Coinbase Global (COIN), the country’s largest crypto exchange, posted its seventh consecutive quarterly loss as its trading volumes and the number of people trading on its platform fell.
Investors pushed the company's stock as much as 5% lower in after-hours trading following a nearly 9% rise during regular trading hours on Thursday.
Its loss of $2 million in the third quarter, however, did beat Wall Street expectations. It is also is the closest Coinbase has come to a positive earnings result since the fourth quarter of 2021, when a crypto boom was still raging.
"Amid multi-year low levels of volatility, we are pleased with our financial results," Coinbase said in a statement.
Coinbase is still in the middle of a legal fight with the US Securities and Exchange Commission, which sued the exchange in June for allegedly operating an unlicensed crypto securities exchange, broker and clearing agency, putting its future earnings at risk.
The company is choosing to defend itself in court and its CEO Brian Armstrong has been vocal about his disagreements with the SEC. Oral arguments set to be heard January 17 in a Manhattan courtroom.
The company is also actively lobbying Washington for more clarity around how the crypto world is regulated.
"While legislating can be slow and unpredictable, we are still optimistic the US will get this right," the company said Thusday.
Despite the legal and regulatory challenges, Coinbase's stock is up 128% since the beginning of the year.
Its stock has benefitted from a year-long rally in bitcoin and other digital assets amid speculation that that the SEC might grant approval for spot bitcoin ETFs, which would allow investors to get exposure to the cryptocurrency without having to own it.
That rally kicked into higher gear in October, pushing the price of bitcoin to its highest point in a year and a half. But that came after the third quarter ended.
During the third quarter, the number of people transacting on Coinbase's platform per month fell below levels not seen since the first quarter of 2021.
Coinbase's trading volume in the third quarter also fell more than 17% from the previous quarter and 52% from a year ago.
"While rising retail take rates may have saved the day" in the quarter, "the underlying fundamentals continue at COIN to worsen," Mizuho Securities analyst Dan Dolev said in Thursday note, pointing to the lower trading volumes.
Coinbase's transaction revenue fell to $288 million, 21% below its amount for the year ago period and the lowest quarterly results for its trading platform in two years. Its monthly transacting users also fell to 6.7 million, 21% lower than transacting customers it had in the second quarter of last year and 8.2% lower than in the previous quarter.
Subscriptions and services rose to $334 million, a 59% increase from the second quarter of last year, driven by Coinbase's stablecoin and interest income revenue streams.
The company's net revenue rose by 5.5% from the year-ago period, not as high as analysts had hoped.
Meanwhile, operating expenses fell 4% from the previous quarter and 32% from the year ago period to $754 million, driven lower by "a shift in timing of certain sales and marketing and legal-related expenses"
David Hollerith is a senior reporter for Yahoo Finance covering banking and crypto.
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