The cryptocurrency exchange Coinbase will announce its 2025 fiscal year third-quarter earnings report after the U.S. stock market closes on October 30. According to projections from the Tiger International App, Coinbase's third-quarter revenue is expected to be $1.775 billion, representing an increase of over 47% year-over-year; adjusted earnings per share are estimated at $1.13, up more than 303% year-over-year.
Review of Last Quarter
In the second quarter, revenue was $1.4972 billion, a year-over-year increase of approximately 3.3%; with a gross margin of about 80.1%; net profit was around $331 million, with a net margin of about 22.1%; adjusted earnings per share were about $2.00, slightly exceeding market expectations for profit quality and effective cost control. Management indicated during the earnings call that third-quarter operating expenses would be around $900-920 million, with stable expectations for subscriptions and services, while trading would fluctuate with the market. Main business revenue included $764 million from trading and $656 million from subscriptions and services, with the subscription portion rising to approximately 44%, optimizing the revenue structure.
Quarterly Outlook
Drivers and Limits of Trading Activity Recovery
As we enter the third quarter, research institutions commonly emphasize the interplay between the strengthening of bitcoin prices and net ETF inflows, which drives trading volume recovery and pricing improvements. The trading sector is expected to resume sequential growth. In the second quarter, trading revenue was $764 million, accounting for approximately 51% of the total, with high correlation between retail and institutional activity levels and cryptocurrency prices. According to models such as from FactSet, a 10% change in bitcoin prices translates to a 7%-10% fluctuation in trading revenue, indicating high sensitivity of the trading section to market continuity and volatility structure. When market continuity is stronger and volatility falls within the "favorable for trading" range, margins and frequency improvements will simultaneously drive revenue. If volatility contracts quickly or prices weaken unilaterally, trading activity may decline, necessitating alertness to intra-quarter shifts. On the cost side, management continues with the second-quarter guidance framework of $900-920 million for operating expenses, where trading volume recovery can facilitate operational leverage, translating incremental trading revenue into greater profit.
Resilience and Expansion Path of Subscriptions and Services
Subscriptions and services revenue in the second quarter was $656 million, accounting for about 44%, comprising USDC interest, staking earnings, and custody fees, among others. Various institutions indicated between July and September that USDC interest and staking earnings were stable in the first half of 2025, providing a basis for maintaining high gross margin levels in the third quarter. This segment is expected to remain stable in the third quarter, with a share above 40%, with a focus on regulatory compliance custody and settlement services for institutional clients and cross-sales to high-value customers to enhance ARPU. Previews from Bloomberg Briefs and MarketWatch also mention that integrated institutional custody and settlement solutions are raising ARPU, stabilizing the share of subscription revenue. This segment has low sensitivity to expenses, benefiting from disciplined operational expense frameworks, and has good visibility on profit margins. The key variables to monitor are the interest rate environment and policy changes affecting staking yields and stablecoin ecosystems; the current data and guidance indicate a clear trend of structural optimization, supporting third-quarter profit quality.
Path to Delivering Expenses and Profit Margins
Consensus forecasts a third-quarter gross margin of about 82% and a net margin of approximately 24%, with improvements in profit margins mainly due to the co-concurrence of rising trading activity and stable subscription revenue. The company clarified second-quarter intentions for a third-quarter operating expense target between $900 and $920 million, allowing controlled expenses to improve profit margins. Should there be an unexpectedly strong recovery on the trading side, incremental revenues will promote operational leverage under the set expense framework, making net margins more elastic. If market conditions are subdued, the resilience of the subscription sector with its high-margin structure is expected to cushion profit fluctuations. Particularly noteworthy is the cross-selling to institutional clients and custody business, where MarketWatch and several brokerage previews highlighted raising ARPU through an integrated platform to boost revenue and profit margins, marking a "light-asset incremental revenue" path as a mid-term lever for optimizing profit structure.
Synergy Advantages of Institutional and Regulatory Platforms
Numerous studies indicate that user retention on compliant platforms and institutional client preferences are forming synergies, translating pricing and liquidity advantages more readily into transactions as trading recovers in the third quarter. Previews from FactSet and Seeking Alpha both emphasize that under the backdrop of trading recovery, driven by net ETF inflows and rising prices, institutional transactions and retail activity are improving concurrently, with cross-sales of custody and settlement services to high net worth and institutional clients beginning to reflect improved unit user value. The resulting "platform synergy effect" stabilizes the high margin and stable cash flow of the subscription sector while creating a multiplier effect on revenue in the trading sector during recovery, aiding structural improvements in income and profit margins for the third quarter.
Formation of Operational Leverage and Risk Balance
The company maintained operational expense discipline in the second quarter and provided clear expense guidance for the third quarter, laying the groundwork for delivering operational leverage. Broker forecasts generally believe that if an unexpected "freeze" in trading volume does not occur in the third quarter, the high-margin and steady cash flow of the subscription sector will match with the incremental parts of the trading segment, aligning net margin and adjusted earnings per share performance closely with or slightly beyond consensus expectations. Risks to balance include high sensitivity of trading to price and volatility, disruptions from policy and interest rate environments on staking and stablecoin earnings, and incidents affecting product/function availability and performance changes within the quarter (Reuters reported several subsystem performance warnings from the second to third quarter but did not materially impact core fund security and Prime accounts). Overall, with disciplined expenses and high-margin subscription moats, the elastic path of profit structure in the third quarter remains well-charted.
Analyst Perspectives
Recent previews and ratings for the third quarter indicate that bullish opinions dominate. Various institutions have raised their target price range to $260-$300 between September and mid-October, giving Buy/Outperform ratings centered on trade recovery, subscription resilience, and expense discipline; Mizuho raised the target price from $267 to $300 (Neutral), while Barclays maintained Equal Weight and slightly lowered the target price to $361, shifting the overall rating distribution from neutral to positive. FactSet and Bloomberg Briefs previews both point to: third-quarter revenue of approximately $1.72-$1.78 billion, gross margin of about 82%, net margin of around 24%, adjusted EPS of approximately $2.1-$2.3, with subscriptions and services sustaining over 40% revenue proportion and OpEx approximately $900-$920 million. More cautious voices remind of regulatory and expense pressures, high sensitivity of trading to market conditions, but based on current data and guidelines, mainstream institutions are still inclined towards expecting third-quarter performance improvements.
Summary
The core logic for the third-quarter forecast is "trade recovery and stable subscriptions," with the resonance of both enhancing the profit structure. The trading sector, driven by price gains and ETF net inflows, expects activity and pricing margins to improve, potentially forming operational leverage under controlled expenses. The subscriptions and services sector, backed by the stable contributions of USDC interest, staking, and custody fees, maintains high margins and cash flow resilience, providing downside protection for profit margins. Cross-sales to institutional clients and integrated platform synergy are raising ARPU, effectively matching income growth with expense expansion. On risk balance, monitoring trading sensitivity to volatility, interest rate and regulatory impacts on subscription composition, and intra-quarter product performance and availability changes are necessary. Integrating consensus forecasts and disclosed expense frameworks, the improvement path for third-quarter revenue and profit quality is relatively clear.
This content is generated based on Tiger AI data and is for reference only.