Coinbase returns to a $719 million Q3 profit on a $715 million crypto gain; transaction revenue falls 44% and shares dip after hours

Coinbase (COIN) reported third-quarter results after the close on Thursday, Oct. 29, ending a run of three straight quarterly losses. The headline profit, however, rests on the value of the crypto the company owns rather than on trading by its customers, which kept shrinking.

Q4 outlook: Transaction revenue was about $165 million in October through Oct. 25. The company guided Q4 subscription and services revenue to $550 million to $630 million and adjusted expenses to $1.07 billion to $1.157 billion, with higher marketing spend, including USDC rewards, driving the increase.

Why it matters: Strip out the crypto mark-to-market gain and Coinbase earned about $78 million, so the quarter shows how much the business now leans on stablecoin interest and subscriptions while retail trading stays weak. Prediction markets passed $200 million in annualized revenue, and average USDC held in Coinbase products rose 49% from a year earlier to $22 billion. Those lines matter more if trading volumes stay low into year-end.

Market reaction: Shares fell about 3% in after-hours trading, according to Reuters, after slipping in the regular session as the Nasdaq sold off on Alphabet’s results.

WMR data: The report landed just as billions of dollars drained from Binance hot wallets in a suspected hack (our report) and bitcoin slipped below $79,000. A rival exchange’s security event can shift volume toward U.S.-regulated venues, but a falling bitcoin price also cuts into the same crypto holdings that produced this quarter’s gain. Track exchange volumes and coin moves on the crypto screen.

What to watch next: whether Binance confirms the size of the breach, how October and November trading revenue compares with the $165 million October pace, and whether bitcoin’s level at quarter-end leaves a gain or a loss on Coinbase’s crypto portfolio in Q4.