Coinbase has released its shareholder letter for the third quarter of 2023, ending September 30th. Total revenue was $674 million, down 5% from last quarter. Net revenue was $623 million, down 6% sequentially. The company posted a small net loss of $2 million and generated positive Adjusted EBITDA of $181 million for the third consecutive quarter.

The crypto market continued to see low volatility and trading volumes in Q3. Bitcoin prices declined 12% from the end of last quarter, and crypto asset volatility hit multi-year lows. As a result, Coinbase’s transaction revenue fell 12% to $289 million. Consumer transaction revenue declined 11% to $275 million as trading volumes decreased 21%. Institutional transaction revenue dropped 18% to $14 million due to a 17% decline in trading volumes.

Subscription and services revenue was $334 million, largely flat from last quarter. Stablecoin revenue grew 14% to $172 million due to higher interest rates. However, blockchain rewards revenue fell 15% to $74 million driven by lower rewards rates and crypto prices.

Coinbase maintained a strong balance sheet ending Q3 with over $5.5 billion in cash, cash equivalents, USDC and custodial account overfunding. The company continued buying back debt at a discount, repurchasing $263 million of its 2031 Senior Notes for $177 million in cash during the quarter.

On the product side, Coinbase made advancements across its three pillar strategy. For crypto as an asset class, it added new assets, unified USD and USDC order books, and expanded internationally. For crypto updating the financial system, Coinbase entered an updated arrangement with Circle around USDC. And for crypto powering the Internet, it launched its Layer 2 scaling solution Base which saw over 10 million NFTs minted during its launch.

Regulatory clarity remains a top priority. Coinbase believes most G20 nations are adopting crypto regulations. It sees the EU’s MiCA regulation as a model framework and picked Ireland as its MiCA hub. In the US, the SEC case is proceeding on schedule with oral arguments set for early 2024.

For Q4, Coinbase expects subscription revenue to be flat sequentially. It anticipates lower stock-based compensation will drive expenses lower by $100-150 million versus Q3. The company believes it will generate meaningful positive Adjusted EBITDA for the full year 2023, an improvement from its prior goal. Despite ongoing volatility, Coinbase remains confident in the long-term potential of crypto.