COINBASE ($COIN) 2025 EARNINGS CALL

Welcome to the Coinbase fourth quarter and full year 2025 earnings call. My name is Anil Gupta and I'm vice president of investor relations at Coinbase. Joining me on today's call are Brian Armstrong, co-founder and CEO, Emily Choy, president and COO, Alesia Haas, CFO, and Paul Greywall, chief legal officer. During today's call, we may make forward-looking statements which may vary materially from actual results. Information concerning risks, uncertainties, and other factors that could cause these results to differ is included in our SEC filings. Our discussion today will also include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our investor relations website. Non-GAAP financial measures should be considered in addition to, not as a substitute for, GAAP measures. We'll start today's call with comments from Brian and Alesia and then take questions. With that, I'll turn it over to Brian.

Crypto prices, but Bitcoin remains the best performing asset class of the past decade. We've been through cycles like this many times at Coinbase, and adoption continues to grow, regulatory clarity is on the horizon, and I'm more bullish than ever. Moreover, we've successfully diversified the business where stablecoins, subscription and services revenue, and now trading of other asset classes like stocks, prediction markets, and commodities means our revenue is less correlated to crypto price fluctuations. We launched the Everything Exchange in Q4 and are seeing early signs of success. Global trading volume and market share doubled year-over-year, reaching new all-time highs. Just last week, as crypto prices fell, gold and silver futures drove record notional volume on our exchange. We hit our highest 24-hour trading volume in over a year. In fact, Base set a new transaction all-time high with AI agents adopting stablecoin wallets. Base is quickly establishing itself as the onchain home for AI. Looking ahead, our strong balance sheet and progress on the Everything Exchange gives us the ability to continue investing in these market conditions. We'll keep buying Bitcoin. We'll continue to buy our stock back and we won't stop building. Now, I want to talk about how we're going to win in 2026. Financial services is a massive industry and there's multiple trillions of dollars of revenue up for grabs. Crypto is updating the financial system from trading to payments to lending. And Coinbase is the best positioned company in the world to capitalize on this transformation. Here are four reasons why. Number one, we store more crypto than any other company. We're the most trusted brand in crypto and we work with thousands of institutions including five GI banks and 150 government agencies. Just as one example, we store 12% of all crypto in the world, more than the next four competitors combined. Assets on platform has grown about 3x over the past three years. And these assets are very sticky as we connect more products into them. So that's the first reason. Number two, we've doubled our trading volume and market share year-over-year. We started off as the leader in the US and now as regulatory clarity has emerged around the world, we're growing our share internationally as well. Number three, we've diversified our revenue streams so that it's not just trading specific. We now have 12 products doing over $100 million in annualized revenue. Subscription and services revenue hit all-time highs, up 5.5x from the peak in 2021, and we generated positive adjusted EBITDA in any market condition and consistently profitable on the adjusted EBITDA and adjusted net income basis over the last two years. And finally, number four, we have deep crypto expertise at Coinbase. This manifests in the unique products that we've been able to offer. For example, we were early to offer DEX trading, which now allows us to have millions of crypto assets available to trade. We were early on DeFi borrow lend. We were early on building out the Base chain. We've even migrated to our multi-party computation cold storage system, the next generation of it, which has allowed us to accelerate the speed at which customers can complete transactions. So this deep crypto expertise really is one of our core strengths. For these reasons we're best positioned to win this transformation as more and more financial services are updated by crypto, this big secular trend. Now in 2026 we have three top priorities that we're focused on and I'll quickly run through those. The first one is to grow the Everything Exchange. In Q2 last year, we introduced our Everything Exchange vision, which is one platform for all tradable assets, whether that's crypto, equities, prediction markets, commodities, and more. Our thesis here is simple. For customers, the ideal experience is to have access to every investment and trading product that they want in one trusted place wherever their assets reside. Stocks and prediction markets are natural extensions of our core business, providing a clear path to increasing product stickiness and revenue generation. And it's working. Early feedback from our customers is very positive and we see a number of users crossing over to trade commodities and equities alongside their crypto. We hit all-time highs in derivatives volume and revenue in Q4. A few weeks ago, we rolled out prediction markets to 100% of our customers. Soon we'll add more markets and a dedicated sports hub for prediction markets. Equities have rolled out and we'll have almost 10,000 tickers live this month. And in Q4, we even acquired Echo to enable more efficient onchain capital formation. This can offer unique investment products to our customers on our Everything Exchange from the private market. We're working on shipping tokenized equities, which will be a major positive change to the financial system. And with the crypto forward leadership of the SEC, we believe there's a path to get there. We'll also be expanding the Everything Exchange to more countries around the world. So that's our number one priority in 2026: growing the Everything Exchange. Our second priority is that we're scaling stablecoins and payments. Stablecoins are the second killer app in crypto and most are still underestimating the potential of a digital dollar. In Q4, we hit an all-time high in USDC stored in Coinbase products, which helped USDC reach an all-time high market cap of about $75 billion. In 2026, we're focused on expanding stablecoin utility with deeper product integrations, scaling out our payments infrastructure in Coinbase developer platform and Coinbase business. We're even protecting the ability to pay rewards to customers using stablecoins to ensure customers can benefit from this and that regulated US stablecoins remain competitive with offshore or unregulated offerings. If you were designing money from scratch today, you'd get crypto and stablecoins where you can transfer funds anywhere in the world in under a second for less than a cent. With the unrivaled efficiency gains, all signs point to stablecoins continuing to grow. We're even seeing AI agents adopt stablecoins for payment. And I believe that stablecoins will be the default payment method for AI agents. So that's our second priority, stablecoins and payments. Our third and final priority in this 2026 timeframe is to bring the world onchain. Onchain is a key part of our business strategy and our mission. This is the broad term that we use for DeFi, self-custodial wallets, and full adoption of decentralized technology as opposed to centralized intermediaries. We're seeing growing adoption of self-custodial wallets around the world, which let people store their funds instead of trusting a third party. With just a smartphone and an internet connection, anyone can get access to more financial services, improved financial services, and participate in the global economy. We have a winning onchain strategy. In 2026, you'll see more DeFi integrations in the Coinbase app. You'll see scaled adoption of the Base app with its new focus on trading. We will continue to increase transaction volume on the Base chain and all the above will increase the percentage of onchain activity powered by Coinbase infrastructure. In closing, as crypto continues to update the financial system, Coinbase is the best positioned company to capitalize on this transition and bring more economic freedom to the world. Now I'll turn it over to Alesia.

All right, we'll take our first questions submitted to us on X. Our first one comes from Mike Pov65 who asks, "Are you making any headway on positive outcomes regarding the Clarity Act?"

Yeah, I can take that one. The answer is yes. I'm actually quite optimistic that we'll get something through here in the next few months. I want to say a big shout out of appreciation to everyone in the Senate and the administration. I think they're doing all the hard work here to help bring this to a good place. There's lots of constituents around the table. The crypto industry is united in their asks and the things that are important to them. Other constituents are around the table as well. I think there's an opportunity to make a win-win outcome here for everyone, for banks, crypto companies, and the US citizen. What we've really focused on is what matters most to our customers: preserving the benefits of crypto, making sure that there's not any kind of protectionism happening for incumbents, but we just want to have a good level playing field. I think everyone understands that and they're all leaning in to try to create a good outcome here. The Genius Act was just passed six months ago, so we're careful to make sure that nothing's being relitigated there, but I think there's a good path to get something through. Others are doing the majority of the work here and we try to add in commentary where helpful, but hopefully we'll get to a good outcome in the next few months.

Our second question is from at Internet token who asks, "With Base TVL and sequencer revenue growing strongly in late 2025, what percentage of overall subscription and services revenue do you expect layer 2 activity from Base and partners to contribute in 2026? And are there plans to further incentivize builders there?"

Yeah. For the second part of the question about what incentives we're putting out there for builders on Base, we're doing this in a number of different ways. We give out grants called Base grants for builders. We're improving our developer tools all the time just to make it simple for folks to onboard. We're getting distribution from many of these builders through our apps. An example of this recently is these AI agents that have been spinning up. We put out some really useful tools for developers to just get any AI agent a crypto wallet and begin to make stablecoin payments and begin to complete agent commerce essentially. That started to get quite a good amount of traction. We're exploring a Base token as well, which we've mentioned in the past. The Base app itself, which is taking this more trading-focused approach, we think can help drive distribution for builders on Base. These are all ways that we're growing adoption. The Base chain itself works well across payments, trading, DeFi, a multitude of use cases. Our goal is to help it be the primary utility layer for crypto, all built on Ethereum.

Our third and final question from X comes from at Chief Skirp, who asks, "What product or platform initiative are you most excited about that investors may be underestimating today?"

Yeah. I think the two I'd draw folks' attention to are the Everything Exchange. It's a big vision: how do we get all tradable assets on chain? In the end state, we'd want to see 24/7 global markets. Anybody can come in and participate. There's a more level playing field, democratizes access to a lot of this, and it'll make it much easier to do capital formation and price discovery. The ideal outcome here is we'd be one of the top exchanges in the whole world across any asset class. That's the vision for the Everything Exchange. Because we have this deep crypto expertise and crypto is the most important technology updating the financial system right now, I think we'll have an advantage there. The second one I'd point people to are stablecoin payments. We're still in the very early days of this. Stablecoins have already gotten pretty big, but I think we're just scratching the surface. Payments globally flow to the path of least resistance and stablecoin rails are faster, cheaper, more global. Today about half of 1% of global GDP runs on crypto rails. I don't see any reason why that couldn't be 10 or 20% in the next decade. We think there's a lot of room to run there as well.

All right, we'll now take questions from our research analysts. Questions were submitted to us in writing and we'll take one question per analyst and optimize to cover as broad a range of topics as possible without being repetitive. Our first question comes from Andrew Jeffrey at William Blair who asks, "Please discuss line of sight to Everything Exchange monetization. What are your thoughts on the timing about revenue diversification?"

Next question is from Ken Worthington at JP Morgan who asks, "Could your economic relationship with Circle change depending upon language in a market structure bill? In particular, could passage of a bill that prohibits payments to stablecoin holders directly eliminate or directly curtail Coinbase's participation in Circle Reserve fees?"

Yeah. The short answer to your question is no. We don't see any way that this market structure legislation would change our economic relationship with Circle. The part that's being debated in the Senate draft for Clarity, because actually the House draft already received a strong bipartisan vote and didn't have any restrictions on these stablecoin rewards. But some drafts we saw, more like amendments in the Senate banking draft, are contemplating prohibiting rewards essentially in various ways. The irony is if that were to go into law, it would actually make us more profitable because we would just continue to receive the economics from Circle but we today pass the majority of that along to the customer. If we were prohibited from doing that, it would ironically just make us more profitable. But we actually don't want that to happen for a number of reasons. One is that we think it's better for customers. We think it's better for the United States of America so that these regulated stablecoins can be competitive on a global stage. It's already allowed under the Genius Act which just became law five months ago. Our strong point of view is that that should continue to be allowed and we'll keep fighting for that.

Our next question is from Owen Lau at Clear Street who asks, "The valuation of the whole sector including tokens and equities has come down. How does Coinbase think about the opportunities in larger scale buybacks and M&A?"

Our next question is from Patrick Moly at Piper Sandler who asks, "What have you seen in terms of prediction market adoption to date among Coinbase customers? Do you have plans to build your own prediction market venue or are you comfortable continuing to act as a retail distribution for existing venues?"

Yep, I can take that one. Our prediction markets really just rolled out to 100% of customers about a couple weeks ago. It's early days, but so far the interest has been great. Super Bowl weekend was a really great moment where a lot of customers got to experience it for the first time. We're making lots of improvements rapidly on both the UX, adding more markets, having a dedicated sports hub where people can see live scores and things like that. And frankly just marketing it, getting the word out. I think a lot of Coinbase customers are delighted to find out that this is available in the app because they already store quite a lot of assets with us. We just need to make them aware of it and I think it's going to be a really good outcome. We launched it with our partnership with Kalshi and they've been a great partner. It's not an exclusive arrangement. We also have the ability to launch our own markets. Nothing to announce on that at the moment, but we're keeping all options open.

Our next question is from James Yrow at Goldman Sachs. "Do you think we're heading into another crypto winter? How long until the cycle could begin to recover and how should investors think about the KPIs suggesting that the cycle could begin to turn?"

Yeah, I can touch on that. In general, we don't try to predict the future too much here. We see our job as just building great products and services for our customers and then we leave the investment decisions to them. I will say that I kind of enjoy these periods sometimes when the market is down ironically because it allows us to keep building. There are opportunities in every market whether it's up or down. It gives us a chance to buy Bitcoin. It gives us a chance to buy back our stock. We've been through so many cycles like this in crypto. I actually don't think it's that connected to core KPIs or some sort of fundamentals. There's a lot of Monday morning quarterbacking happening where people will look backwards and say it must be because Kevin Warsh is an inflation hawk or quantum computing is on the horizon or something. I actually think markets are a little bit more psychological where people think someone else is going to think something, so they try to get ahead of it. I don't think this market correction is that connected to any fundamentals. We're still seeing good growth of stablecoin adoption and other indicators. In this environment, we are seeing traders on our platform at these prices, we're seeing people who are net buyers. But I would leave the investment decisions to you all on this call.

Next question is from Ben Budish at Barclays. "Can you talk about your 2026 spending plans given a wide variety of potential topline outcomes in 2026? How do you think about need to spend versus want to spend? And where is the most flex in the cost space? Is it marketing, venture, moonshot type investments, etc.?"

Our next question is from Robbie Bamberger at Baird. "Yesterday a Wall Street Journal article said that BlockFill was suspending customer withdrawals and today Coinbase has reportedly had issues with customers trying to buy, sell, and transfer. Was the Coinbase issue just a tech mishap and not a more severe issue? Does the amount of leverage in the crypto ecosystem increase the risk that we may be more prone to customer freezes during quick pullbacks?"

Next one's from Alex Mark at Key Bank Capital Markets. "As you work to scale the Everything Exchange, can you describe the strategy for bringing customer assets to Coinbase? To what extent do you expect equities and prediction markets to act as a front door to net new users?"

Sure. Our strategy overall, we call it the asset accumulation flywheel. It starts with being the most trusted brand in crypto. That causes people to store more assets with us. We store more crypto than any other company in the world, as I mentioned in my opening comments. When people are storing their assets with us because of this trust, we have an opportunity to connect more and more products into those assets. Whether that's Coinbase card or they have a loan or they're earning rewards on staking or USDC, they're also getting access to more and more trading products through the Everything Exchange. We see that the more products people connect into those assets, the more sticky they are. We use the monetization from that to complete the flywheel and we invest back in being the more trusted brand and adding more products. As we've added some of these asset classes like equities and prediction markets and commodities into the Everything Exchange, the first step is it just makes the product more valuable for our existing users. But we're also seeing it help attract more traditional investors who want to come in and onboard and have an easy place to trade every asset class in one spot, maybe get better rewards on their credit card, maybe get a better rate lending out their money. Ultimately, crypto is going to be here to update financial services more broadly and just make better financial services. That's a bit about our asset accumulation flywheel strategy.

Next one's from Ramsey L. Assal at Canaccord Genuity. "You guys have made some key acquisitions in 2025. Can you help us think through your M&A strategy at this point? What parts of the business are you looking to bolster with M&A and what types of assets are you looking at?"

Our next one is from Crypto Pete Christensen at Citi. "There's a recent debate that the original version of L2s as branded shards for scaling is no longer entirely valid as Ethereum L1 is improving its own capacity and L2 decentralization has been slower than expected. The debate further argues that L2s should focus on value added features including AI, privacy, etc. What's Coinbase's view on the Base L2 value prop going forward in this respect and how might potential DeFi regulations shape Base's future?"

Yeah, sure. Vitalik had a great post on this recently. I think in some ways he's right. Ethereum doesn't need dozens or hundreds of different L2s. We've seen that Base has rapidly become the number one L2 on Ethereum. It's a broad utility that makes it attractive to developers. It's really great for payments, great for trading, great for DeFi. People wanting to build different types of applications can come in and Base does have amazing scale. It's been able to move really fast, have great speed of execution, and frankly move a little faster than the Ethereum L1, which is by design. They should be a little bit more cautious, but we can inherit a lot of the security constraints from the L1 and then the L2 can move a bit faster. The scale and speed of execution on Base has been really good. We're also working on adding novel features like privacy. I think private transactions or optional private transactions will be a big differentiator. The Base app is good for distribution. The Base token we're exploring, etc. There's a lot that we can do there. Longer term, I do think the line between L1s and L2s could be a little blurry. It's not entirely clear that there's a hard definition of one versus the other. Anyway, we'll continue to build Base in rapid succession and I think we can attract a lot of development activity and adoption.

Next question is from Devon Ryan at Citizens. "Stablecoin adoption is a 2026 priority, but we've seen market cap flatline for the last couple of months. Why has that been and what gives you confidence around growth in 2026? And can you give any color around incremental adoption trends?"

Yeah, the only thing I'd add is that one of the things that gives me confidence about continued growth is just the Genius Act passing in the US. We saw 150 companies in the three months following that piece of legislation going into law that came out and announced stablecoin integrations. It's faster, cheaper, more global. There's no company in the world that wants to pay more money for moving their money. I think that's an incredible tailwind to see the continued adoption of stablecoins. In particular, it's important that these stablecoins preserve the ability to have rewards programs. US regulated stablecoins don't exist in a vacuum. In fact, today they're the minority of all dollar-issued stablecoins globally. Now that we have this legislation, we need to make sure that the US regulated ones can actually remain competitive. The Chinese central bank digital currency came out and said they're going to pay interest on stablecoins. Some of the offshore regulated ones would love it if the regulated ones in the US couldn't pay rewards because it would preserve their profit margins. For the US regulated stablecoins to be competitive, bring this industry, repatriate those reserves and bring it within the US regulatory perimeter, they're going to have to be competitive and paying rewards is a big part of that.

Our next question is from John Tadaro at Needham. Can you provide an update on how much USDC market cap is currently on the Coinbase platform, i.e. a January average or February number?

Next one's from Bo Pay at US Tiger. "Can you quantify the effective take rate compression from simple to advanced and Coinbase One users? Structurally, where do you see normalized consumer take rates settling over the next two to three years?"

Our next one's from Gus Gala at Manas Cresby Hart. "Adoption on commerce and developer rails you talked about on page 19 of the shareholder letter. How do you work with Circle and USDC on real world volume commercialization? Can you give us an update on the time you expect it takes to get up the S-curve in B2B payments? How is this different from potential revenue S-curve? Contrast that with USDC on Base for more consumer centric volumes via X42."

Our final question comes from Dan Dolev at Mizuho. "How should we think about the strength of the casual crypto trader in this winter? Any pattern you can call out for when they come back eventually?"

All right. Well, that does it for today. Thank you for joining us and we look forward to speaking with you again on our next call.