Coinbase Profit Rises 66% as Prediction Markets Broaden Its Revenue Base

Coinbase reported a 66% rise in third-quarter net income, as growth in prediction markets and services offered a counterweight to quieter cryptocurrency trading.

The exchange posted net income of $719m, up from $433m a year earlier. Total revenue reached $1.22bn, broadly unchanged from the previous quarter but down 35% year on year.

The headline profit increase needs context, however. Results included a $715m gain on cryptocurrency assets held for investment, compared with $424m in the corresponding quarter last year.

Spot trading volumes fell 8% quarter on quarter to $135bn, although Coinbase said it continued to gain market share.

Coinbase’s prediction markets business surpassed $200m in annualised revenue, twice the roughly $100m reported in the previous quarter. The figure reflects an annualised run rate, rather than revenue earned during the quarter.

"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," said chief executive Brian Armstrong.

Bernstein analysts said expanding prediction markets activity, alongside subscription and services revenue, "helped offset the softer crypto trading activity."

The analysts estimated that prediction markets and derivatives together generated approximately 25% of transaction revenue, equivalent to around 12% of total revenue.

Derivatives trading volumes declined 7% quarter on quarter to approximately $986bn. That compared with an 11% decline across the wider industry, according to Bernstein.

Subscription and services now account for nearly half of Coinbase’s net revenue, giving the exchange a growing income base beyond trading fees.

"Subscription and services revenue grew quarter over quarter and now represents nearly half of net revenue. Prediction markets are adding another revenue stream and are less correlated to crypto volatility," said chief financial officer Alesia Haas. "These businesses make Coinbase more diversified and resilient across market cycles."

Stablecoin revenue also increased, rising 3% from the previous quarter to $328m. This included $21m attributable to USDC held in corporate balances.

William Blair analysts highlighted stablecoins’ potential in cross-border payments, saying they would "play a critical role in tokenized RWA settlement."

Both William Blair and Bernstein retained their Outperform ratings. Bernstein maintained a $250 share price target, while William Blair’s valuation analysis suggested a value of approximately $240 per share.

Coinbase shares closed Thursday down 1.07% at $160.59.

The results show a business developing more sources of revenue as spot trading slows. Whether that diversification can sustain stronger underlying earnings will matter more than a quarterly profit figure heavily influenced by investment gains.