COIN

Coinbase is a higher-quality, better-diversified business than it was two cycles ago, but the FY2025 numbers expose the core problem the 10-K itself flags: results are 'substantially dependent on the prices of crypto assets and volume of' trading, and 2025 proves it. Revenue grew a modest +9.4% to $7.18B, yet net income collapsed -51.1% to $1.26B and diluted EPS fell -53.1% to $4.45. That divergence — flat-to-up top line, halved bottom line — is the whole story: net margin fell to 17.6% and ROE to a thin 8.5%, while operating cash flow dropped -21.8% to $2.43B and Adjusted EBITDA slipped to $2.8B from $3.3B. The history reinforces how unstable the earnings base is ($3.62B net in 2021, -$2.62B in 2022, $94.9M in 2023, $2.58B in 2024, $1.26B in 2025) — you are not buying a steady compounder, you are buying a leveraged bet on crypto volumes and rates.

The diversification story is real but rate-exposed. Management highlights subscription & services revenue of $2.8B (up from $2.3B) led by USDC reaching all-time-high market cap, plus the August Deribit acquisition to build the derivatives franchise and the launch of U.S. perpetual-style futures. That mix shift is the right strategic move. But the MD&A explicitly warns that 'if interest rates continue to decline, they may materially impact our subscription and services and other revenue' — much of the stablecoin economics is interest income, so the most-touted growth engine is itself cyclical. Meanwhile the key business metrics are mixed: MTUs +10% to 9.2M and trading volume +3% to $1,221B, but Assets on Platform fell -7% to $376B.