Coinbase reported second-quarter revenue of $1.22 billion on Thursday, falling short of analyst expectations of $1.29 billion and representing a 14% decline from the prior quarter. The company posted a net loss of $359 million for the period.

Shares dropped approximately 5% in after-hours trading following the earnings miss.

Total crypto spot trading volume fell more than 20% from the previous quarter, which Coinbase attributed to declining crypto asset prices and market volatility reaching multi-year lows. The pullback reflected a broader industry trend, as major cryptocurrencies including Bitcoin retreated from spring highs and trading activity contracted across exchanges during the quarter. Transaction revenue came in at $599 million, below the expected $628 million.

Subscription and services revenue totaled $555 million, accounting for 48% of net revenue. This figure fell below Coinbase's previously forecast range of $565 million to $645 million. The company cited two factors: certain USDC-related commercial agreements closed later than anticipated, and lower crypto asset prices reduced staking revenue.

Stablecoin revenue reached $292 million. Average USDC held across Coinbase products hit a record $20 billion during the quarter, representing more than 30% of all USDC in circulation at quarter-end. The company also noted that 88% of net revenue came from sources other than Bitcoin spot trading, compared with just 45% in the second quarter of 2020, underscoring a multi-year effort to reduce reliance on trading fees that has taken on greater significance amid the quarter's volume contraction.

Crypto trading market share climbed to a record 10.3%, marking the third consecutive quarter of gains. Coinbase reported increased share in both spot and derivatives trading.

Prediction markets contracts and revenue grew 106% from the prior quarter, exceeding a $100 million quarterly annualized net revenue run rate. Average Borrow/Lend balances rose by more than $1 billion year-over-year to $1.49 billion. Separately, Coinbase confirmed that conditions for its commercial agreement with Circle to automatically renew in August had been satisfied.

The earnings report followed an active quarter for the exchange. In May, Coinbase became the first U.S. crypto exchange cleared to offer customers access to offshore crypto perpetual futures through its Deribit subsidiary. In June, the company launched Coinbase for Agents, a platform enabling AI agents to trade crypto, make payments, and manage portfolios on behalf of users. Later that month, Coinbase announced plans to introduce tokenized stock trading, crypto and equities options, and new lending and rewards products.

Coinbase ended the quarter with $8.6 billion in cash and cash equivalents and $10 billion in total available resources. The company repurchased 814,000 Class A shares during the quarter. Year to date, nearly 7 million shares have been repurchased for $1.2 billion, leaving approximately $2 billion remaining under its share repurchase authorization.

Looking ahead to the third quarter, Coinbase reported transaction revenue of approximately $130 million through July 26. The company projects subscription and services revenue between $500 million and $580 million, with adjusted expenses between $980 million and $1.08 billion.

Despite the weaker-than-expected results, CEO Brian Armstrong struck an optimistic tone during the earnings presentation.

"Coinbase is no longer a bet just on the price of Bitcoin," Armstrong said. "All of financial services are getting updated by crypto technology, whether that's trading or payments or lending. And Coinbase is the best-positioned company in the world to power this. And of course, this next frontier is going to be agentic finance, where we're an early leader."