Coinbase’s fourth-quarter revenue dropped 20% amid the crypto market slump, with net losses exceeding $600 million | Earnings report highlights

Impacted by the cooling of the crypto market, cryptocurrency exchange Coinbase suffered a huge loss of $667 million in the fourth quarter.

After the U.S. market closed on February 12, Coinbase released its fourth quarter financial report. Revenue fell 20% to $1.8 billion, exceeding market expectations for the decline. The quarter recorded a net loss of $667 million, compared to a net profit of $1.3 billion in the same period last year.

The financial report points out that the losses mainly came from impairment provisions for unrealized losses on cryptocurrency holdings and investments. In contrast to the weak single-quarter financial performance, Coinbase still emphasizes the narrative of "scale and diversification" for its 2025 operational metrics.

Annual total trading volume reached $5.2 trillion (YoY +156%), with the market share of crypto trading volume rising to 6.4% (doubling YoY). Management regards the historic high of subscription and service income to $2.8 billion, with USDC-related earnings and membership subscriptions becoming key pillars as "ballasts to ride through cycles".

Dan Dolev, analyst at Japan's Mizuho, noted that Coinbase's institutional business performed strongly but the consumer side was weak. First quarter revenue guidance falls short of consensus, and EBITDA is below expectations. The market is closely watching whether this is a "mid-cycle adjustment" or the start of a new "crypto winter".

Despite the disappointing financial results, the company’s stock rose slightly in after-hours trading, but the cumulative decline this year remains more than 40%.

This downturn reflects a common dilemma facing the entire cryptocurrency exchange industry. Competitor Gemini Space Station announced plans last week to lay off up to 25% of staff and scale back international business. Robinhood also said this week its cryptocurrency trading revenue fell 38%.

Trading Revenue Under Pressure, Derivatives Business Emerging as a New Growth Engine

Due to the overall weakness in the crypto market in the fourth quarter, Coinbase's core trading revenue declined.

The company’s Q4 trading revenue was $983 million, down 6% quarter-on-quarter. Among this, consumer trading revenue plummeted 13% QoQ to $734 million. The report shows that more trading volume is coming from Coinbase One paid subscribers who enjoy discounted trading fees.

Benchmark analyst Mark Palmer comments:

Overreliance on retail trading is not the future Coinbase wants, especially as trading fees may gradually approach zero just like traditional brokers.

Nevertheless, CFO Haas remains optimistic about the retail outlook:

Retail investors are buying the dips, and importantly, retail investors are in good shape.

In contrast, institutional business performed remarkably well. Although institutional spot trading volume dropped 13% QoQ, thanks to optimized fee structure and strong growth in derivatives business, institutional trading income rose 37% against the trend to $185 million.

Especially after completing the acquisition of Deribit, Coinbase further solidified its leadership in the global crypto derivatives market. Data shows Coinbase’s U.S. derivatives market share surged fourfold YoY, and Q4 derivatives trading volume hit a record high.

Subscription Services as Ballast, Stablecoin USDC Ecosystem Growing

If trading business is Coinbase's "spear of offense", then subscription and service income are its "shield of defense".

In 2025, subscription and service revenue reached $2.8 billion, up 23% YoY. Among them, stablecoin revenue was the biggest highlight, contributing $364 million in Q4 alone. This was mainly due to the average amount of USDC held on the platform surging 18% QoQ to a record $17.8 billion.

Coinbase is deepening cooperation with Circle and promoting the Base chain to make USDC the "hard currency" of on-chain economies. The report notes Coinbase holds about 12% of global crypto assets, and platform assets have tripled in the past three years.

Additionally, paid membership service Coinbase One is nearing 1 million subscribers. These high-stickiness users not only pay stable subscription fees but also increase platform fund retention through products like the Coinbase Card.

Notably, ongoing U.S. stablecoin legislation may limit exchanges offering rewards tied to users’ stablecoin balances, directly affecting Coinbase's and Circle’s revenue sharing arrangement. CFO Haas says:

We're at the negotiating table, and will stay until an agreement is reached.

Analysts generally believe this portion of income is higher margin and more predictable, providing an important buffer against trading volume volatility. If legislation restricts this source, it will weaken one of the core pillars of the company’s diversification strategy.

Planning the Future: Rigid Growth on the Expense Side

To support its ambition of being an "exchange for everything", Coinbase has not been stingy with spending.

Full-year operating expenses for 2025 surged 35% to $5.7 billion. In Q4, total operating expenses increased 9% QoQ to $1.5 billion. Technology, R&D, administration, and marketing expenses grew a combined 14%.

The rise in expenses stems mainly from three sources:

First, as USDC holdings increase, reward payments to users have soared;Second, acquisition related costs and amortization from purchasing companies like Deribit;Third, investment in global compliance and legal affairs.

Despite high costs, Coinbase emphasizes these are to capture market dividends once regulatory clarity is achieved. Full-time employees increased 3% QoQ in Q4 to 4,951, mainly concentrated in customer service and product teams, showing signs of expansion.

Outlook for Q1: Cautious Optimism

For the first quarter of 2026, Coinbase gave relatively cautious performance guidance.

As of February 10, 2026, the company had generated about $420 million in trading income. For subscription services, Q1 revenue is expected to be between $550 and $630 million, lower than Q4, mainly due to falling interest rates, leading to reduced interest income and lower staking rewards from declining crypto asset prices.

To help buffer against potential performance volatility and return to shareholders, Coinbase launched an aggressive buyback plan.

Following the Q4 buyback of $850 million in shares, the company repurchased another $895 million of stock from the start of 2026 to February 10. With a newly approved $2 billion buyback authorization from the board, Coinbase currently has about $2.3 billion in buyback "ammunition" left.

Analysts believe this aggressive capital allocation strategy provides support for the stock price amid market turbulence. In response to the recent crypto market shrinkage, research firm Kaiko said we are now at the "midpoint of the bear market". Clear Street analyst Owen Lau thinks:

Price action and trading volume are more like a mid-cycle correction than a total collapse.

For Coinbase, the short-term crypto market weakness will prove the effectiveness of its diversification strategy. However, a prolonged bear market will again expose the reality that exchange income is hard to fully escape the market cycle.

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