Coinbase Prediction Markets Surpass $200 Million Annualized Revenue as Q3 Net Revenue Falls 34 Percent
Coinbase Q3 net revenue fell 34% to $1.16B amid lower crypto volatility, missing estimates. Prediction markets exceeded $200M annualized revenue with 60%+ daily trader growth and 82% quarterly compounding. The unit now drives over 25% of transaction revenue and serves as a less volatile stream.
SCCG Take — Prediction markets create a diversification hedge and customer acquisition funnel for exchanges. This reduces cycle dependence and supports all-weather revenue, a model regulators and operators should monitor closely.
Coinbase Global reported third-quarter net revenue of $1.16 billion, a 34% decline from $1.76 billion a year earlier and below the $1.21 billion analysts expected. Subdued crypto volatility and lighter trading weighed on the core business. The prediction market unit, in operation for less than a year through a partnership with Kalshi, delivered some of the exchange's fastest growth to date.
The company said its prediction market business surpassed $200 million in annualized revenue in the September quarter, while daily traders grew 60%+ quarter-over-quarter. It has recorded 82% quarterly compound growth since launch.
Prediction Markets as Fastest-Growing Product
Coinbase called prediction markets one of the fastest-growing products by revenue in its history and a new source of growth for the Everything Exchange. Chief Financial Officer Alesia Haas said they "are adding another revenue stream and are less correlated to crypto volatility." Chief Business Officer Shan Aggarwal stated that diversification efforts are showing results, with derivatives and prediction markets now comprising over 25% of transaction revenue from 0% a few years ago. Subscription and services revenue reached $570 million, up 3% from the prior quarter and nearly half of net revenue.
The exchange gained crypto trading volume market share for the fourth consecutive quarter, doubling to 10.7% over the past year. More than half the prediction market contracts were non-sports, centered on crypto events and elections. Customers using prediction markets also drive incremental crypto spot trading volume.
Outlook for Investment and Diversification
Coinbase expects fourth-quarter adjusted expenses of $1.07 billion to $1.157 billion, partly from greater investment in prediction markets. Shares slid 3.5% in after-hours trading. The results show how event contracts can broaden the customer base and stabilize revenue against crypto cycles. Platforms facing similar volatility will track whether this funnel from prediction markets into full exchange services sets a scalable pattern for regulated operators.
Gaming, betting and prediction markets — the desk’s read, every weekday.
Subscribe →