Coinbase Misses on Revenue. The Shares Are Falling.

Coinbase investors will be listening to what CEO Brian Armstrong says about the impact of recently enacted crypto legislation. (Michael Nagle/Bloomberg)

Coinbase Global posted second-quarter results that missed expectations, with revenue of $1.5 billion falling slightly short of forecasts, and transaction revenue of $764.3 million missing estimates for $814 million.

Quarterly revenue was down 26% from the year-ago quarter, and transaction revenue was 39% lower.

While analysts had expected net income of $319 million, the company reported net income of $1.5 billion (including a $1.5 billion gain on strategic investments and a $362 million gain on crypto investment
assets), and adjusted net income of $33 million.

At the same time, operating expenses increased $193 million, or 15% from a year ago, to $1.5 billion, because of $307 million in costs related to a previously-disclosed data theft incident. Coinbase said in May that tens of thousands of users were victims of a data breach after a cyber attacker bribed overseas support workers in an attack that could cost the company up to $400 million.

Shares were falling more than 7% in late trading on Thursday.

Coinbase said this month marked monumental milestones on the policy front, with the Genius Act, the first-ever federal legislation for digital assets and establishing clear rules for stablecoin issuers, signed into law, and the House passing the Clarity Act, which sets a market structure framework for digital assets, “potentially unlocking new opportunities for Coinbase and reinforcing U.S. leadership in digital finance.”

“The third quarter is off to an incredibly strong start,” with July transaction revenue expected to be about $360 million, Chief Financial Officer Alesia Haas told Barron’s. Third-quarter subscription and services revenue is expected to hit a new high of $665 million to $745 million, driven by higher average crypto prices and stablecoin revenue.

Coinbase announced on Thursday that it was working with JPMorgan Chase to accelerate crypto adoption. Chase credit card customers can use their cards on Coinbase, link their Chase accounts to Coinbase, and redeem rewards points for USDC, a stablecoin issued by Circle and pegged to the U.S. dollar, on Coinbase’s platform. “This is early, early days,” Haas said.

Haas said the company is also working with PNC Bank, enabling bank customers to perform crypto transactions that Coinbase will execute. Last month, Coinbase and American Express announced the launch of a Coinbase One Card, Coinbase’s first credit card, on the American Express Network, that will let users earn up to 4% Bitcoin back on purchases.

Haas also confirmed that Coinbase is expanding its core trading app beyond crypto into what the company is calling an “Everything Exchange,” where assets including tokenized real-world assets, stocks, derivatives, prediction markets, and early-stage token sales, will be tradeable “in one place, open 24 hours a day, with low friction.”

Coinbase’s previously announced acquisition of crypto options exchange Deribit for $2.9 billion, which it said would help it gain even more market share in the crypto derivatives business, is expected to close by the end of the year.

Coinbase’s stock has gained 52% this year through Thursday’s close, and its market value has increased to $96.15 billion.

Over the past quarter, Coinbase has joined the benchmark S&P 500. Bitcoin price hit a record high of $119,963 on July 21.

Write to Janet H. Cho at janet.cho@dowjones.com