Shares in Coinbase Global Inc. remained somewhat flat in after-hours trading today despite the cryptocurrency exchange strongly beating estimates in its first earnings report after going public in April.

For the quarter ended June 30, Coinbase reported revenue of $2.23 billion, up from $186.4 million in the same quarter of 2020. Earnings came in at $3.45 per share. Refinitiv analyst estimates had predicted revenue of $1.78 billion and earnings per share of $2.33.

Net profit in the quarter was $1.6 billion, up about 49 times year-over-year as Coinbase has continued to thrive despite volatility in cryptocurrency markets.

Not surprisingly, the volume of trading was the main driver on Coinbase’s surging growth. Coinbase had 8.8 million monthly transacting users in the quarter, up from 1.5 million in the same quarter of 2020. Those users traded the equivalent of $462 billion in cryptocurrency, compared to $28 billion a year ago.

Assets held on Coinbase’s platform ended the quarter at $180 billion, up from $26 billion year-over-year but notably down from $223 billion in the first quarter. The drop in the quarter likely represents a drop in the price of cryptocurrencies.

Bitcoin peaked at just over $65,000 the day Coinbase went public in April but then dropped to a recent low of just under $30,000. Bitcoin and cryptocurrencies, however, are growing in value again, with bitcoin currently trading at around $45,000.

Coinbase’s success was not attributed to consumer-level cryptocurrency investors alone. The company specifically mentioned in a letter to shareholders that its institutional customers are seeing Coinbase as a one-stop shop for the services they need, including trading, custody, lending, yield generation, data and more across a broad spectrum of cryptocurrency assets.

“Institutions are choosing Coinbase for the deep pools of liquidity we offer, our sophisticated algorithmic order execution, as well as the trust that comes with being a public company,” Coinbase said. “Furthermore, we have enabled access to all our order books and our global fiat payment networks, allowing our institutional exchange customers to reach new currencies and markets and improving their access to global liquidity pools.”

Coinbase has also gained the attention of hedge funds, with 10% of the top largest hedge funds by reported assets having chosen to onboard with Coinbase. The company has also formed new partnerships with companies and people, including Elon Musk, PNC Financial Services Group Inc., SpaceX Inc., Telsa Inc., Third Point LLC and WisdomTree Investments Inc.

For the quarter ahead, Coinbase declined to give formal estimates, saying that “it is important for investors to remember that our business is unpredictable.”

That said, Coinbase did note that in July, it saw 6.3 million monthly transacting users trading $57 billion in assets as crypto asset prices and crypto asset volatility declined significantly relative to the second quarter. Month to date in August, numbers are said to have improved compared to July but are still lower than the second quarter.

For the full year, Coinbase predicted three possible scenarios. On a high scenario, it predicted an average MTU of 8 million, a midrange of 7 million and a low range of 5.5 million.

The warning that trading volume and user numbers in the third quarter will be lower may have sobered investors despite Coinbase strongly beating estimates in its second quarter. Coinbase shares rose just under a percentage point in after-hours trading.

Photo: Coinbase