Coinbase reported net income of $719 million for the third quarter of 2026, ending a three-quarter run of losses. Gains on its crypto investments were a major contributor, while trading remained subdued: revenue fell 35% year over year and spot trading volume declined 8% from the previous quarter. Growth in prediction markets and subscription services is shifting the company’s revenue mix, while higher USDC reward costs and crypto price swings add financial uncertainty.
Trading revenue falls as adjusted EBITDA rises 60%
Coinbase reported revenue of $1.216 billion on October 29, roughly flat from the previous quarter but down 35% year over year. Crypto spot trading volume fell 8% sequentially to $134.5 billion, and transaction revenue dropped 44% year over year to $590 million.
Chief Financial Officer Alesia Haas said Coinbase had posted positive adjusted EBITDA for a 15th consecutive quarter. The measure reached $333 million, up 60% from the prior quarter. Adjusted net income, however, was $78 million, far below reported net income of $719 million, reflecting the substantial contribution from gains on the company’s crypto investment portfolio.
Prediction markets top $200 million in annualized net revenue
Prediction markets have become a new source of growth for Coinbase’s trading business. The company said annualized net revenue from the business exceeded $200 million in the quarter. Since launch, it has recorded a compound quarterly growth rate of 82%, while daily traders increased by more than 60% from the previous quarter. CEO Brian Armstrong called it one of the fastest-growing products in Coinbase’s history.
Prediction markets and derivatives together accounted for about a quarter of trading revenue. Customers trading event contracts also generated additional crypto spot activity. Coinbase’s share of global crypto trading rose to 10.7%, from 5.6% a year earlier, with growth in both spot and derivatives.
Subscription and services revenue increased 3% sequentially to $570 million, representing 49% of net revenue. Haas said prediction-market revenue is less correlated with crypto market volatility, helping Coinbase reduce its reliance on conventional crypto trading. The company plans to add more event categories and integrate prediction markets into additional products, while developing native USDC settlement infrastructure.
Haas also said Coinbase had received approval from the US Commodity Futures Trading Commission for its own designated contract market clearing organization (DCO). That could allow the company to offer its own contracts and capture revenue across more parts of the business.
Record USDC balances coincide with higher reward costs
Average USDC balances held in Coinbase products reached a record $22 billion, up 49% year over year and equivalent to about 30% of average USDC in circulation. Stablecoin revenue did not rise with the larger balances: third-quarter revenue was $306.9 million, down 5.4% from a reclassified $324.5 million a year earlier.
USDC reward costs increased 15.8% over the same period, from $111.6 million to $129.2 million. Subtracting the disclosed rewards from stablecoin revenue gives a difference of about $177.7 million, compared with $213 million a year earlier—a decline of roughly $35.3 million, or 16.6%. This calculation is not a measure of stablecoin business profit and excludes other revenue and expenses associated with the business.
Company filings show that higher average USDC balances added $84.6 million to revenue, while lower interest rates reduced it by $52.8 million. Interest earned on USDC reserve assets is an important part of revenue shared between Coinbase and Circle, so lower rates can reduce the amount available for distribution. Haas said both companies want to expand USDC’s market capitalization and use, and may each work with different partners to broaden participation in the ecosystem.
Crypto investment gains underpin quarterly profit
Coinbase continued to increase its bitcoin and ether holdings. At the end of September, the company held 17,954 bitcoin for investment, up 643 from June 30, and 152,649 ether, an increase of 2,370. Including other digital assets, the fair value of its investment portfolio rose 51.5% sequentially, from $1.47 billion to about $2.22 billion.
Coinbase recorded about $715 million in gains on crypto investments during the quarter, nearly matching its $719 million net income. Adjusted net income was $78 million after excluding those investment gains and certain other items. The company estimates that a hypothetical 50% rise or fall in crypto prices would change the portfolio’s fair value by about $1.1 billion, with the resulting gains or losses flowing through its results. Despite the growing contributions from prediction markets, subscriptions and stablecoins, quarterly earnings remain materially exposed to crypto price movements.