Revenue misses expectations, trading volume halves, Coinbase (COIN.US) turns profitable in Q3 thanks to unrealized gains on bitcoin

Coinbase (COIN.US) released its Q3 2026 financial results after the U.S. market close on October 29 (early morning Beijing time on October 30). Total revenue was US$1.216 billion, down about 35% year over year and below the expected US$1.233 billion. GAAP net income was US$719 million, with diluted earnings per share of US$2.51, reversing the previous string of lossesthe market had expected a net loss of about US$35 million. However, the profit came almost entirely from US$715 million in unrealized gains on its crypto asset investment portfoliobitcoin rose about 39% in Q3. Meanwhile, crypto volatility fell to multi-year lows, and industry-wide trading volume declined about 10% quarter over quarter. Excluding that item, adjusted net income was US$78 million; adjusted EBITDA was US$333 million, up 60% quarter over quarter and above the market expectation of about US$290 million, positive for the 15th consecutive quarter. Operating income for the quarter was US$61.7 million, far below US$481 million in the same period last year. Core business data was mixed. Transaction revenue was US$590 million, halved year over year (-44%), but above the market expectation of about US$527 million; individual investor spot trading volume fell 59% year over year. Subscription and services revenue was US$570 million, up 3% quarter over quarter and accounting for nearly half of revenue, including US$307 million in stablecoin revenueaverage USDC holdings on the platform reached a record US$22 billion (up 49% year over year). Adjusted EBITDA was US$333 million, up 60% quarter over quarter and above the expected about US$290 million, positive for the 15th consecutive quarter. The company's share of crypto trading volume rose to 10.7%, increasing for the fourth consecutive quarter. New businesses were the biggest highlight: prediction market annualized revenue exceeded US$200 million, and daily trading users grew more than 60% quarter over quarter, making it one of the fastest-growing products in history. CEO Armstrong World Industries, Inc. said in the earnings statement that the business "is growing even in the sports off-season"; CFO Alesia Haas said prediction market revenue has lower correlation with crypto volatility. Paid subscription Coinbase One users rose 24% year over year to a record high. On guidance, the company expects Q4 subscription and services revenue of US$550 million to US$630 million; as of October 25, Q4 transaction revenue was about US$165 million. The company also lowered the midpoint of its 2026 adjusted expense guidance by another US$100 million to US$4.15 billionUS$4.3 billion. In addition, regulatory filings show that 10b5-1 stock sale plans of three executives including CEO Armstrong World Industries, Inc. cover a total of about 13.6 million shares (about US$2.2 billion).