San Francisco, CA – Two prominent financial technology firms, Coinbase Inc. and Block Inc., reported their quarterly earnings today, yielding divergent outcomes. Coinbase shares experienced a decline due to diminishing trading volume, while Block shares surged by as much as 17%, fueled by higher-than-expected growth.
Coinbase’s Fiscal Q3 Performance
Coinbase’s fiscal third quarter, ending on September 30, featured an adjusted loss of one cent per share, an improvement from a loss of $2.43 per share in the same quarter the previous year. The company reported revenue of $674.1 million, reflecting a 14% year-over-year increase. Notably, analysts surveyed by FactSet had anticipated Coinbase to report a loss of 55 cents per share and revenue of $651 million.
However, while the headline figures were indeed positive surprises, Coinbase witnessed a decline in total transaction revenue, which fell to $76 billion. This was a notable decrease from $92 billion in the preceding quarter and a substantial drop from $159 billion in the corresponding quarter of the previous year. Among the cryptocurrencies traded on the platform, Bitcoin accounted for 38% of all trading volume, with Ethereum at 19%, USDT at 15%, and other crypto assets comprising 28%.
In the third quarter, subscription and services revenue remained steady at $334 million, showing no significant changes quarter-over-quarter. Coinbase did experience growth in native units held in custody, an increase in staked balances, and an expansion in USDC on its platform.
In a letter to shareholders, Coinbase stated, “Amid multi-year low levels of volatility, we are pleased with our financial results. While we have generated a net loss through Q3, we are on track to deliver meaningful positive adjusted EBITDA for 2023, reflecting the direction we set at the beginning of the year to be a company that can generate adjusted EBITDA in all market conditions.”
Coinbase did not provide specific revenue or earnings estimates in its outlook, only revealing that it generated $105 million in total transaction revenue in October. Subsequently, Coinbase shares experienced a modest decline of just over 4% in late trading.
Block’s Fiscal Q3 Success
In contrast, Block reported a strong performance in its fiscal third quarter. The company achieved adjusted earnings per share of 55 cents, an increase from 47 cents in the same quarter of the previous year. Block’s revenue reached $5.6 billion, up from $4.5 billion, surpassing analysts’ expectations of 47 cents per share on revenue of $5.4 billion.
Block’s Square business contributed $899 million in gross profit, marking a 15% year-over-year increase, while its Cash App segment saw substantial growth, rising by 27% to $984 million. The company boasted 55 million transacting active users in the quarter, an 11% increase, with inflows per transacting user rising by 8% to $1,132.
For the fiscal fourth quarter, Block provided an outlook of $1.96 billion to $1.98 billion in gross profit and $430 million to $450 million in adjusted earnings. The midpoint of the gross profit figure was slightly below the expected $1.98 billion, while the earnings projection significantly exceeded the anticipated $393 million.
Furthermore, Block shared a preliminary adjusted earning outlook for 2024, projecting $2.4 billion, a considerable increase from the expected $1.94 billion.
Block’s robust earnings outlook, combined with its optimistic vision for 2024, generated substantial enthusiasm among investors, leading to a significant surge in its stock price.
