Coinbase (COIN) Q3 2025 earnings call transcript

Coinbase Global, Inc. Third Quarter 2025 Analyst Q&A Call October 30, 2025 Anil Gupta, Vice President, Investor Relations: Good afternoon and welcome to the Coinbase third quarter 2025 Analyst Q&A call. Joining me on today's call is Alesia Hass, CFO. Before we get started, I'd like to remind you that during today's call, we may make forward-looking statements. Actual results may vary materially from today's statements. Information concerning risks, uncertainties, and other factors that could cause these results to differ is included in our SEC filings. Our discussion today will also include references to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our Investor Relations website. Non-GAAP financial measures should be considered in addition to, not as a substitute for GAAP measures.

And with that, let's take our first question.

Alesia Haas, CFO: Good observation. So yes, we are pleased to see our record on-platform growth. Our balance has now crossed $15 billion on average during the quarter. And notably, Circle is also focused on the same. They are also focused on growing their on-platform via deals with other partners. As we both are pursuing growth of on-platform balances, the mix will change over time, and the total available off-platform dollars may decrease, and that is what we saw this quarter.

Alesia Haas, CFO: That's right. It's a mix of what is on versus off-platform. That's right.

Alesia Haas, CFO: Correct. So if other distribution partners are incentivized and they're receiving on-platform rewards, it will just shrink the overall off-platform.

Alesia Haas, CFO: So similar to Base, it's a volume versus rate question and we believe that as more and more activity and transactions take place on proof of stake protocols and more and more assets are staked that will grow the overall opportunity for the growth of blockchain rewards. However, the reward rates may come down as we just get to more participation and more staking validators in the ecosystem. So we are really pleased this quarter to see the first ETF get approved for staking and we are partnering with a long-term partner Grayscale to offer staking within the ETF. So that is new assets that will become staked that were not previously staked as an example. And so we think innovations like this will drive the total growth of staked assets and we can be an important participant in that ecosystem.

Alesia Haas, CFO: So we are too early. We're obviously not monetizing today on this platform, but we believe that we are uniquely enabled to provide infrastructure i. e. we have been safely custodying bearer instruments now for the past 12 years. These will be tokenized. We do onchain transaction monitoring. We do onchain network in Base. And so we think we will monetize by being an infrastructure provider to this space. Early days in understanding where value will accrue. I think as we're able to tokenize more and more assets there will be trading fees for some of the more illiquid, longer tail of assets where we may just see less trading fees on things that are already heavily commoditized and more liquid today.

Alesia Haas, CFO: I don’t believe it’s exclusive in any way, and I do think due to their size and scale they have the obligation to have redundancy, but we are one of their key partners and have been a long-standing majority partner of theirs.

I think it was 385 that you all called out around October. Alesia Haas, CFO: There was a spike in volatility on October 10th that led to a lot of trading in and around the day that there was a market dislocation. So yes, we had elevated single day trading. And this is why we share with you crypto always has events that create short-term spikes in volatility and short-term spikes in trading. So we don't overindex on any single day, week or month and don't look to extrapolate broadly. But we also have now a full quarter of Deribit in that number, and options has shown to be less volatile than many other asset classes in crypto, and seen that it is more durable during peaks and valleys in crypto prices.

Alesia Haas, CFO: Happy to. So what I shared is that in Q4, let's start there, that we are seeing sequential growth in our Tech & Dev and G&A and at the midpoint of our range it's up about $100 million quarter over quarter Q3 to Q4, and about half of that is driven by the acquisitions of Deribit and Echo. And then the other half is driven by headcount growth. The growth rate in Q4 will be lower than our organic headcount growth rate was in Q3. And then when I look forward to early 2026, my comments were “we're planning to absorb the talent that we've brought on to the company in 2025. ” We've really had 2025 be a significant headcount growth year.

And as we turn the corner to 2026, we're really going to be focused on execution. And we anticipate that then our sequential rate of operating expense growth, so the Q1 expense rate growth compared to Q4 will be much slower than the growth rate you're seeing from Q3 to Q4. So that was our comment. So we're slowing the pace of growth as we turn the corner into 2026.

And we shared this last quarter, we made a deliberate change to our pricing program that increased the fees on stablecoin pairs. And that increase in fee was a deliberate act to have less of that trading on our platform. What we observed is that because we are somewhat unique in the ecosystem with really robust fiat on-ramps and off-ramps that other stablecoin participants do not have the depth of the payment on-ramps and off-ramps, and we don't charge for those on-ramps and off-ramps that we were finding some of that abused and we're offering that infrastructure for free to other players. And so by increasing the fee, we are now charging for the use of our infrastructure to other stablecoins.

And so now it's a higher quality trading volume on our platform and we're getting paid appropriately for the cost of operating services in this space. I would note that this is only offered at higher fee tiers. So we are also very conscious that we don't want to prohibit the growth of payments. And so if this is legitimate payments volume, we have different fee structures than just trading volume that are looking for arbitrage and using the off-ramps for that purpose.

Alesia Haas, CFO: So, as I mentioned on the earlier call, we're really focused on monetization at the client level versus at the product level at this point. And so as we bring all of these products onto a single trading platform over time, the focus is growing total trading revenue for institutional clients or total revenue for total Prime clients which includes trading, custody, financing, etc. So we're looking at it more as the bundled growth of the institutional revenues that we have. As things become material that would necessitate potentially additional breakouts. But in the near term, we are not looking to focus on the growth of any single asset class category, options versus perps or spot versus perps.

We're looking to grow the overall trading activity on our platform. And so we will probably disclose most of the data in aggregate. Notable that the fee rates for the institutional side are not as materially different as they are between different retail products as well.

I believe that they made a partnership with one asset manager. And so – my question is how could you defend your business from the entry of the largest crypto exchange in the world into the US? Alesia Haas, CFO: Binance had Binance. US for many years. So that's not a new entrant to the US market. I think that there's a renewed push to the US is what I would characterize it but they've been a longstanding US platform that we've competed against for the last four years or so. So, what I would say is just like everything else that we welcome competition into this space because we think that that makes us all stronger. That makes us have to really focus on product quality and competing to delight customers on our platform.

But we've been competing against a diverse group of players now for more than a decade and we're prepared for that dynamic.

Alesia Haas, CFO: So two different kind of approaches there. One, we are the platform of choice when it comes for TradFi, fintechs, big banks partnering to grow their products and services in crypto. And I think you may have seen that time and time again where we partner with BlackRock, we partner with Shopify, we partner with Citi and JP Morgan as you noted. So we're really proud that we've built a platform that has the institutional scale, controls, complexity that can meet these large company and corporate needs and we think we're very unique in that way. We also think this is a wonderful way to grow the overall crypto ecosystem as these are large players with large distribution, big balance sheets, product complexity.

But I think it also speaks to the maturation of crypto where they are being driven each and their own right by their own customers to gain access to crypto related products and services. And so we do think we're unique in being able to serve them through our crypto as a service or our business products where they are building off of the infrastructure that we have built. So over time we think this is a wonderful complement to our own business where we go direct to consumer that we are powering the ecosystem by being a key infrastructure provider so that others can go directly to their clients and I think that that trend will continue because customers want this.

We have 50 million Americans holding crypto and I think that now a lot of companies that serve those customers are realizing they want to serve their customer base in this way as well. And with regards to the CLARITY Act, we've been pushing for crypto regulation now for some time and as you know, we were pushing historically for it through Congress and the courts and now we're pushing through Congress and the financial services regulators. That door was previously closed, but now it's wide open. And so what CLARITY provides is a firm legislative framework with the taxonomy of the assets where we would have clarity on who regulates which assets, how to define each of these assets.

And we think that just clear rules, level playing field will really just continue to foster innovation and adoption much like the GENIUS Act has really created innovation and adoption of payments. So, we're really looking forward to the passage of that act.

Alesia Haas, CFO: We've long held the position that as crypto trading becomes commoditized and that people have comparable products at many platforms that we will see price compression and spread compression within crypto trading. It is yet to be the case that we've seen that, but we definitely think that there is a future where these spreads come down much like they had in other asset classes over time once you got to broad distribution and competition. It's why we've been so focused on revenue diversification and we're really pleased with the efforts that we've made to diversify our revenues over the last few years. As we noted this quarter, our subscription services revenues nearly reached $750 million, hundreds of millions more than they were when we went public and even multiples above where they were two years ago.

So, we're really working on developing a suite of products and services to serve our retail, our institutional, and our developer clients, monetizing the whole wallet at each of those customers’ level. And I think that we're doing well at that continued goal towards that. And that will kind of insulate us from any risk on the overall simple trading fee rates.

Alesia Haas, CFO: So I want to share how we think about DEX versus centralized exchange revenue. Let me zoom out to that level. We are focused on growing overall retail trading volume on our platform, and whether it comes from DEX, whether it comes from our central exchange, we're agnostic. We're charging fees on both of those platforms. The purpose of integrating DEX into the Coinbase app so people can find and discover and trade these assets is that we can give them the earliest access to these assets as possible and they can come to our platform and explore and find new assets. And when those assets gain traction, we may then bring them onto our centralized exchange, where they can benefit from higher liquidity, lower latency in trades, more depth.

So, it's really an ongoing funnel, but we don't anticipate monetizing these as two different products or two different volume streams because we think about this as a migration path towards being listed on the centralized exchange in many ways. And so, we're looking at this as a combined trading volume. So, we did see more trading and we do think that the DEX contributed to that because now more and more customers can say, "I can do more of my trading at Coinbase. I don't have to go to one platform for one thing and a different platform for another thing. " And so, we're getting higher share wallet from customers because they can do everything on one platform, but we're not going to be disclosing or looking at volume of them as two separate channels.

And then the second question, how meaningfully will reducing rebates grow institutional transaction profitability? It is meaningful in the way that we were essentially providing rebates to offset almost all the revenue. So the revenue contribution from the international exchange has been nearly zero for the last few quarters as we were building open interest and building liquidity in these products. And so as we reduce these, we're getting to a higher net revenue contribution. Then the combination of the integration of the futures with options and with spot, we really think is the next plateau that can really accelerate the revenue growth for the institutional business.

So, the Coinbase One credit card is intended to be a customer acquisition and retention tool and is not looking to drive significant revenue on our platform. We do believe that the program can be self-funding. So, it will not be a cost of doing business. Rather, it'll be relatively a break even product with the purpose of growing as we mentioned and acquiring customers.

So we anticipate these to be episodic. So as we continue to grow onchain partnerships and we distribute products through either our main app or we have partners on Base, we are finding that we are getting token allocations from these partners and that we would then vest in these token allocations when the products achieve certain milestones. And so, one, I think this could become more frequent going forward that we have revenue from these as this becomes a more important part of the partnerships as we grow overall distribution of DeFi. However, it will be very episodic. So, this is not a run rate and you should view this as sort of a one-time for Q3. However, I don't think it's a true one time, we'll never have it again.

It's just going to be episodic revenue.

Alesia Haas, CFO: We're running experiments to look at different reward rates with Coinbase One, outside Coinbase One, as we mentioned earlier thinking about different overall relationship monetization models. But in the spirit of these are experiments, we are going to focus on the pricing that will drive overall positive economics for Coinbase, positive user experience and, growth in our users and revenue.

Alesia Haas, CFO: So I think it's important to say how important rewards are to our customers and we are going to support our customers in trying to advocate strongly for their right to receive rewards on stablecoins and participate in this overall ecosystem. I think it's important to share that, we saw bipartisan support to pass the GENIUS Act. Brian was in DC most recently last week discussing any potential risk to the GENIUS Act getting reopened with Senators and I don't think there's a ton of appetite to do so. But we are going to continue to advocate for our customers and we think this was a decided issue and don't see a purpose in having this relitigated.

Alesia Haas, CFO: Great questions. Okay, so first of all, in trading volume metrics, trading volume is a spot only metric which drives the majority of our revenue. We have not provided a separate derivatives volume metric nor have we aggregated derivatives volume with spot volume in our key business metrics at this time. However, on the revenue side, we are aggregating derivatives revenue along with spot revenue in both the consumer and the institutional revenue. So to the extent it is consumers or retail trading – perps in the US on our CFTC regulated exchange or if it's institutions we break out that revenue and record them in consumer transaction revenue or institutional transaction revenue, respectively. Up until this quarter there was nothing material in those revenues because as we mentioned on the institutional side we were doing a contra revenue for incentives and rebates.

On the consumer side it just has not been material as compared to the overall spot transaction revenue. So we have not provided any breakout. Now, on the institutional side with the combination of Deribit, derivatives is a more material driver which is why we broke out in part the impact of Deribit this quarter for you. And we will evaluate going forward what the disclosures will be and how we want to think about the combined platform as derivative scales. Similarly, DEX is not yet material. I would say the combination of everything though, the ability for our retail customers to trade more things on our platform drove overall trading volume. And so I think you should think about this as the product gets deeper and wider, you'll see just growth in overall trading activity and therefore revenues.

Anil Gupta, Vice President, Investor Relations: We have one more question.

Thanks. Alesia Haas, CFO: So the focus of our payments products right now are on B2B payments, not at this time on retail payments. We think that will come with time but as Brian shared in his earlier call a lot of the pain that merchants feel is on cross border payments and so we're going after that cross border $40 trillion volume annually. And B2B is 75% of that network. So in that case we're really working with small and medium sized businesses as well as large companies, i. e. we have the partnerships we mentioned with Shopify where the payment APIs are now live and they're doing business with their merchants through these payment rails. So, it's early days.

I don't have any specific data to provide with you at this time on typical transaction size, what the transactions look like.

Alesia Haas, CFO: That's the initial focus. That is correct.

Anil Gupta, Vice President, Investor Relations: All right, that's it for today. Thanks for joining us and we'll talk to you again next quarter.