headline profit looked so strong, and why it can swing the other way: bitcoin rose 39% in the third quarter, CNBC noted, but has since slipped back to around $77,000.

For now, the quarter tells two stories at once. Coinbase is building real new revenue lines in prediction markets, derivatives and stablecoins, but its biggest business is still tied to how much people trade crypto, and right now they are trading a lot less.