COIN Coinbase 10-Q 2026-09-30 section summaries

Coinbase (COIN) — Q3 and 9M 2026

Consolidated results

Q3 revenue declined 34.9% year over year, led by lower consumer transaction revenue and blockchain rewards. Net income rose despite the weaker operating result, reflecting volatile investment and other non-operating effects: Q3 other income was $66.735 million, versus other expense of $380.518 million a year earlier. For 9M, other income was $78.468 million, compared with $1,120.199 million in 2025; the prior period included substantial investment gains. Q3 gains on crypto held for investment were $715.022 million versus $423.903 million.

Revenue detail

A single counterparty accounted for 27% of Q3 revenue, up from 19%. Coinbase reclassified revenue from corporate payment stablecoin balances from net revenue to other revenue; this changed the presentation, not total revenue. Prior-year comparisons include $30.1 million reclassified for Q3.

Balance sheet and cash flow

Capital expenditures are not separately presented. Cash, cash equivalents and restricted cash decreased $3,657.527 million to $13,172.937 million. Coinbase repaid $1.3 billion principal of 0.5% convertible notes at maturity using cash. Shares outstanding declined from 267.836 million at the start of 2026 to 264.756 million at September 30; 7.130 million shares were repurchased during 9M. The board’s $4.0 billion authorization had $2.0 billion remaining at September 30, after 10,169,729 Class A shares had been repurchased under the authorization.

Business, funding and risks

Loan receivables rose to $1.976 billion from $1.355 billion; three counterparties each exceeded 10% of loan receivables. Loan collateral requirements ranged from 100% to 250% of loan fair value. Customer collateral pledged but not recognized on the balance sheet increased to $3.285 billion from $1.863 billion. Short-term borrowings carried weighted-average annual fees of 3.9%, up from 3.5%. Crypto assets held for investment had $2.225 billion fair value against $1.863 billion cost basis.

Derivative instruments produced a $717.485 million Q3 loss, versus an $8.043 million gain; most changes were recorded in transaction expense and related to crypto borrowings and collateral-return obligations. The company says related positions naturally offset at least in part. Customer crypto assets and payment stablecoins safeguarded by Coinbase, valued at $376.6 billion, are not recognized on the balance sheet.

Stock-based compensation expense was $233.045 million in Q3, up from $222.069 million, and $719.441 million for 9M, up from $608.958 million. Coinbase announced a workforce reduction of approximately 700 employees in May; 9M restructuring expense was $47.789 million. The 9M effective tax rate was 3.7%, affected by a favorable adjustment after closure of the federal tax audit for 2020–2021 and by nondeductible expenses.

Coinbase acquired Deribit in August 2025 for $4.295 billion—$721.460 million cash and $3.573 billion in Coinbase shares—to expand its global crypto derivatives platform. Purchase accounting recorded $2.819 billion of goodwill. In 9M 2026, Coinbase also completed a $180 million strategic equity investment.

Legal and regulatory proceedings remain a risk. In July 2026, defendants obtained summary judgment on claims concerning most transactions in the Underwood securities-related case; surviving claims proceed to discovery, and Coinbase cannot estimate their potential impact. State actions relating to staking services remain unresolved in some jurisdictions, although several regulators withdrew or dismissed actions in 2025, and New Jersey indicated on October 29, 2026 that it intended to rescind its order. Coinbase disputes the remaining claims.

Coinbase (COIN) — Q3 and 9M 2026 MD&A

Results

Revenue contracted as crypto prices, trading volumes and user activity weakened. Net income diverged from Adjusted EBITDA, particularly in Q3, reflecting non-operating gains, including fair-value gains on crypto held for investment. Adjusted EBITDA also excludes recurring items such as stock-based compensation, interest, taxes, and depreciation and amortization; Coinbase cautions that it is supplemental and may not be comparable across companies.

Revenue detail

Transaction revenue fell 44% in Q3 and 37% in 9M, as consumer and institutional spot volumes declined; prediction markets and derivatives partly offset the weakness. Institutional revenue increased year to date as derivatives, including activity following the Deribit acquisition, more than offset lower spot revenue. Subscription and services became a larger share of net revenue—49% in Q3 and 47% in 9M, compared with 41% and 40% a year earlier. Stablecoin revenue was nearly flat year to date: higher average USDC balances were offset by lower interest rates. Lower crypto prices and reward rates weighed on blockchain rewards, partly offset by higher staked balances. Corporate interest and other income declined with lower average rates and corporate cash balances. In Q1 2026, payment-stablecoin-balance revenue was reclassified to this category and prior periods conformed.

Expenses and operating developments

Lower rewards fees, incentives and transaction reversal losses reduced transaction expense, partly offset by prediction-market fees; “other” transaction expense rose to $45.0M from $9.6M in Q3 and $111.1M from $28.6M in 9M. Higher 9M technology and development costs reflected acquired employees and less capitalization of internally developed technology; employee-related expense was $932.0M versus $749.0M. Higher USDC rewards increased sales and marketing expense by $71.6M in Q3 and $175.7M in 9M, partly offset by lower advertising and marketing spend. Lower legal, professional and customer-support costs reduced G&A, although average G&A headcount rose 3% in Q3 and 18% in 9M. Restructuring charges were $47.8M for 9M; Q3 included a $4.6M reversal. Coinbase expects 2026 technology and development, G&A, and sales and marketing expense, excluding intangible amortization, to be slightly below FY2025, with spending flexed to market conditions and opportunities.

Activity, platform assets and strategy

AOP declined 27%, primarily because of lower crypto asset prices, partly offset by unit growth, largely in Bitcoin. Its composition at September 30 was:

AOP is measured at market prices and includes customer crypto and payment stablecoins held or managed on-platform, excluding assets for which customers hold full or partial keys. Coinbase views it as an indicator of platform scale and a potential monetization base. The U.S. generated 84% of revenue in both 2026 periods; no other country exceeded 10%. Strategic priorities are expanding the “everything exchange,” scaling stablecoins and payments, and growing onchain adoption. The company cited growth in derivatives, equities and prediction markets, record average USDC held in Coinbase products, expanded decentralized-exchange trading and borrowing/lending, and renewal of its Circle arrangement on the same terms.

Non-operating items and cash flows

Crypto assets held for investment generated Q3 gains of $715.0M versus $423.9M, and 9M gains of $23.2M versus $189.3M, primarily from fair-value remeasurement, mainly of Bitcoin and Ethereum. Other investment gains were $39.2M in Q3 versus $400.3M of losses; 9M gains were $27.9M versus $1.075B. The prior-year comparison largely reflected remeasurement of the Circle investment after its Q2 2025 IPO. Stock-based compensation was $233.0M in Q3 versus $222.1M, and $719.4M in 9M versus $609.0M. The 2025 Data Theft Incident drove much of the prior-year incident expense; the corresponding line recorded $14.9M of Q3 2026 net income versus $48.0M of expense, and 9M expense fell to $15.9M from $355.4M. Q3 income-tax provision was $105.2M versus $69.6M; 9M included a $1.3M tax benefit versus a $481.3M provision.

Operating cash flow declined 56.4%, primarily reflecting a $1.1B decrease in consumer transaction revenue. Investing outflow was lower partly because the prior year included $665.8M of net cash used for business combinations, primarily Deribit; increased net investment purchases partly offset that decline. Financing cash flow shifted to outflow, driven by $2.7B less net proceeds associated with prior-year convertible-note issuances and capped calls, repayment of the 2026 notes, and share repurchases.

Capital, liquidity and risks

Coinbase reported $8.8B of cash, cash equivalents and marketable investments and expects these resources, future operating cash flows and potential financing to meet cash needs. It repaid the $1.3B aggregate principal amount of its 2026 Convertible Notes at maturity on June 1, 2026. At September 30, outstanding convertible and senior notes had $6.0B aggregate principal, maturing 2028–2032; short-term borrowings were $748.8M, denominated in crypto assets and payment stablecoins for institutional financing. Coinbase repurchased approximately 7.1M Class A shares for $1.2B in 9M; about $2.0B remained under its $4.0B authorization, with no long-term debt repurchased under it.

Crypto assets held at September 30 included $53.1M for operations, $1.3B as collateral, $389.7M borrowed, and $2.2B for investment. Investment crypto is primarily long-term and less liquid than cash; market instability could limit sales or prices in a stress event. Customer assets are not collateralized or rehypothecated without consent. Coinbase reported compliance with subsidiary capital requirements: CB Inc. had $2.928B net capital against $1.185B required, a $1.743B surplus; Coinbase Custody Trust Company had $618M against $396M, a $222M surplus; and other regulated subsidiaries had $1.018B against $887M, a $131M surplus. Requirements can fluctuate with crypto values. Results remain exposed to crypto prices and trading volumes, interest rates, user activity, and fair-value swings; additional equity financing could dilute shareholders, while debt could add servicing costs and restrictive covenants.

Market risk: investment crypto assets

Coinbase primarily holds investment crypto assets for the long term and historically has not hedged this exposure. Bitcoin and Ethereum each had approximately 50% one-year historical volatility, measured as the annualized standard deviation of daily price returns over the prior 24 months.

The sensitivity increased primarily because Coinbase held more crypto units. The resulting gain or loss would be recognized in “Gains on crypto assets held for investment, net.” Other market-risk exposures were not materially changed from the company’s 2025 Annual Report.

Disclosure Controls and Internal Control over Financial Reporting

As of September 30, 2026, Coinbase management, including the CEO and CFO, concluded that the company’s disclosure controls and procedures were effective at a reasonable-assurance level. No changes during the most recently completed fiscal quarter materially affected, or were reasonably likely to materially affect, internal control over financial reporting.

The filing cautions that controls provide reasonable, not absolute, assurance. Their effectiveness may be impaired by factors including judgment, resource constraints, misconduct, changing conditions, or declining compliance. Coinbase intends to monitor and upgrade its controls as appropriate, but cannot guarantee that improvements will ensure effective internal control over financial reporting.

Coinbase reported no material changes to the risk factors disclosed in its Form 10-K for the year ended December 31, 2025. It cautioned that those risks are not exhaustive: risks that are currently unknown or considered immaterial could become significant and materially adversely affect its business, operating results, financial condition, or prospects. The section identifies no specific new risks or financial metrics.

During the three months ended September 30, 2026, one non-employee director and two officers adopted Rule 10b5-1 trading plans during open trading windows. The plans permit potential sales, subject to specified stock-price thresholds; they do not establish that any sales occurred.

Each estimated period may end earlier upon specified completion or termination events. The stated amounts total up to 13,594,519 shares, excluding the undetermined future RSUs under Choi’s plan. This is not a firm estimate of net sales: Choi’s stated amount does not subtract shares sold under her prior August 12, 2025 plan or shares withheld or mandatorily sold for taxes, and excludes shares from RSUs not yet granted. The plans represent potential insider-sale supply and related market overhang; the filing does not report completed sales or proceeds.