Spoiler Alert – Coinbase Q2 Revenue Estimates

Key Insights

• We expect Coinbase’s revenue to decline by 9% in Q2 2023 to approximately $670 million, driven by a reduction in trading spot volumes which have fallen by 36%. This decline is attributed to a strategic shift to focus on margins rather than market share.
• We project non-trading revenue to overtake trading revenue for the first time in Coinbase’s history, illustrating the company’s successful shift towards more sustainable revenue streams.
• We calculate growth of 13% in Coinbase staking revenue, supported by a higher average ETH price and the addition of Polkadot to its staking product. Furthermore, custodial revenue should grow by 20%, higher crypto prices offsetting the 5-15% forecasted outflows.
• Interest income, a significant contributor to Coinbase’s non-trading revenue, is calculated to decrease by 19% due to a sharp fall in the USDC supply. Despite higher interest rates boosting yield on USDC deposits, the depegging event in March 2023 negatively impacted its market perception, leading to significant outflows.

The name “Messari” comes from the term for the “treasurers” of the Venetian merchant class in 15th-century Italy. Their double-entry bookkeeping methods took root after a Franciscan monk (the “father of accounting”) argued that “clean” books were more than a good business practice - they were a moral imperative for traders.

There is no cleaner accounting system than the one enabled by public blockchains. All information is publicly available, making it easily verifiable and harder to manipulate. Using such publicly available information, we estimate Coinbase’s Q2 result, which is to be published tomorrow, August 3, 2023.