Investment gains powered its rebound as prediction markets grew into a $200 million business, while record USDC holdings delivered shrinking revenue after rewards.

Coinbase returned to a $719 million quarterly profit despite weaker crypto trading, buoyed by its investment gains in Bitcoin.

The exchange's third-quarter earnings, released Oct. 29, showed revenue of $1.216 billion, largely unchanged from the previous quarter but down 35% year over year. Crypto spot trading volume fell 8% to $134.5 billion, while transaction revenue declined 44% from a year earlier to $590 million.

Chief Financial Officer Alesia Haas said that Coinbase recorded its 15th consecutive quarter of positive adjusted earnings before interest, taxes, depreciation, and amortization, which reached $333 million, up 60% from the previous quarter.

Nevertheless, Coinbase reversed a $359 million second-quarter loss as its diversification strategy gained traction. Prediction markets surpassed $200 million in annualized revenue, while subscription and services contributed nearly half of net revenue.

The results also revealed growing costs associated with its USDC business and increased investments in Bitcoin and Ethereum.

Coinbase's prediction-market business has emerged as an increasingly important revenue source as sluggish cryptocurrency trading activity weighs on its traditional exchange operations.

According to its Q3 earnings presentation, prediction markets surpassed $200 million in annualized net revenue during the quarter, following an 82% compound quarterly growth rate since launch.

The company also reported a more than 60% increase in daily prediction-market traders compared with the previous quarter, making the product one of its fastest-growing businesses by revenue.

Coinbase CEO Brian Armstrong described prediction markets as “one of the fastest-growing products in Coinbase history,” highlighting strong demand for cryptocurrency-related event contracts even during seasonally slower sports-betting periods.

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