Coinbase Q4 earnings: why the headline net loss may mislead

Transcript

So I think Coinbase is doing a lot of good decisions and I think right now market is punishing them for not materializing all the investments right away into their earnings. What's up everybody? It's LG Doo here and welcome to the Milk Road Show. The daily crypto show that is ready for a recovery even if we got to wait until the next Olympics for it. Jeez, I hope that's not true. Today is February 18th, 2026. We're recording this on February 17th. While the market chops or bleeds, I've been gem hunting. And that's because, like many of you, I believe in crypto long-term, or at least I'm looking for reasons to still believe long-term and finding ways to double down on those reasons and that conviction. The problem is there are so many tokens and stocks and everything to pick from out there.

So, like a lot of you, I often look to uh my colleagues in Milkroad Pro for some of that alpha, whether it's just looking at the community chats or even asking them one-on-one, what are you looking at? Today, our pro analyst Martin joins me to talk about Coinbase and how their revenue is changing, why he's super bullish on it despite last week's earnings, and maybe I will get a few other tokens and apps out of him in terms of things that he's bullish on for that long- aaited recovery. Today's episode is brought to you by Warbox, the easiest way to trade crypto, bridge, stable coin payments instantly, simple, global, friction free, and some turn crypto tax chaos into confidence.

Martin, what's up, man? Welcome back uh to the main show. People see you in pro all the time, but I feel like you haven't been on the the actual podcast for for maybe a month or two. >> Yeah, it's been a while. Uh yeah, thanks for for having me. >> Okay, Martin. So, the one of the main reasons I really wanted to have you on this week is last week Coinbase reported their earnings. I think people were generally disappointed because there was a drop in revenue. There's a lot of confusing uh noise going on for me right now about like Brian Armstrong selling stocks. I don't really know what's going on. So, I wanted you to come on and basically first of all like break down for us what's happening with their earnings, why that's maybe bullish or bearish or whatever, and then just kind

of like let's just do a deep dive into the company and and and kind of overview everything that's happening there. So, let's start with telling me tell me about that earnings report last week and kind of what it meant to you in terms of the direction of the company. >> I think Q4 was pretty tough for Coinbase as for everyone in the markets, I guess. And they also reported net income negative, meaning they lost some money on paper in Q4, but in reality when you look at adjusted uh AIDA or adjusted net income, they were still profitable. Uh >> the the key thing here is to understand that some of those companies they also have crypto portfolio on their balance

sheet and they need to sort of report even those unrealized you know P&L. So imagine you own some Bitcoin and Ethereum and obviously Q4 was pretty brutal for for those assets. So like on your balance sheets it appears as losses but those are unrealized ones but you have to report those. So that's why what makes the the you know the topline number looking like very negative and sort of um I would say some people were super surprised to see that Coinbase is losing money and they thought that it's just because their business is struggling which is not the case at all.

Um, so if we just ignore those uh those unrealized losses on their on their uh crypto portfolio, they were still making a good ton of money. I think uh adjusted earnings, adjusted debit, that was something about 500 million and it's a better measurement of seeing how their core business is really doing. So if you extrapolate everything else and just look at you know the core business they are still still doing quite well and also I want to highlight that couple key things that when you were listening the earnings call or then going through those numbers what took took my eye and uh what's worth highlighting I believe

>> the first thing is they now have 12 product lines that are making more than 100 millions uh AR it means annualized revenue per year. So that's pretty big. Um I think that will just that number will just keep growing as they are expanding to like many new verticals and markets. So they the the whole point of their business is sort of to get to become less dependent and reliable on transaction revenues that are very sensitive to crypto prices. And yet I feel like a lot of people still see Coinbase as a as a crypto exchange and

nothing else. And right now by the way transaction revenues are still something around 40% of the total revenues. So still significant portion but that debt ratio is is going down as the other revenues are just up and to the right and that's where I think people should focus more on. Uh that's the subscription and services fee that are less dependent to to crypto prices and in general market cycles. those are more like durable and more recurring revenues that Coinbase is really focusing on. So despite what markets are doing, they can still, you know, print a ton of money

and make investors happy. So >> also like when I was uh having a community call, I was saying I expect that Coinbase results are going to disappoint. And the the main the main thing for me is to listen how the team is going to talk about the other business lines that are not as famous and like that might not bring as much revenues yet, but that are getting attraction already. So I think overall I was very not very bullish but I think the results were positive at least for me because I'm not worried about this transactional part this volatile part of their business. I think crypto will do

well. I don't know if it's going to be in 3 months or one year. I don't know but I'm sure that there's going to be uh you know sentiment shift and once that happens that part of their business is going to bring a lot of money again. But the rest of of the their business is just getting bigger and bigger and that what makes me really bullish on on Coinbase. And like one more thing is I'll just highlight also I think for all these uh platforms like uh Robin Hood uh new bank uh revolute the key thing to watch is how many assets is on that platform because >> what you want to do is you want to bring users and you want users to bring money

because the more money you have on your platform the more ways to monetize that money. like basically that's your market. So the more money is there you can find ways and bring more features, more products that you can monetize that balances on your platform. And I think Coinbase reported that it was nine straight quarters where assets under management in in a in unit basis are just growing. So it it ignores the prices volatility but you know if there was I don't know let's say 100 uh 100 uh bitcoin in couple years ago so now it's

it's let's say 200 meaning like not maybe not in dollar terms but in unit base it it keeps growing and I think that's super important and also like when you listen all the people talking about Coinbase I think their vision is just much much bigger And >> I'm very bullish on, you know, agentic um e-commerce and payments. And I think that Coinbase is very well suited for to capture that the emerging trend that might not be that obvious today, but I think in couple years it it's going to be it's going to be huge. And so overall like retail part of their business is

not doing like super well because prices are down but the rest of their business is just keeps growing and I think they are doing a great job at at that. So um I'm still I'm still bullish on on Coinbase. >> Everything you're listening to today is also covered in our daily crypto newsletter and on Sundays we even recap the best parts of the entire week's worth podcast. So check it out at the link below. So is that is that is that drop in retail is that do you think that that's due to price action? Like is or is that due to retail like not being present right now?

Like I'm just trying to understand what would be driving that down? I guess especially in Q4 relative to to the rest of Q or the rest of 2025 because there's the larger narrative is that retail hasn't really been here this like cycle or now that the cycle's done. We won't get into that but is is that like what what is that role of retail and why suddenly in Q4 is that revenue down is I guess is kind of my my bigger question there. >> Yeah. Yeah. I think first of all you have holidays so usually it's you know seasonality and Q4 is usually uh sort of muted. I think Q4 2024 was an exception because Trump just won presidency and then you know all the hype that Trump is

going to be next president and he's going to support crypto. So Q4 2024 was different but um Q4 last year uh was quite muted overall like we could see all the DEX volumes and centralized exchanges volumes like not just Coinbase but also like uh Binance and like everyone else. So there wasn't much activity and it makes sense when when prices are not going up people people have less sort of incentives to do something right so it's not like when Bitcoin is going to hit new all-time highs you you know your your Uber driver is going to ask you like hey

are you buying Bitcoin as well but that's not happening when prices start going down so >> it just correlates with the market sentiment and that's how retail always always behaved and I think it will it will not change anytime soon. >> Why did the market turn turn bullish on this? And I want to look at you you've created an amazing dashboard about all their lines of business. So, we're going to dive into that next. This is part of the answer and let's just go right to it. But I think one of the things that really caught people's eye over the weekend or on Friday is that they had this kind of you know I guess bearish looking uh report or earnings report on Wednesday or Thursday last week and then on Friday there the stock rallied and it's also up today as well which today

is the Tuesday yesterday Monday markets were closed. uh what what's driving that rally at this point? Like why would we bounce back so quickly considering that the market initially took this in such a bearish way? >> Yeah. Um I don't really know. I think the market like maybe the first impression when you see the headlines that Coinbase is, you know, operating at loss, it might be like, wow, what what's going to h what what's going on here? But then when you dig into the numbers, you you'll quickly learn that it's actually not that bad. It's actually like uh pretty good. Um so I think the first sort of panic was to sell and then people took some time to think

about it and like dig into the numbers and see like what's really going on and then they might change their stance and like oh okay it's not actually that bad. It's like if we if we just filter out all the losses, unrealized losses on the balance sheet, we are still like making a good a good amount of money. So, >> it's not actually that bad. So maybe I should like buy back because eventually like I guess all the listeners like you and me including we are all bullish on crypto in general and like yes there is short-term volatility and I don't know when the markets will bounce back up but it will happen eventually and once it does again Coinbase is in unique position to benefit from that hugely

>> just like last time just like I mean if we are in a deep bare market coin base was absolutely a fantastic buy last time as well. Uh if you're buying in in late 2022, early 2023, let's look at their lines of business, Martin, because I think this is this is something you only showed me like literally minutes before we started recording. Um in terms of this amazing dashboard that you've built that outlines all these 12 different lines of business that have uh like kind of a minimum of 100 million uh recur annual recurring revenue. Um tell me about this, man. So you've got consumer spot trading and stablecoin revenue at the top, but take me through this.

>> Yeah. Um that's actually the the biggest source of revenue, the consumer spot. And that's like >> that's the thing that we all know and think about Coinbase. It's okay. You it's a crypto exchange. So you will create account, you go you fund your account, and then you buy and sell Bitcoin, right? um it's still 40% of their business but um over time that part is going to uh decrease their their share of their total revenues I think as the other parts are are going to be more significant and some of them are getting a big uh traction recently. So I think and it's not just uh I think overall

Coinbase strategy is to diversify their mix. So they don't want to be you know super sensitive to the crypto prices and they so they want to make sure that they can perform well even if there is a bare market and not just for crypto maybe even just for stocks. So yeah, I think as I said going forward we are going to see a much more revenue coming in from you know subscription and services fees and that's that's a big part of their business that's feels like almost like unrecognized yet and people are still not yeah you can see here that that part of the business this is annual

subscription and services it's actually grew like six times over the last five years >> purple part on this chart Right. It's the purple part on this chart. >> No, it's it's like it's total. It's this whole category. >> It's just uh >> Oh, I see. Oh, sorry. Yeah, it says Okay, so this whole category is annual subs and services. Got it. >> Yeah. Yeah. >> So, that's that's what I'm saying when Okay. Coinbase revenue is still dependent on transactions revenue, but you can see here that >> the the other part of their revenue, which is subscription and services, is just growing like phenomenally. And it did again six times over the last five years. So that's you know very impressive compounded growth and I think

investors are going to keep watching this and okay I need to reflect that in my models because this is becoming bigger and bigger and who doesn't like when the chart is up and right only right. So um yeah >> that's pretty good man. Yeah, cuz since since 2021 and for people that are just listening audio only, basically we're looking at a chart that stacks stable coin revenue, blockchain rewards, uh their other subscriptions like Coinbase 1, uh and their interest in fees from all that and charts them over the last 5 years from 2021 to 2025. And the revenue from all that 2021 was 500 518 million and then in 2025 was 2.8 billion. So you're looking at a 6x in this in just

this category in the last 5 years and you expect this to keep growing, right Martin? Obviously. >> Yes, I do. >> What else can you tell us in these charts? I feel like there's a lot more to learn here. Um especially when we look at all them stacks. So right now consumer spot still makes up what 41% of their quarterly revenue, correct? >> Um and their stable coin business is 20% and then and then that's a mix of of kind of the subs and other things. How do you expect this part to change? Like do do you expect their consumer spot to to kind of decrease in percentage and maybe in actual revenue as these other services ramp up?

>> I think even this category which is consumer spot will need to be sort of splitted away because right now you can only trade uh spot of like cryptospot. But I expect that Coinbase will eventually find way to also provide stocks and some other assets. So, you know, because when we look at Robin Hood uh earnings, they their numbers are still up and to the right and they are growing despite the crypto being down.

And that's because they still provide people with um they can trade stocks and >> Yeah. >> Yeah. and uh futures and like many many other stuff. Coinbase also has derivatives but they still do not have stocks and I think stocks are you know like the foundation like if you are investor >> the odds are that you are not will be interested in stocks are pretty low. So it's good to offer cryptospot but you also need to offer uh at least US stocks. I feel like that's what most people would love to see and like I know that Coinbase is trying to do something

there. Um, but I think in the future there's going to be a a different product lines. So, it's going to be cryptospot and then maybe like US equity spot and like world equities and and stuff like that. So um it's not just about like everything else uh like subscription services or stable coins and and like business payments and stuff like that. It's also about like what people can actually trade on that platform. right now. Yes, there are some derivatives like options and futures and perpetuals, but I also expect that some people will demand like and really make a pressure on Coinbase to bring those US

equities to the Coinbase app because that's what just makes sense to to have there right? >> Warbucks is the easiest way to start trading crypto. No deposits, no wallets, no complicated setup. Choose your path one step instant target or instant funding starting as low as $40. Trade, stack profits, and withdraw on demand in crypto or USDC. Blow the account, you only lose the test fee. Reload and go again. With Warbucks, you can profit from crypto moves in any direction, up or down. Get funded today at milkroad.com/warbbucks. Stable coins are reshaping the financial order, but most companies don't have the opportunity to participate in the rewards they generate. Plus, launching a stable coin means wrestling with complex regulations, building bespoke

infrastructure, and burning endless developer hours. Enter Bridge and its new product, open issuance. Bridge lets companies send, store, accept, and even launch their own stable coins instantly. Seamless fiat to stable coin flows, control over reserves and rewards, and full interoperability across every bridge issued token. No more patching payment rails, no more monthslong launches. Visit milkroad.com/bridge to see how it works. you had written a while back or maybe not a while back in November Martin in one of your pro reports uh that's exclusive only available to pro members u you written one entirely about Coinbase and it was titled uh Coinbase hidden gem or dying giant uh and obviously in here you you shared similar views you also noted that Coinbase had a

trajectory to $10 billion annual revenue and I think right now it's at three do you still see that happening I mean it's only been two three months so I don't think that that would massively change but I feel like we we've got to I think everybody had to kind of shift their perception of the market at least of the the more like the cycle narrative and the price action but um and even something like Coinbase like their their their stock is down everything's down but I'm assuming that for you this thesis holds so can you tell me more about that and kind of how you see them tripling that revenue from here >> well the revenue in 2025 was 7.2 two billion. Uh >> oh yeah, that's right.

>> So >> I think it's still the annual services. >> Yeah. Uh I think I always try to look for what's my edge in in the trade and with Coinbase I think my edge is that I try to understand the other businesses that uh Coinbase is trying to pursue and because sometimes that's the part that some people are missing and again as I said many times it's not crypto exchange anymore they are going to they are offering so many services today. And it's not just for retail, it's also for institutions. I feel like Robin Hood is now trying to understand the Coinbase play and sort of do a a similar thing

where they they want to also sort of get institutions interested in using Robin Hood. So that's my edge that I think Coinbase was the very first public company who really started to build blockchain. Now they have uh their own blockchain and they can pretty much now provide payment services. They can provide this agenting e-commerce. They they also launched a new standard for Ethereum. How agents can actually use stable coins and interact with blockchains. Uh and like their blockchain is you know layer 2 built on top of Ethereum. So whatever happens on Ethereum like Coinbase can profit from that as well because eventually it will

be all interconnected. So it will be like one giant ecosystem. Um so I think Coinbase is doing a lot of a lot of good decisions and I think right now market is punishing them for not materializing all the investments right away into their earnings. But I think now they have advantage because they are number one institution for uh whoever is interested in using or building on top on top of blockchains and based in US they are probably going to call uh Coinbase and how how they could do it what products they could use and stuff like that. So they they have always been

sort of front running the market and I think now when we we get all the regulations and more clarity on how we could use this technology and who can use it, how who is going to regulate it and those kind of stuff. I think more demand will will come and I think Coinbase will capture most of the market because they are number one player really here. So that's sort of the edge that I keep seeing that people are missing and I think it will slowly start to materialize in their in their earnings uh pretty soon. So, I guess I guess my question is for for people that are investors and they're trying to be

part of this trend and and and believe a lot of the stuff that you're saying, is there is the best bet to to look at both Coinbase and Robin Hood or is it easier to kind of like pick a winner here? And in your I guess in this case, if they're listening to the show, it would be Coinbase. Um, but it's really hard to deny Robin Hood success, right? And they they've done so well. They're moving so quickly. In your article in November, you wrote that they were surging and Coinbase was stalling. So what how would you approach this uh strategically let's say for the next couple years 5 10 years?

>> I think Robin Hood I think you should you should own both. They are both great businesses and again they are probably the best fintex in US that will give you exposure to you know this new disruptive financial system that we are building right now. assuming you want to hold something that generate some cash flows and you know is profitable. So you don't necessarily need need to own like Ethereum or or SOL. And I think when I when I think about Coinbase and Robin Hood I I see two different approaches. One is Coinbase was

first to realize that they will need to build the whole infrastructure by themselves from scratch and so they focused a lot of investments and talent into that and now that's that part is ready and that's why now they can not only tap into the s the whole world of you know crypto users who have access to the internet but they also can come to institutions or payment providers and say like Hey, we have our own infra that is interconnected to the rest of the ecosystem. So, keep uh come and use our products. So, that's their part. I think Robin Hood, they took a different strategy. It's a retail-driven platform still like 90% is is just retail. But

what makes them different is that Robin Hood provides uh stocks and so despite like crypto is down their earnings Q3 Q4 still up still growth and it's mainly because people are still trading stocks and stocks are like S&P, NASDAQ, they are still hitting all-time highs. So like why should people stop trading stocks when they are hitting all-time highs every day? Just doesn't make sense. And it it it just confirms that what I was saying earlier that when the the markets are going down, the volumes are going down and like the whole retail activity is going down. But when something is at all-time highs, obviously the activity is picking up.

Plus they were for us to and they are very quick to ship products. So right now the biggest revenue driver and the biggest growth on Robin Hood is uh prediction markets. So you you can you know you can sort of think about it as a as a betting platforms or like you know draft kings or like you know you can bet on who is going to win next Champions League or you know uh Olympic games in hockey or something like that. That's sort of a prediction markets and now that's what I I think coin Robin Hood showed for 4 forex growth uh over the last quarter on prediction markets. So that's what's

driving their growth. But I think at the same time imagine that also stocks are down as well as crypto. I think then at that point Robin Hood earnings would really struggle and I think that investors are still not reflecting that because again S&P alltime highs everything's fine nobody's worry okay but you know crypto is down and now we might see that S&P is also going to do some correction I don't know for how long like I don't want to get into that discussion but then they they don't have as much product lines and sort of diversify products as Coinbase. I think

Robin Hood also also have uh actually 11 product lines making more than 100 million per per year but most of them are still transaction based revenues meaning people need to trade those are volatility volumedriven uh revenues. So once people stop the the music will stop as well and that might you know be troubling for for Robin Hood investors. So like I'm not saying it is it's bad or or good. I'm just saying those are two different approaches and that's like I I don't think you you have to choose Robin Hood or Coinbase because right now they have sort of different strategies and

you can you can own both and you will do pretty well. I think they both provide a good exposure to this and new sort of fintax world that is going to disrupt the world. So, um, having both of them is is a good choice. >> Crypto taxes are a nightmare. You've got trades across 15 exchanges, DeFi positions, you forgot about NFT flips, staking rewards, airdrops, and somehow you're supposed to report all of this to the IRS. Good luck. Cue the solution, SUM. You may know it by its old name, crypto tax calculator. The Sum platform connects to over 3,500 exchanges, wallets, and crypto projects, including full support for DeFi, NFT, staking, and airdrops. It finds deductions you'd miss, reconciles massive transaction histories without losing track, and

generates IRS ready reports that will help you pay the least tax possible. Oh, SUM is also the official tax partner of Coinbase and MetaMask, rated 4.6 out of five on Trust Pilot. Turn cryptotax chaos into confidence. Get started for free at milkroad.com/sum. That's sum.com. Milk Road listeners can also unlock 20% off their first year subscription with code milkroad 20. And you've written a lot uh about super apps and how these are going to be super apps that kind of do everything for us. So I think that that's a really good, you know, narrative that you've you've championed at Milk Road and you and Kyle and um we're going to keep learning more about.

Last question I want to ask you Martin to kind of wrap it out is obviously we don't know what the next couple months, couple quarters look like uh for crypto and and like you're saying even for the stock market um what regardless of volatility, price action um things happening in crypto, clarity act, any of that kind of stuff. What is like the one key like metric or number that you are watching for Coinbase out of all their revenue lines or everything that they're doing? What's the one thing that that you really are going to watch very closely? Yeah, I would like to see that um subscription and services fee uh revenue just keeps growing up.

>> And is that what's going to drive that? >> Well, all the product lines under that category. So, um I think there's like seven product lines that are under that category. So, and I think they're going to bring even more products into that. So, >> I guess their stable coin business is expected to grow because that's one of the bigger narratives, right? is that regardless of price action, like stable coins are just under like a meteoric growth right now. So, that's something you would expect obviously to grow, especially their contract in USDC. Like you couldn't be better positioned uh than Coinbase. >> Yes. But like I think their the contract term terms ends this year. So, they will need to renegotiate with Circle this year. But also Fed funds rates are expected to be uh lowered down. So all

the balances that are making a lot of money for Coinbase will now make less money for Coinbase, right? So we need to reflect that. But I think it's going to be offset by by more supply as like more demand for USDS is there then it will offset the lower yields that are going to be available when you you buy US treasuries. So I I would expect the stable coins revenue to be flat because of like those two things that goes against so they will sort of offset each other.

>> Okay. So that's a thing to watch and I'm assuming you're going to keep us updated uh on that and Milk Road for Milk Road Pro and and outside and maybe we can have you back on after the next next earnings report to kind of tell us a little bit more about what they're they're they're bringing to the table and what's been happening. >> Yeah, sure. >> Cool. Well, thanks Martin. Good to see you again, man. although I see you every day, but uh people on the podcast don't. So, thanks for coming on. Um and uh thanks everybody for listening to Milk Road. Hopefully you guys learned a little bit more about Coinbase and what that means for their future. >> Thanks guys. Have a good one. >> Want insights on what's moving crypto markets and how we're trading each event? Subscribe to our channel and join

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