Coinbase Global's (NASDAQ:COIN) just-released quarterly earnings report was an unsteady mix of encouraging news and dispiriting developments. In the first category was the cryptocurrency exchange operator's admirable gain in market share. In the second, it posted key fundamentals that fell short of analyst expectations. Consequently, its share price slumped by almost 11% after the report was published.
After a good-news/bad-news quarter like that, it can be tough to determine how to approach a stock. Here's a breakdown of Coinbase's results, and my thoughts on whether its equity is a buy.
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Coinbase's second quarter, the results of which were published after market close on Thursday, was headed by a net revenue line of $1.22 billion. This was well down from the nearly $1.5 billion in the same quarter of 2025. It also represented the third quarter in a row that the metric has declined.
On the good news side of the ledger, Coinbase's share of total global crypto trading volume grew for, yes, the third quarter in a row. It was 10.3%, continuing an impressive run from the third quarter of 2025's 5.6% to the 8.4% and 9.1% in the two subsequent periods.
On the bottom line, Coinbase posted a net loss under generally accepted accounting principles (GAAP) of nearly $360 million, or $1.36 per share, quite the contrast from the more than $1.4 billion profit in the year-ago quarter. At least this loss is narrower than in both previous quarters (almost $667 million in No. 4 of last year, and $394 million in the first quarter of this one). Also, it's worth noting that non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) was positive for the 14th quarter in a row.
However, the consensus analyst GAAP net loss estimate was only $0.01. Coinbase also missed on revenue, although not as badly. The average pundit projection for that fundamental was $1.35 billion.
Like other financial companies, Coinbase has been trying to diversify as it matures. Still, around half of its revenue remains heavily dependent on crypto trading. The geopolitical environment was volatile throughout the period, not least because of the Iran conflict, and risky assets like cryptos aren't typically popular in such periods.
With sluggish and even weakening prices for many digital coins and tokens, global trading volumes were down at double-digit rates. That applies both sequentially and to the year-over-year figures. Being an exchange operator, Coinbase earns commissions on trades from many of its clients. So when volume is down, revenue tends to obey gravity too.
At this point, the cryptocurrency market is well established, so I predict it'll remain volatile. To me, then, the deciding factor to watch with Coinbase will be those diversification moves.
The company's three revenue buckets are crypto trading, subscription and services, and the small other/corporate category. Trading brought in $599 million in the quarter, down 22%, while subscription/services "only" fell 12% to $555 million (other/corporate took in the remainder).
Coinbase currently has a strategic partnership with Circle Internet Group (NYSE:CRCL), which developed and manages the No. 2 stablecoin in the world, USD Coin (CRYPTO:USDC). Under its terms, Coinbase collects 100% of the reserve interest income — interest generated by investing the cash reserves backing the USD Coin stablecoin — on the USD Coin balances stored on its platforms. It also earns 50% of the stablecoin's reserve interest income generated outside its ecosystem.
As they're pegged to fiat currency and therefore less risky than standard cryptos, stablecoins have been, well, stable compared to coins like Bitcoin (CRYPTO:BTC) or Ethereum (CRYPTO:ETH). Coinbase's stablecoin revenue dipped by 6% year over year to $292 million, a relatively good showing considering the swoon of crypto trading more broadly.
The second sub-category to monitor in this revenue bucket is the company's "other" subscription and services. This is where it records what it takes in for Coinbase One, a service where users pay a monthly fee ranging from $4.99 to $299.99 for perks such as zero-commission trades, account protection insurance, and other goodies.
Recurring revenue such as this is valuable because it's steady and predictable. While it isn't yet considerable for Coinbase — it amounted to $114 million in the quarter, down a not-disastrous 4% year over year — the company could gain significantly if it boosted those subscriptions.
I feel that if Coinbase improves dramatically in subscription and services, it would have a thicker, more solid revenue stream — and one that would nicely mitigate the constant volatility of crypto trading.
So ultimately, I'd consider buying the stock if and when it makes a notably concerted effort to do this. And, of course, that it's showing results in the form of growth, even modest growth for a quarter or several. Otherwise, Coinbase shares don't feel compelling to me.
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Eric Volkman has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
Coinbase Reports Record Share of Global Crypto Trading Volume, But Its Price Still Drops. What Does That Mean For COIN Investors? was originally published by The Motley Fool