the future of digital assets, quarterly earnings might seem somewhat beside the point for Coinbase. That is especially the case during the current crypto winter, when little is expected from trading activity. Still, Coinbase’s stock has found its footing of late, rising more than 150% so far this year, in large part because it has been able to use a surge of interest income—driven by interest earned on customer cash and stablecoin reserves—and a cost-cutting drive to improve profitability measures.
The company’s second quarter, reported on Thursday, showed a second consecutive positive reading for adjusted earnings before interest, taxes, depreciation and amortization. But even simply collecting interest is becoming harder. Coinbase has generated a lot of interest revenue from reserves backing the USD Coin stablecoin.
That revenue had jumped sharply in recent quarters. But a 28% decrease in average USDC market cap in the second quarter helped drive a 16% quarter-over-quarter drop in interest income, to $201 million. Along with falling transaction revenue, that helped end a two-quarter streak of sequential companywide revenue increases, with net revenue coming in at $663 million, down from $736 million in the first quarter.
The company told analysts on Thursday that it was working with partner Circle Internet Financial to try to increase USDC’s market cap again after the stablecoin broke its $1 peg during the banking crisis earlier this year. Meanwhile, Coinbase continued to slash expenses, with second-quarter core operating costs down nearly 50% versus a year earlier, and down about 13% from the first quarter. It added $156 million to its cash resources.
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