Coinbase Global, Inc.

Good afternoon and welcome to the Coinbase fourth quarter and full year 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 Grewal, 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 comments from Brian and Alicia, and then take questions. And with that, I'll turn it over to Brian.

prices, but Bitcoin remains the best performing asset class of the past decade. We've been through cycles like this many times at Coinbase, and adoption continues to grow, regulatory clarity is on the horizon, and I'm more bullish than ever. Moreover, we've successfully diversified the business where stablecoins, subscription and services revenue, and now trading of other asset classes like stocks, prediction markets, and commodities means our revenue is less correlated to crypto price fluctuations. We launched the Everything Exchange in Q4 and are seeing early signs of success. Global trading volume and market share doubled year over year, reaching new all-time highs. Just last week, as crypto prices fell, gold and silver futures drove record notional volume on our exchange. We hit our highest 24-hour trading volume in over a year, in fact. And BASE set a new transaction all-time high with AI agents adopting stablecoin wallets. BASE is quickly establishing itself as the on-chain home for AI. So looking ahead, our strong balance sheet and progress on the Everything Exchange gives us the ability to continue investing in these market conditions. We'll keep buying Bitcoin, we'll continue to buy our stock back, and we won't stop building. Now I want to talk about how we're going to win in 2026. Financial services is a massive industry, and there's multiple trillions of dollars of revenue up for grabs. Crypto is updating the financial system from trading to payments to lending. And Coinbase is the best positioned company in the world to capitalize on this transformation. Here are four reasons why. Number one, we store more crypto than any other company. We're the most trusted brand in crypto. And we work with thousands of institutions, including five G-sub banks and 150 government agencies. Just as one example, we store 12% of all crypto in the world, more than the next four competitors combined. Assets on platform has grown about 3x over the past three years. And these assets are very sticky as we connect more products into them. So that's the first reason. Number two, we've doubled our trading volume and market share year over year. We started off as the leader in the US and now as regulatory clarity has emerged around the world, we're growing our share internationally as well. Number three, we've diversified our revenue streams so that it's not just trading specific. We now have 12 products doing over $100 million in annualized revenue. Subscription and services revenue hit all-time highs of 5.5x from the peak in 2021. And we generated positive adjusted EBITDA in any market condition and consistently profitable on the adjusted EBITDA and adjusted net income basis over the last two years. And finally, number four, we have deep crypto expertise at Coinbase. This manifests in the unique products that we've been able to offer. So, for example, we were early to offer DEX trading, which now allows us to have millions of crypto assets available to trade. We were early on DeFi borrow-lend. We were early on building out the base chain. We've even migrated to our multi-party computation cold storage system, the next generation of it, which has allowed us to accelerate the speed at which customers can complete transactions. So this deep crypto expertise really is one of our core strengths. So for these reasons, we're best positioned to win this transformation as more and more financial services are updated by crypto, this big secular trend. Now in 2026, we have three top priorities that we're focused on, and I'll quickly run through those. So the first one is to grow the everything exchange. In Q2 last year, we introduced our everything exchange vision, which is one platform for all tradable assets, whether that's crypto, equities, prediction markets, commodities, and more. Our thesis here is simple. For customers, the ideal experience is to have access to every investment and trading product that they want in one trusted place, wherever their assets reside. Stocks and prediction markets are natural extensions of our core business, providing a clear path to increasing product stickiness and revenue generation. It's working. Early feedback from our customers is very positive, and we see a number of users crossing over to trade commodities and equities alongside their crypto. We hit all-time highs in derivatives volume and revenue in Q4. A few weeks ago, we rolled out prediction markets to 100% of our customers. Soon, we'll add more markets and a dedicated sports hub for prediction markets. Equities have rolled out. We'll have almost 10,000 tickers live this month. In Q4, we even acquired Echo to enable more efficient on-chain capital formation. This can offer unique investment products to our customers on our everything exchange from the private marketplace. We're working on shipping tokenized equities, which will be a major positive change to the financial system. And with the crypto forward leadership of the SEC, we believe there's a path to get there. We'll also be expanding the Everything Exchange to more countries around the world. So that's our number one priority in 2026, is growing the Everything Exchange. Our second priority is that we're scaling stablecoins and payments. Stablecoins are the second killer app in crypto, and most are still underestimating the potential of a digital dollar. In Q4, we hit an all-time high in USDC stored in Coinbase products, which helped USDC reach an all-time high market cap of about $75 billion. In 2026, we're focused on expanding Stablecoin utility with deeper product integrations, scaling out our payments infrastructure in Coinbase developer platform and Coinbase business. We're even protecting the ability to pay rewards to customers using Stablecoin's to ensure customers can benefit from this and that regulated U.S. stablecoins remain competitive with offshore or unregulated offerings. If you were designing money from scratch today, you'd get crypto and stablecoins where you can transfer funds anywhere in the world in under a second for less than a cent. With the unrivaled efficiency gains, all signs of stablecoins continuing to grow. We're even seeing these AI agents adopt stablecoins for payment, and I believe that stablecoins will be the default payment method for AI agents. Okay, so that's our second priority, stablecoins and payments. Our third and final priority in this 2026 timeframe is to bring the world on-chain. Now, on-chain is a key part of our business strategy and our mission, and this is the broad term that we use for DeFi, self-custodial wallets, and full adoption of decentralized technology as opposed to centralized intermediaries. We're seeing growing adoption of self-custodial wallets around the world, which let people store their funds and instead of trusting a third party. With just a smartphone and an internet connection, anyone can get access to more financial services, improve financial services, and participate in the global economy. We have a winning on-chain strategy, and in 2026, you'll see more DeFi integrations in the Coinbase app. You'll see scaled adoption of the base app with its new focus on trading. We'll continue to increase transaction volume on the base chain, and all of the above will increase the percentage of on-chain activity powered by Coinbase infrastructure. So in closing, as crypto continues to update the financial system, Coinbase is the best positioned company to capitalize on this transition and bring more economic freedom to the world. Now I'll turn it over to Alicia.

Thanks, Brian. Good afternoon, everyone. 2025 is a strong year for Coinbase, both operationally, as Brian just highlighted, and financially. we executed consistently against our goals. We delivered or outperformed our revenue and expense guidance that we provided every quarter. Our 2025 total revenue was $7.2 billion, a 9% year over year increase. Subscription and services revenue reached $2.8 billion, up 23% year over year, and more than five and a half times higher than the prior cycle peak in 2021. As Brian noted, we are pleased to see the growth of the number of products generating $100 million of annualized revenue. And equally, if not more pleased, to see many of these products scale. And we are working hard to see more products join the $250 million, $500 million, and billion dollar annualized revenue club. Turning to our Q4 results, I'm going to start with some highlights. We did have quarter-over-quarter softer market conditions. Crypto market cap was down 11% quarter-over-quarter. However, we outperformed the market on total trading volume, driven by strong derivatives volume growth. Deribit saw another all-time high quarter. Q4 marked our ninth consecutive quarter of native unit inflows. This is inflows to our assets on platform, where customers then in turn stake, they custody, they engage in USDC. So we're seeing growth in native units despite the price headwinds. It was our 12th consecutive quarter of adjusted EBITDA profitability. We are a business that is prepared for volatility. We have diversified over the last four years. Our transaction revenue is diversified and will continue as we execute against the everything exchange. As we mentioned, we have 12 products with over $100 million of annualized revenue, and we are scaling them. Half of those are over $250 million. As we enter the first quarter and see even more volatility, what we are pleased to see is that our retail customers are hodling like they always have, but those who are in the market, they're buying the dip. Every week we've seen net buying versus selling on our platform as we've entered this year. And as Brian mentioned, Coinbase is buying the dip. We've deployed $1.7 billion to repurchase shares. We've fully offset our 2025 dilution from stock-based compensation. And we're buying Bitcoin. So let's dive into the details. Q4 total revenue was $1.8 billion, down 5% quarter-per-quarter. Q4 transaction revenue was $983 million, down 6% quarter-over-quarter, while subscription and services revenue was $727 million, down 3% quarter-over-quarter. Turning to expenses, total operating expenses were $1.5 billion, up 9% quarter-over-quarter, and in line with our outlook. Technology and development, general and administrative, and sales and marketing expenses collectively increased 14% quarter-over-quarter, primarily driven by costs associated with the recently closed acquisitions of Darabit and Echo, and higher USDC rewards, reflecting the record USDC balances held in Coinbase products. When you exclude deal-related costs associated with our M&A activity in 2025, tech and dev, G&A, plus sales and marketing would have increased 11% on a quarter-over-quarter basis. We ended the year with 4,951 full-time employees, up 3% quarter-over-quarter, as we continue to invest in product team development, customer support, and compliance infrastructure. Adjusted EBITDA in the fourth quarter was $566 million, and adjusted net income was $178 million. On a GAAP basis, we reported a net loss of $667 million, primarily driven by a $718 million unrealized loss on our crypto investment portfolio and a $395 million loss on strategic investments, which includes our investment in Circle. As I mentioned, we're adding to our crypto investment portfolio on a weekly basis. We've modestly increased the size of our weekly purchase to build positions in these price markets. Importantly, we remain in a very strong capital and liquidity position. We ended the year with $11.3 billion in cash and cash equivalents and total available resources of approximately $14.1 billion when you include our crypto assets held for investments and collateral. As our stock price declined during Q4 and through early February, we took the opportunity to begin repurchasing our stock with our previously approved authorization. As of today, we have repurchased $1.7 billion of our common stock, fully offsetting dilution from stock-based compensation for the year 2025. We secured an $815 million notional discount to the average price we issued that stock-based compensation in 2025. In January, our board approved an additional $2 billion share repurchase authorization, which we plan to continue to deploy opportunistically when we see price dislocations and to manage down our future dilution from stock-based compensation. Now I'm going to touch briefly on our Q1 outlook. Through February 10th, we have generated approximately $420 million of transaction revenue. Markets have experienced heightened volatility as we began the year, and so while we always caution extrapolation, it's even more important when we see volatility spikes. For the first quarter, we expect subscription and services revenue to be in the range of $550 to $630 million, reflecting the lower average crypto price environment we are in, lower interest rates, and lower staking protocol rewards rates compared to the fourth quarter. On the expense side, we expect technology and development plus general and administrative expenses to be flat, quarter per quarter, in the same range we guided last quarter, in the range of $925 to $975 million. Similarly, we expect sales and marketing expenses to be flat to down, quarter per quarter, in the range of $215 million to $350 million, with our performance in the range largely depending on performance marketing opportunities and the USDC balances on our platform. Overall, while crypto markets remain cyclical, we believe Coinbase enters 2026 from a position of strength. We have a more diversified revenue base. We have a scaled global platform. And with the balance sheet that we can be flexible to continue and invest through the cycle. With that, let's go to questions.