Coinbase Misses on Revenue. The Shares Are Falling. — Barrons.com

By Janet H. Cho

Coinbase Global posted second-quarter results that missed expectations, with revenue of $1.5 billion falling slightly short of forecasts, and transaction revenue of $764.3 million missing estimates for $814 million.

Quarterly revenue was down 26% from the year-ago quarter, and transaction revenue was 39% lower.

While analysts had expected net income of $319 million, the company reported net income of $1.5 billion (including a $1.5 billion gain on strategic investments and a $362 million gain on crypto investment assets), and adjusted net income of $33 million.

At the same time, operating expenses increased $193 million, or 15% from a year ago, to $1.5 billion, because of $307 million in costs related to a previously-disclosed data theft incident. Coinbase said in May that tens of thousands of users were victims of a data breach after a cyber attacker bribed overseas support workers in an attack that could cost the company up to $400 million.

Shares were falling 6% in late trading on Thursday.

Coinbase said this month marked monumental milestones on the policy front, with the Genius Act, the first-ever federal legislation for digital assets and establishing clear rules for stablecoin issuers, signed into law, and the House passing the Clarity Act, which sets a market structure framework for digital assets, "potentially unlocking new opportunities for Coinbase and reinforcing U.S. leadership in digital finance."

The company told CNBC that it is expanding its core trading app beyond crypto into an "everything exchange" that includes tokenized real-world assets, stocks, derivatives, prediction markets, and early-stage token sales. The offerings will be available first to American users, and then to international markets, "based on jurisdictional approvals," Max Branzburg, Coinbase's vice president of product, told CNBC.

Investors will be listening for what the crypto exchange operator says about its transactions, the impact of recently enacted federal crypto legislation, and its acquisition of crypto options exchange Deribit.

Coinbase's stock has gained 52% this year through Thursday's close, and its market value has increased to $96.15 billion.

Over the past quarter, Coinbase has joined the benchmark S&P 500. Bitcoin's price hit a record high of $119,963 on July 21.

In May, the company announced that it was buying crypto options exchange Deribit for $2.9 billion, which it said would help it gain even more market share in the crypto derivatives business.

Coinbase management will hold a conference call to discuss second-quarter financial results at 5:30 p.m. Eastern time.

Write to Janet H. Cho at janet.cho@dowjones.com

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