Thread by @LiebermanAustin

Coinbase $COIN is down 11% after reporting Q3 Earnings

Revenue: $1.3B missed $1.57B est.
Monthly Transacting Users (MTU): 7.4M vs 7.09M est
Trading Volume $327B vs $309B est
Adjusted EBITDA $618M vs $662M

Thread on my notes from shareholder letter + call ⬇️

"We are focused on investing for long-term growth. Our business is volatile. $COIN is a long-term investment in the growth of the cryptoeconomy & our ability to serve users through our products & services. We encourage our investors to take this point of view"

"In Q3, Verified Users grew to 73 million and retail Monthly Transacting Users (MTUs) were 7.4 million. The number of institutions and ecosystem partners using Coinbase also continued to grow nicely."

"We generated $1.2B in net revenue, marking our third consecutive quarter of over $1B in
net revenue. This includes $1.1B in transaction revenue and $145M in Subscription and
services revenue. Net income and Adjusted EBITDA were $406M and $618M,
respectively"

Notes from the Call:

Crypto users have doubled this year and growth is accelerating. This resembles the growth of the internet over the last 20 - 30 years.

Focused on serving users with great products, customer service and app reliability, and meeting with/educating regulators.

Institutional business outperformed and retail business performed inline with broader crypto industry

Retail transaction decline is a result of lower volatility in crypto prices. No underlying change to fee rate.

Focus on assets paying off. ~50% of transaction rev from other

Subscription services revenue up 41% QoQ. Encouraging sign that crypto is moving to utility with use cases around yield + reward instead of just investing.

We have increased MTU guidance for remaining of FY 21 to a high of 8.5M and a low of 8 million.

Question: about Coinbase Ventures

Answer: Very pleased with progress (launched in 2018). More than 200 portfolio companies. We invest based on interesting future themes then look for best teams and technologies in those spaces

Question about NFT product

Answer: Very excited about NFTs. Could end up bigger than fungible side of our business. We'd like to make $COIN NFT more like Instagram than an auction so people can follow their favorite creators. We also want to make NFTs easier to use

Question on evolution of marketing (NBA partnership, Youtube ads, etc)

Answer: We have historically used very little marketing spend prior to this year. Right now we see tremendous opportunity and want to reach 1B users (currently at 73 million).

Question on diversifying revenue away from fees

Answer: On the retail side we focus on access to assets, new products, etc. We view ourselves as offering a platform of products and services for investors and don't see ourselves as competing on fees.

continued... we do believe over long term we will see compression in fees and we are focused on growing subscription and service revenue to diversify revenue stream with more products to come in future quarters.

goal is to become primary financial account for users

Question: Improvements in how $COIN will show profit/loss/taxes/etc to users?

Answer: Our view is to have end of year single file showing tax information (Coinbase Tax Center).

By Q1 should see improvement in app to profit/loss/etc

Question: Who is Coinbases largest competitor/threat?

Answer: We love more traditional finance companies getting involved. We do see Square, Paypal, etc entering and often partner with them.

We do see many growing crypto-native companies and also look to partner with them

Many crypto native competitors are much smaller and not regulated so we can often offer a better/safer experience for users.