Coinbase Q3 Net Income Rises 66% to $719 Million

Coinbase Global (COIN) reported third-quarter net income of $719 million, up 66% from $433 million a year earlier, as prediction markets and derivatives growth offset weaker spot trading, according to the exchange's earnings release published Thursday.

Total revenue came in at $1.22 billion — broadly flat quarter over quarter but down 35% year on year. The bottom line got substantial help from mark-to-market accounting: the results included a $715 million gain on crypto assets held for investment, compared with a $424 million gain in the year-ago quarter.

Spot trading volume fell 8% quarter over quarter to $135 billion, though the report notes Coinbase continued to gain market share even as its core cash-and-carry business softened.

How much are prediction markets now contributing?

The standout line item is prediction markets. Coinbase said the business surpassed $200 million in annualized revenue, doubling from roughly $100 million in the previous quarter.

"Prediction markets have been one of the fastest-growing products in Coinbase history, growing even through slower sports months driven by crypto contracts where we have a strong right to win," CEO Brian Armstrong said in a Thursday statement.

Bernstein analysts, writing in a Friday research note, estimated that prediction markets and derivatives together accounted for about 25% of Coinbase's transaction revenue — roughly 12% of total revenue. They credited the segment, along with subscription and services income, with helping "offset the softer crypto trading activity."

Derivatives volume declined 7% quarter on quarter to roughly $986 billion, but that outperformed the industry: Bernstein put the broader market's derivatives decline at 11% over the same period, implying Coinbase picked up relative ground.

What does this mean for revenue mix?

CFO Alesia Haas framed the shift as a structural change in how Coinbase earns money, not just a quarter's anomaly.

"Subscription and services revenue grew quarter over quarter and now represents nearly half of net revenue. Prediction markets are adding another revenue stream and are less correlated to crypto volatility," Haas said. "These businesses make Coinbase more diversified and resilient across market cycles."

Stablecoins remained a key contributor. Stablecoin revenue reached $328 million, up 3% quarter over quarter, including $21 million attributable to USDC held in corporate balances.

William Blair analysts said Thursday that stablecoins, particularly USDC, will revolutionize cross-border payments and "play a critical role in tokenized RWA settlement" — real-world asset settlement on-chain.

How did the market and analysts react?

Both Bernstein and William Blair reiterated Outperform ratings on Coinbase stock after the release. Bernstein maintained its $250 price target, while William Blair's valuation analysis suggested the stock could be worth roughly $240.

The market itself was cooler. Coinbase's Nasdaq-listed shares closed down 1.07% at $160.59 on Thursday, suggesting investors had already priced in the revenue mix shift.

The operational takeaway: Coinbase is deliberately reducing its dependence on spot trading fees, which historically tracked crypto volatility in lockstep. Prediction markets, derivatives and stablecoin income are steadier, less volatility-correlated streams — and they now anchor nearly half of net revenue.

The question for the fourth quarter is whether prediction markets can sustain their doubling trajectory now that sports betting volumes are picking up seasonally, and whether the segment can keep compounding fast enough to offset another leg down in spot activity.