Coinbase posts $719 million profit, almost all from crypto revaluation

Coinbase is back in profit, but the money did not come from trading. Third-quarter net income hit $719 million, and about $715 million of that came from revaluations of crypto on the company's own balance sheet. For the market, it shows what the exchange lives on when volatility dries up.

Profit is back, revenue is flat

Net income of $2.51 per share beat expectations, since analysts, according to Zacks, had pencilled in a 15-cent loss. The adjusted figure without investment gains is far more modest at $78 million. The exchange closed the two previous quarters in the red, with a $394 million loss in the first.

Revenue came in at $1.22 billion. That matches the forecast, repeats the second quarter and sits 35% below a year ago. Transaction revenue slipped only 1% to $590 million and even topped the expected $527 million, even though volatility sank to multiyear lows and trading volumes across the market fell.

Context matters too. In the second quarter, when trading activity slumped, Coinbase missed analyst estimates. This time transaction revenue came in better than expected, so the debate shifts from whether revenue will hold to where exactly it comes from.

The exchange held its ground where the market is weak. Calling it growth would be a stretch.

Why prediction markets became the story of the quarter

The product is quite new, yet it has already crossed $200 million on an annualized basis. Daily traders grew by more than 60% over the quarter, and revenue has compounded at 82% per quarter since launch. According to CEO Brian Armstrong, the business kept growing even through slower sports months.

Bernstein analysts say prediction markets and derivatives are what covered the weaker spot trading. The point for investors is that this revenue is not tied to the bitcoin price. When charts go flat, bets on elections or matches keep generating fees.

"Prediction markets are adding another revenue stream and are less correlated to crypto volatility."

Alesia Haas, CFO of Coinbase, comment on the third-quarter 2026 results

Stablecoins carry almost half of net revenue

Subscription and services revenue rose 3% to $570 million and now makes up nearly half of the company's net revenue. Stablecoins brought $307 million of that. The average balance of USDC held in Coinbase products reached a record $22 billion.

Paid Coinbase One subscribers are up 24% over the year. The exchange's share of global trading volume rose to 10.7%, the fourth quarter in a row that the figure has grown. Coinbase is taking a bigger slice of a smaller pie, which matters more for a market column than a one-off revaluation gain.

A record stablecoin balance at minimal volatility seems to show that clients keep this money as a dollar-like buffer, not just as fuel for trades. That base is steadier than trading income and suffers less from a quiet market.

How the stock reacted and what could spoil the picture

Before the report, shares closed at $160.59 (down 1.1%) and barely moved in after-hours trading. They are more than 55% below the 52-week high of $361.40. The record $6.3 billion hack of Binance added to the pressure. Crypto stocks dropped, Coinbase was among the biggest decliners, and bitcoin traded below $77,000.

There are several reasons not to rush into optimism:

• The $715 million gain is an accounting revaluation, and if crypto falls it can flip into a loss just as easily.
• Transaction revenue depends on volatility, and in the less than four weeks of the fourth quarter through October 25 it came to about $165 million.
• Prediction markets are under regulatory pressure: Utah filed criminal charges against Kalshi and its executives over alleged illegal gambling.

Some Wall Street analysts, according to CoinDesk, now urge investors to buy crypto stocks after the hack. For Coinbase that is a chance, but only as long as reports confirm it earns money on something other than revaluations.

Costs down, margin up

Coinbase cut its 2026 adjusted expense guidance by another $100 million at the midpoint. The range is now $4.15 billion to $4.3 billion, and the first round of cuts came in May. Adjusted EBITDA jumped 60% quarter over quarter to $333 million.

The takeaway is short. Coinbase is cheaper to run and less tied to the bitcoin price, but the real test comes when revaluations stop patching the profit.