Coinbase Global, Inc.

Good afternoon, and welcome to the Coinbase Third Quarter 2025 Earnings Call. My name is Anil Gupta, and I'm Vice President of Investor Relations at Coinbase. Joining me on today's call are Brian Armstrong, co-founder and CEO, Emily Choi, President and COO, Alicia Haas, CFO, and Paul Graywall, Chief Legal Officer. During today's call, we may make forward-looking statements, which may vary materially from actual results. 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 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. We'll start today's call with opening comments from Brian and Alicia, and then take questions from our retail shareholders and our research analysts. With that, I'll turn it over to Brian for opening comments. Thanks, Anil. It was another great quarter for Coinbase. We continued to drive strong financial performance and build the everything exchange that we announced last quarter. Financially, Coinbase's core business is incredibly strong, and we're very well positioned for the opportunities ahead of us. Our strong financial performance in Q3 was driven by continued product execution. Total revenue was $1.9 billion. Adjusted EBITDA was $801 million. We ended Q3 with $11.9 billion in USD resources and another $2.6 billion in long-term crypto investments. So just a quick refresher, our mission is to increase economic freedom in the world at Coinbase. And crypto is the technology that we're going to harness to get there. Crypto rails will power more and more of financial services over time because they're faster, cheaper, and more global. With just a smartphone, for instance, anyone in the world can access trading and payments, raise money to start a business, or get access to credit. Coinbase is the most trusted brand in crypto with deep technical expertise, and as finance moves to these rails with increasing regulatory clarity, we're uniquely positioned to lead and capture the upside of this paradigm shift. In Q2, we introduced the Everything Exchange, a one-stop shop to trade every asset class. Customers want one venue to trade spot crypto assets, derivatives, and options, but also equities, prediction markets, commodities, and more. In Q3, we executed on that vision by expanding spot coverage, growing our derivatives offering, and laying the groundwork for new asset classes on our platform. In terms of spot coverage, we turbocharged our trading platform in Q3 by adding decentralized exchange or DEX integrations, which expanded access to tradable assets from about 300 to over 40,000 assets in the U.S. With DEX integrated under the hood, customers get day one access to new tokens as they are created, and we capture the upside when one of those takes off. We've also made strong progress in growing our derivatives product. As a reminder, derivatives account for about 80% of all crypto trading volume. And in Q3, we were the first to launch CFTC-regulated, 24-7, perpetual-style futures in the U.S. Early traction is strong for our U.S.-style PERPS product, which helps drive all-time highs in U.S. derivatives volumes and market share. We closed the Deribit acquisition, bringing the number one crypto options venue into Coinbase, and Deribit plus Coinbase saw over $840 billion in total derivatives volume in Q3, driven by stronger participation from institutions and advanced traders. Next, let's touch on how we're accelerating stablecoin adoption by improving payments. The majority of global payments will shift to stablecoins over time because they allow you to send money anywhere in the world in under one second for less than one cent. No other payment rail can match this. Adoption is already well underway as stablecoin market cap hit $300 billion, driven by companies and financial institutions using them for payments and treasury, and we expect policy tailwinds like the Genius Act to continue to accelerate this. In Q3, Coinbase customers held on average $15 billion of USDC on platform, making us the largest contributor to USDC's all-time high $74 billion market cap. USDC continues to be the top-performing major stablecoin in the crypto ecosystem, growing more than 2x as much as the largest competitor. In closing, with regulatory clarity accelerating, crypto rails are set to power more and more of global GDP for trading, payments, and every financial service. Coinbase is well positioned to be the partner of choice for companies and financial institutions, including Citi, which we just announced last week. We're looking to come on chain. Through the end of the year, we're heads down building the Everything Exchange and scaling stablecoin payments with USDC. Speaking of which, I'm super excited to share that on December 17th, we're hosting our H2 product event, where we'll go through everything we've built in the second half of this year. Tune into the live stream for a closer look at the next phase of the Everything Exchange. I'll now turn it over to Alisa.

Thanks, Brian, and good afternoon, everyone. As Brian shared, it was a strong quarter for Coinbase. We had total revenue of $1.9 million, net income of $433 million, adjusted EBITDA was $801 million, and adjusted net income was $421 million. So let's dive deeper into our Q3 results. As always, any comparison I'll share is going to be on a quarter-over-quarter basis unless I note otherwise. In the third quarter, our U.S. and global spot market trading volume increased 29% and 38% respectively. This is global market. Against that, our Coinbase's Q3 consumer spot trading volume grew 37% to $59 billion, and consumer transaction revenue grew 30% to $844 million. The main difference between the growth rate in volume and revenue was due to a higher mix of advanced trading volume, which has a lower feed rate. a couple of call-outs on what drove this growth. First, as Brian mentioned, we made progress on growing the number of assets available to our customers, both in terms of spot and derivatives assets. Second, our advanced trading volumes were supported by price increases and the long tail of assets, as well as our concerted effort to attract and retain high-priority traders through a new white-glove service offering. Our institutional business had strong results across the board. Total institutional transaction revenue was $135 million, up 122%. The primary growth driver was derivatives. We closed Airbit on August 14th, which contributed $52 million to revenue, driven by continued growth of options trading, which led to all-time high notional volumes. Additionally, we saw revenue growth in both our exchange and Coinbase Prime businesses in the third quarter. Now turning to S&S revenue, which grew 14% quarter over quarter to $747 million. We saw strong native unit inflows across USDC balances and Coinbase products, average loan balances across our institutional financing products and assets under custody. We ended the third quarter with $516 billion in assets on platform. Total operating expenses decreased 9% to $1.4 billion. Technology and development, general and administrative, and sales and marketing expenses collectively increased 14% to $1.1 billion, largely driven by headcount and USDC rewards growth. I note that Darabit contributed $30 million to total operating expenses in the third quarter, including $16 million in deal-related amortization, the majority of which was recorded in sales and marketing. We ended the third quarter with 4,795 full-time employees, up 12%. I want to turn your attention to two below-the-line items that affected our GAAP profitability. First, we had a $424 million gain from the ongoing fair value remeasurement of our crypto investment portfolio. Second, we had a $381 million expense in other expenses, largely driven by unrealized losses related to our investment in Circle, as their stock price was lower as of the end of third quarter as compared to the end of second quarter. Including both of these items, net income was $433 million. Excluding both of these items, adjusted net income was $421 million. Now let's turn to our Q4 outlook. The fourth quarter is off to a strong start, and we expect October transaction revenue to be approximately $385 million. We expect subscription and services revenue to be in the range of $710 to $790 million, driven by higher average crypto prices and continued growth of the Coinbase One subscriber base. On the expense side, our expense range is higher quarter per quarter for tech and dev and G&A, in the range of $925 to $975 million. up approximately $100 million at the midpoint. Approximately half of this increase is due to the recent acquisitions of Darabit and Echo. The remainder of the quarter-per-quarter increase is largely due to headcount growth, which we expect to grow at a slower rate in the fourth quarter as compared to the third quarter. Sales and marketing is expected to be in the range of $215 to $315 million. Where we land in this range will largely be determined by performance marketing spend opportunities and USDC balances and Coinbase products, which drive USDC rewards. Included within the above outlook ranges is approximately $70 million of total depreciation and amortization for Q4. This is an increase from historical averages, which has been driven higher due to amortization of intangibles from our recent acquisitions. Over the course of 2025, we've made a significant investment in headcount to capitalize on the many opportunities we see and accelerate our vision on the everything exchange. As we look to early 2026, we plan to absorb the employees we've brought into the company and focus on execution and anticipate that our sequential rate of operating expense growth will slow as compared to our Q4 rate. With that, let's go to questions.

Thanks. So let's begin with pre-submitted questions from retail shareholders. Many of the top questions touch on similar topics, so for efficiency we'll group by theme. The first topic is about competition. What's the plan to improve product innovation and velocity and increase market share? How are you thinking about listing stocks and prediction markets given the success of others? Brian? Yeah, so on this question I'd say that we've spent a lot of time investing in policy and getting regulatory clarity both in the U.S. and a number of countries around the world. and that's starting to bear fruit which is great it's growing the tam of crypto it's making it trusted and regulated um even as more and more people come into the space we're able to power a lot of the that with our infrastructure services but it does mean that lots of new competition is coming in so we need to make sure we're executing well and we've talked since q2 about this everything exchange vision we've made really substantial progress toward that already areas where i think we're best in class like i mentioned the DEX integrations where we went from 300 tradable assets to 40,000 tradable assets in Q3. And we were the first to launch these CFTC-regulated U.S. perpetual-style futures contracts, which have been growing really well. So there's a lot to like there. Now, we've been heads down working on the next pieces of that because we think that every asset class is going to come on-chain. And our customers are asking for this, too, you know, prediction markets and tokenized stocks and every on-chain asset you can imagine. The Everything Exchange is really central to the next chapter of what we're building. And I'm really excited that we'll have more to share on that on December 17th at our product showcase. So please tune into the live stream for that. And I'd say the Everything Exchange is really a perfect complement to all the other features that we've built into Coinbase, including DeFi Borrowed Lend, USDC, Global Payments, Coinbase Card. People really love that product. Base is having really strong momentum. And so I think these are all going to come together to be – our goal long-term is to be the number one financial app, and that's what we're working on. Thanks, Brian. So the second topic is base. Brian, can you elaborate on how you're thinking about a base network token, and in particular how shareholders could be beneficiaries of the distribution? And Alicia, can you talk about the monetization of the base network and how that might evolve over time? Yeah, so I'll start it off. You know, we're still early on exploring a base network token, but – The high-level goal is to help bring a billion people on chain and just to really grow the developer and creator ecosystem around FACE. So there's not any specifics that we're going to announce today on the governance or distribution model or the timing of it exactly, but we are going to build this in the open and just continue talking with our customers, investors, regulators to make sure that we get it right. So, Alicia, anything you want to add?