Coinbase(US:COIN)2024-10-30 20:15Revenue and Net Income - Net revenue for the three and nine months ended September 30, 2024 was $1.1 billion and $4.1 billion, respectively, with net income of $75.5 million and $1.3 billion[159] - Net revenue for the three months ended September 30, 2024, was $1,128.6 million, representing 94% of total revenue, compared to $623.0 million (92%) in the same period in 2023[194] - Total revenue for the nine months ended September 30, 2024, was $4,292.4 million, a 99% increase from $2,154.6 million in the same period in 2023[194] - Net income for the nine months ended September 30, 2024, was $1,287.9 million, compared to a net loss of $178.6 million in the same period in 2023[194] - Total revenue increased by $2.1 billion for the nine months ended September 30, 2024, contributing to higher operating cash flow[251] Trading Volume and User Growth - Monthly Transacting Users (MTUs) increased by 16% to 7.8 million for the three months ended September 30, 2024, compared to 6.7 million in 2023[161] - Trading Volume for the three and nine months ended September 30, 2024 was $185 billion and $723 billion, respectively, representing a 143% and 131% increase compared to 2023[161] - Consumer Trading Volume increased by 209% to $34 billion for the three months ended September 30, 2024, while Institutional Trading Volume grew by 132% to $151 billion[167] - Consumer transaction revenue for the nine months ended September 30, 2024, rose by 141% to $2,083.2 million, compared to $865.1 million in 2023, due to a 176% increase in consumer trading volume[197] - Institutional transaction revenue for the nine months ended September 30, 2024, increased by 282% to $204.3 million, compared to $53.4 million in 2023, driven by a 123% increase in institutional trading volume[197] Crypto Asset Performance - Bitcoin accounted for 37% of Trading Volume for the three months ended September 30, 2024, down from 38% in 2023, while Ethereum's share decreased from 19% to 15%[167] - Crypto Asset Volatility increased by 78% and 36% for the three and nine months ended September 30, 2024, respectively, contributing to higher Trading Volume[168] - Transaction revenue from Bitcoin decreased to 35% for the three months ended September 30, 2024, compared to 37% in 2023, while Ethereum's share dropped from 18% to 16%[167] - Losses on crypto assets held for investment, net were $120.5 million for the three months ended September 30, 2024, due to the remeasurement of the fair value of crypto assets, mainly Bitcoin and Ethereum[221][222] - Gains on crypto assets held for operations, net were $(142) thousand for the three months ended September 30, 2024, resulting from net receipts of crypto assets during a period of rising crypto asset prices[214] - A hypothetical 50% increase or decrease in crypto asset prices as of September 30, 2024, would result in a $630.4 million impact on the value of crypto assets held for investment[263] Subscription and Services Revenue - Subscription and services revenue includes stablecoin revenue from USDC, blockchain rewards, interest and finance fee income, and custodial fee revenue[173] - Subscription and services revenue increased by $221.7 million (66%) for the three months and $634.6 million (62%) for the nine months ended September 30, 2024, driven by growth in stablecoin revenue, blockchain rewards, and custodial fee revenue[199] - Stablecoin revenue grew by $74.5 million (43%) for the three months and $161.9 million (31%) for the nine months, primarily due to higher on-platform USDC balances and increased USDC market capitalization[199] - Blockchain rewards revenue increased by $80.4 million (108%) for the three months and $255.1 million (108%) for the nine months, driven by higher average prices for Ethereum and Solana, and increased native units staked[199] - Custodial fee revenue rose by $15.9 million (101%) for the three months and $48.7 million (98%) for the nine months, due to growth in average crypto assets held under custody of $62.4 billion and $72.6 billion[199] Expenses - Transaction expenses as a percentage of revenue vary based on revenue composition, with blockchain rewards increasing transaction expenses as a percentage of net revenue[179] - Technology and development expenses include personnel-related costs for platform maintenance, new product development, and website hosting[180] - Transaction expense grew by $81.2 million (90%) for the three months and $285.5 million (97%) for the nine months, primarily due to higher blockchain rewards fees and payment processing fees[204][207] - Technology and development expenses increased by $54.7 million (17%) for the three months and $98.1 million for the nine months, driven by higher personnel-related expenses and website hosting costs[208] - Sales and marketing expenses rose by $86.6 million (111%) for the three months and $202.6 million (90%) for the nine months, primarily due to higher USDC rewards expense and brand spend[204] - General and administrative expenses increased by $77.8 million (31%) for the three months and $177.4 million (23%) for the nine months, reflecting higher personnel-related costs[204] - Sales and marketing expenses increased by $86.6 million (111%) for the three months ended September 30, 2024, compared to 2023, driven by higher digital advertising spend and USDC rewards payouts[209][211] - USDC rewards payouts increased by $50.9 million (474%) for the three months ended September 30, 2024, compared to 2023, due to higher reward rates and on-platform USDC balances[209][211] - General and administrative expenses increased by $77.8 million (31%) for the three months ended September 30, 2024, compared to 2023, primarily due to higher personnel-related and customer support costs[212] - Customer support costs increased by $9.3 million (24%) for the three months ended September 30, 2024, compared to 2023, driven by increased capacity needs following higher trading volumes[212] Operating and Net Income - Operating income for the nine months ended September 30, 2024, was $1,273.1 million, a significant improvement from an operating loss of $277.3 million in the same period in 2023[194] - Gains on crypto assets held for operations, net, were $55.5 million for the nine months ended September 30, 2024, compared to no gains in the same period in 2023[194] - Adjusted EBITDA for the three months ended September 30, 2024, was $448,624 thousand, a significant increase from $178,332 thousand in 2023[234] - Adjusted EBITDA for the nine months ended September 30, 2024, reached $2,058,468 thousand, up from $653,696 thousand in 2023[234] Cash and Debt - As of September 30, 2024, the company held $7,723,806 thousand in cash and cash equivalents, a substantial increase from $5,139,351 thousand as of December 31, 2023[237] - The company's total USDC holdings as of September 30, 2024, were $871,425 thousand, compared to $576,028 thousand as of December 31, 2023[237] - On March 18, 2024, the company issued $1.3 billion in aggregate principal amount of convertible senior notes maturing on April 1, 2030[238] - As of September 30, 2024, the company held $4.3 billion in aggregate principal amount of debt[238] - Net cash provided by operating activities for the nine months ended September 30, 2024, increased by $664.1 million to $1,592,226, compared to $928,137 in 2023[251] - Net cash used in investing activities for the nine months ended September 30, 2024, increased by $147.9 million to $232,969, compared to $85,117 in 2023[253] - Net cash provided by financing activities for the nine months ended September 30, 2024, increased by $2.4 billion to $682,663, compared to a net cash used of $1,734,128 in 2023[254] - Customer custodial cash increased by $798.9 million due to higher trading volume for the nine months ended September 30, 2024[254] Derivatives and Financial Instruments - Gross Financing Derivatives as of September 30, 2024, totaled $265,259, compared to $62,980 as of December 31, 2023[270] - Gross Financing Derivatives gains for the three months ended September 30, 2024, were $25,378, compared to a loss of $325 in the same period in 2023[271] - Gross Financing Derivatives losses for the nine months ended September 30, 2024, were $56,529, compared to gains of $6,677 in the same period in 2023[271] - Gross Other Derivatives exposures as of September 30, 2024, were $46,523, down from $65,082 as of December 31, 2023[274] - Gains on Gross Other Derivatives for the three months ended September 30, 2024, were $4,712, compared to $12,639 in the same period in 2023[274] - Losses on Gross Other Derivatives for the nine months ended September 30, 2024, were $9,921, compared to gains of $13,738 in the same period in 2023[274] - A hypothetical 50% change in the fair value of Gross Financing Derivatives would not materially impact the company's financial statements[271] - A hypothetical 10% change in the fair value of Gross Other Derivatives would not materially impact the company's financial statements[274] Other Financial Metrics - The company generated 86% of total revenue in the U.S. for the three months ended September 30, 2024, compared to 90% in the same period in 2023[196] - Other revenue for the nine months ended September 30, 2024, increased by 48% to $196.2 million, compared to $132.7 million in the same period in 2023[196] - Other revenue increased by $25.5 million (50%) for the three months and $63.5 million for the nine months, reflecting higher average corporate balances and increased earned interest rates[200][202] - Other operating (income) expense, net decreased by $12.1 million (344%) for the three months ended September 30, 2024, compared to 2023, due to gains on certain derivatives in 2023 that did not recur in 2024[217] - Interest expense decreased by $0.3 million (1%) for the three months ended September 30, 2024, compared to 2023, with no material changes noted[220] - The change in (Benefit from) provision for income taxes for the three months ended September 30, 2024, was $(43,840) thousand, a decrease of 119% compared to 2023, primarily due to tax benefits from stock-based compensation[225] - For the nine months ended September 30, 2024, the provision for income taxes increased by $189,010 thousand, a 607% rise compared to 2023, driven by higher pretax income partially offset by stock-based compensation tax benefits[225] - The company authorized a share repurchase program of up to $1.0 billion of Class A common stock in October 2024[248] - Effective January 1, 2024, the company adopted ASU 2023-08, resulting in a fair value adjustment of $739.5 million on crypto assets held at that time[240] - The company's crypto assets held for operations are considered less liquid than cash and cash equivalents, particularly during market instability[242] - Crypto assets borrowed as of September 30, 2024, totaled $252.9 million[261] - Crypto assets held for investment as of September 30, 2024, amounted to $1.3 billion[261] - Restructuring expenses were immaterial for the three months ended September 30, 2024, compared to $142.6 million for the nine months ended September 30, 2023, related to workforce reduction[216]