Q3 2024 Coinbase Global Inc Earnings Call
Good afternoon. My name is Sarah and I will be your conference operator today at this time I would like to welcome everyone to the Coinbase third quarter 2024 earnings call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session and if you would like to ask a question. During this time simply press star one on your telephone keypad.
Speaker Change: And Neal <unk>, Vice President Investor Relations you May begin your conference.
Neal <unk>: Good afternoon, and welcome to the clean base third quarter 2024 earnings call.
Speaker Change: Winning me on today's call are Brian Armstrong co founder and CEO.
Speaker Change: Emily Joy, President and CEO, Alicia <unk>, CFO, and Paul <unk>, Chief Legal officer.
Speaker Change: I hope you've all had the opportunity to read our shareholder letter, which was published on our Investor Relations website earlier today.
Speaker Change: Before we get started I'd like to remind you that during today's call. We may make forward looking statements, which may vary materially from actual results.
Speaker Change: Information concerning risks uncertainties and other factors that could cause these results to differ is included in our SEC filings.
Speaker Change: Our discussion today will also include certain non-GAAP financial measures reconciliations.
Speaker Change: Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our Investor Relations website.
Speaker Change: non-GAAP financial measures should be considered in addition to not as a substitute for GAAP measures.
Speaker Change: We are once again using the <unk> technology platform to enable our shareholders to ask questions. In addition, we will take live questions from our research analysts and with that I'll turn it over to Brian for opening comments.
Brian Armstrong: Thanks, Neil I'm excited to share our progress on our 2024 priorities.
Brian Armstrong: Just a reminder, our priorities for 2024, we're number one driving revenue.
Brian Armstrong: Number two driving utility, which is really going beyond just trading as a use case for crypto and how do we make it a part of People's ordinary lives.
Brian Armstrong: And then number three driving regulatory clarity so we'll touch on each of these in turn.
Brian Armstrong: So starting with driving revenue, we had some softer market conditions in Q3, but overall it was a really solid quarter for clean base was our seventh consecutive quarter of positive adjusted EBITDA is our fourth consecutive quarter of positive net income.
Brian Armstrong: And as you've heard from US many times, we've made a big effort to diversify our revenue over the years away from transaction fee revenue, which is more volatile it's not as predictable. It is it's more market dependent we've shifted more of that to subscription and services revenue over time, and we've made incredible progress on that this year. So we're now on pace to surpass $2 billion.
Brian Armstrong: And subscription and services revenue in 2024, that's up from just $1 4 billion in 2023.
Brian Armstrong: And.
Brian Armstrong: This has really given us the resources to invest in some of those those next steps around utility and regulatory clarity.
and we've made incredible progress on that this year. So we're now on pace to surpass two billion in subscription and services revenue in 2024. That's up from just 1.4 billion in 2023.
Brian Armstrong: Just a quick update on some of our international expansion efforts because this also helps drive our revenue.
and um...
Brian Armstrong: We did invest in four new markets.
This has really given us the resources to invest in some of those next steps around utility and regulatory clarity.
Brian Armstrong: And over the last few years. The last two years that have now the revenue has exceeded their direct operating costs and so that's kind of showing that we have a playbook there thats repeatable and we can continue to do that in more countries.
I just quick update on some of our international expansion efforts because this also helps drive our revenue.
We did invest in four new markets and over the last two years that have now, the revenue is exceeded their direct operating costs. And so that's kind of showing that we have a playbook there that's repeatable and we can continue to do that in more countries.
So this has resulted in a stronger balance sheet, which is now at $8 2 billion and that's given US a lot of financial flexibility, we can do lots of different things with that but.
Brian Armstrong: Our board has also authorized a $1 billion.
Brian Armstrong: Buyback, which is something we can use at our discretion as well.
So this has resulted in a stronger balance sheet which is now at $8.2 billion and that's given us a lot of financial flexibility. We can do lots of different things with that but our board has also authorized a $1 billion stock buyback which is something we can use at our discretion as well.
Speaker Change: Okay. So moving onto the second priority was around driving utility.
Speaker Change: This is really important because crypto started off as an asset class that people want to trade but.
Speaker Change: We actually want to increase economic freedom in the World, we want to update the financial system, we want to make it a part of People's Daily lives.
Speaker Change: Ok, so moving on to the second priority was around driving utility.
Speaker Change: And to benefit from it not everybody in the world is someone with disposal when it comes to actually do trading every day.
This is really important because crypto started off as an asset class that people wanted to trade.
Speaker Change: They need to be doing things that are that are more frequent for regular people and so some of these building blocks are now really just starting to come together this quarter in the last few quarters that are going to allow us to bring on hopefully a 1 billion more people into the crypto space and I'll just touch on a few of those quickly.
We actually want to increase economic freedom in the world, we want to update the financial system, we want to make it a part of people's daily lives.
and to benefit from it, you know, not everybody in the world is someone with disobeyed one come to actually do trading every day.
They need to be doing things that are more frequent for regular people. And so some of these building blocks are now really just starting to come together. This quarter and last few quarters that are going to allow us to bring on hopefully a Billion of More people into the crypto space. And I'll just touch on a few of those quickly.
Speaker Change: One of them is stable coins.
Speaker Change: These are useful for people in high inflation markets, they're useful for people, who want to make money move faster around the world do fast cheap payments remittances.
Speaker Change: Smart wallets is the second one.
One of them is stable coins. These are useful for people in high inflation markets. They're useful for people who want to make money move faster around the world and do fast cheap payments, remittances.
Speaker Change: This is a technology that we really pioneered and it's made onboarding to crypto based apps much lower friction and and reduce the fees and it has a bunch of benefits, which I'll talk about and then the last one is layer two solution literature solution called base.
Smart Wallets is the second one.
This is a technology that we really pioneered and it's made onboarding to crypto based apps much lower friction and reduced the fees and it has a bunch of benefits we'll talk about. And then last one is layer two solution called base.
Speaker Change: This is allowing blockchain to really scale and it's enabling every transaction to happen under one second one.
Speaker Change: Where in the World I think crypto is probably the only rail.
Speaker Change: Rail in the world that can that can claim that it's both fast cheap and global.
This is allowing blockchains to really scale and it's enabling every transaction to happen under one second, one cent anywhere in the world. I think Crypto is probably the only rail payment rail in the world that can claim that. It's both fast, cheap and global.
Speaker Change: So.
Speaker Change: Let's touch on each of these and just think about how they're coming together to enable new use cases.
Speaker Change: And one of those use cases is payments and payments is having a bit of a moment right now in crypto I'd say, it's a really important trend. That's underappreciated. So last year stable coin payments transactions. We saw about 10 trillion dollars of volume and we're actually we've already to ex that in 2024.
So...
Let's talk about each of these and just think about how they're coming together to enable new use cases. One of those use cases is payments.
and payments is having a bit of a moment right now in crypto. I'd say it's a really important trend that's underappreciated. So last year, the Bitcoin payments were transactions, we saw about $10 trillion of volume.
Speaker Change: So it surpassed 20 trillion already.
Speaker Change: It'll be larger of course by by the end of this year and so one of the things that's really making that possible is now having a trusted stable coin with U S. D. C. It's one of those important building blocks, we've made a really big effort at coinbase to integrate stable coins into all of our different products and that's actually driven U S. You see growth in a major way.
And we're actually, we've already two X-Bat in 2024, so it surpassed 20 trillion already.
It will be large of course by the end of this year. And so one of the things that's really making that possible is now having a trusted stablecoin with USDC. It's one of those important building blocks. We've made a really big effort at Coinbase to integrate stablecoins into all of our different products.
Speaker Change: The market cap of U S. D. C is up 45% year to date to 36 billion in Q3, that's up from 25 billion at the start of this year.
Speaker Change: And I believe it's actually now the fastest growing U S dollar backstay bitcoin or at least the major one out there.
And that's actually driven a U.S.U.C. growth in a major way. The market cap of U.S.U.C. is up 45% year to date to 36 billion in Q3. That's up from 25 billion at the start of this year.
We also launched support for EUR C, which is a euro back stable coin.
Speaker Change: On base, we were able to help double its market cap in Q3 and that has now become the largest euro back stable coin. So this is no longer just a dollar phenomenon, we're going to see stable coins and many different Fiat currencies.
and I believe it's actually now the fastest growing U.S. dollar backstable coin at least major one out there. We also launch support for EURC, which is a Eurobackstable coin.
Speaker Change: So that's an important building block with stable coins. The second one I mentioned was smart wallets.
On-base. We were able to help devilish market cap in Q3 and that's now become the largest euro-backstable coin. So this is no longer just a dollar phenomenon. We're going to see stablecoins in many different the occurrences.
Speaker Change: And last quarter, we actually launched support for smart wallets this really.
Speaker Change: Revolutionize the user interface that people go through especially with self custodial wallets to onboard to crypto. So they no longer have to remember this recovery phrase or write it down people were always worried about losing these recovery phrases.
So that's an important building block with stable coins. The second one I mentioned was smart wallets.
and last quarter we actually launched support for.
Smartwallets, this really...
Speaker Change: And they no longer need to do that they can use biometrics or something called past keys.
Revelu's nice, the user interface that people go through, especially with self-custodial wallets to onboard the crypto. So they no longer have to remember this recovery phrase or write it down. People were always worried about losing these recovery phrases.
To create the wallet in just a second or two theres nothing to remember a write down or to lose or forget.
Speaker Change: And it also helps eliminate some of the network fees came up with a clever solution around that.
And they no longer need to do that. They can use biometrics or something called pass keys to create the wallet in just a second or two. There's nothing to remember or write down or to lose or forget.
Speaker Change: Because there was often a sort of chicken and egg situation, where people didn't have the crypto to pay the network fee and now now they don't have to you don't have to have that.
Speaker Change: So it's still early days, but we're seeing really positive signals there not all of our products have integrated this but in some of the ones that where we have we've seen the time to first transaction, which is a metric we track.
and it also helps eliminate some of the network fees. It came up with a clever solution around that.
Because there was often a chicken egg situation where people didn't have the crypto to pay the network fee and now they don't have to have that. So it's still early days but we're seeing really positive signal there, not all of our products have integrated this, but...
Speaker Change: Down to about eight minutes instead of it being a 2.5 hours using some of the more traditional wallets.
Speaker Change: So smart wallets have made their onboarding simpler and then lastly.
In some of the ones where we have, we've seen the time to first transaction, which is a metric we track, go down to about eight minutes instead of it being 2.5 hours using some of the more traditional wallets.
Speaker Change: These later two solutions have been a huge contributor in base, which is our layer two solution that we helped pioneer.
Speaker Change: And as now Decentralizing is this becomes the number one layer two solution out there it's been incredibly successful whether you measure that by the transaction count processed or the total value. That's on the platform. It's now the number one way or two solution out there and so I think this is going to become the default way that people pay with layer two on base.
So SmartWall have made the onboarding simpler and then lastly
These layer two solutions have been a huge contributor in base, which is our layer two solution that we help pioneer.
and is now decentralizing, has become the number one layer to solution out there. It's been incredibly successful, whether you measure that by...
Speaker Change: D C. It's Lee.
Less than one cent one second anywhere in the world.
Transaction Count Processed or the Total Value that's on the platform. It's now the number one layer to solution out there. And so I think this is going to become the default way that people pay with layer two on-base USDC.
Speaker Change: It went from 10 trillion of volume last year to 20 trillion of volume. This year, it's really starting to happen in front of our eyes.
Speaker Change: Base has.
Speaker Change: To really innovate quickly. So for instance, they added something called base names, which is an entre and identity product. This is just it makes it it makes crypto easier to use if you can send to a human readable name instead of these wallet addresses which look a little more complex.
Speaker Change: Less than one cent, one second anywhere in the world.
It went from 10 trillion of volume last year to 20 trillion of volume this year. It's really starting to happen in front of our eyes.
Speaker Change: and you know, bass has continued to really innovate quickly so for instance they added something called bass names.
Speaker Change: They also launched something called CV, BTC or Queen based bitcoin DTC.
which is an on-chain identity product. This is just just makes it, it makes crypto easier to use if you can send to a human readable name instead of these wallet addresses which look a little more complex.
Speaker Change: We launched that on a theory and base and this is essentially a coinbase wrapped version of bitcoin. It allows people to use all of the value that they've accumulated in bitcoin, but use it for <unk> applications, such as for borrowing and lending.
Speaker Change: They also launched something called CVBTC or Coinbase Bitcoin BTC.
Speaker Change: So.
Speaker Change: The base team has just been innovating at a really important pace here. So all of these building blocks are coming together, where you can really start to see consumer utility happening in crypto.
We launched that on Ethereum and base, and this is essentially a coin-based wrapped version of Bitcoin that allows people to use all of the value that they've accumulated in Bitcoin, but use it for in defy applications such as for borrowing and lending.
And just to give you an analogy of how I think about it.
Speaker Change: So...
Speaker Change: Really how the Internet started right. If you go back to the year 2000, and only about half of 1% of global GDP was happening through E Commerce and today, it's about 20% of global GDP running through E Commerce, and so I think crypto is going to follow a similar trend.
The base team has just been innovating on a really important pace here.
All of these building blocks are coming together where you can really start to see consumer utility happening in crypto.
and just to give you an analogy of how I think about it, you know, sort of really how the internet started, right? If you go back to the year 2000, only about half of 1% of global GDP was happening through e-commerce. And today it's about 20% of global GDP running through e-commerce.
Speaker Change: We've done our own internal estimates of this and we've it's a tough thing to estimate but by our our best guess is about half of 1% of global GDP is occurring on crypto rails, we really want to get that to be 20% of global GDP running on crypto rails, we think that they're faster they're cheaper they're more they're more global more fair Theyre more free it's just you know.
and so I think Crypto is going to follow us in more trends. We've done our own internal estimates of this and we've
It's a tough thing to estimate, but our best guess is about half of 1% of global GDP is occurring on cryptorails.
Speaker Change: Payments are going to flow to the path of least resistance kind of like water and these are the best payment rails in the world.
We really want to get that to be 20% of global GDP running on crypto rails. We think that they're faster, they're cheaper, they're more fair, they're more free. Payments are going to flow to the path of least resistance, kind of like water. And these are the best payment rails in the world.
Speaker Change: Many other benefits people want this globally as a refuge from inflation economic freedom good financial infrastructure. It just it creates prosperity around the world and so.
Speaker Change: We're going to I think we now have that foundation in place to see global GDP run more and more on crypto rails over the coming years.
Speaker Change: Many other benefits people want this globally, you know, as a refuge from inflation, economic freedom, good financial infrastructure, it creates prosperity around the world. And so...
Speaker Change: Okay. So that's driving utility.
Speaker Change: Let's talk about driving regulatory clarity as our final pillar here.
Speaker Change: We're going to, I think we now have that foundation in place to see, you know, global GDP run more and more on crypto rails over the coming years.
Speaker Change: I'm really proud of where we've gotten to as an industry as a community over the last few years I mean, just a few years ago. We were it felt like crypto was under siege.
Speaker Change: Okay, so that's driving utility. Let's talk about driving regulatory clarity as our final pillar here.
Speaker Change: There was a small handful of people that were very anti crypto really attacking the industry.
I'm really proud of where we've gotten to as an industry, as a community over the last few years. I mean, just a few years ago, we were, I felt that crypto was under siege. You know, there was a small handful of people that were very anti-cripto, really attacking the industry.
Speaker Change: And today, it really couldnt be a different story and are both presidential candidates are now courting the crypto voter in their statements.
Speaker Change: Over 350 politicians running for federal office have now adopted pro crypto stances. If you look at standard scripted out Oregon rating system that have either an a or a b grade and so.
And today it really couldn't be a different story in both presidential candidates, they're now courting the crypto voter in their statements.
Speaker Change: Really no matter what happens in this election, it's going to be the most pro crypto Congress ever we know that already.
Over 350 politicians running for federal office have now adopted pro-cryptostances. If you look at stem of cryptid.org's rating system, they have either an A or a B grade.
Speaker Change: And then we had a big success this year with the house are in the United States passing.
Speaker Change: Procryptic legislation was strong bipartisan support that was the fifth 21, Bill. So that's of course now being discussed in the Senate and so.
Speaker Change: Really no matter what happens in this election, it's going to be the most pro-crypto-congress ever. We know that already. And then we had a big success this year with the House in the United States passing.
I just feel like a crypto has shown up in a really massive way on the policy side and it's.
Speaker Change: It's very powerful voice constituencies so.
Pro Crypto Legislation was strong by partisan support that was the fifth-21 bill. So that's of course now being discussed in the Senate.
Speaker Change: We've we've tried to really do our part here and supporting our customers and we've been a major supporter of for instance, a fair shake.
Speaker Change: They were one of the largest nonpartisan acts in this election, maybe maybe the largest one I'm not sure.
I just feel like a crypto has shown up in a really massive way on the policy side and it's...
It's a very powerful boy, so constituency.
Speaker Change: We also supported stand with crypto Dot org there. This grassroots advocacy group that I mentioned, they're now up to $1 8 million crypto advocates who have raised their hand, and it's incredible number.
We've tried to really do our part here and supporting our customers and we've been a major supporter of instance to fair shake.
They were one of the largest nonpartisan packs in this election. Maybe the largest one I'm not sure.
Speaker Change: These are folks who raised their hand and said they want to elect procryptic candidates in this election.
Speaker Change: and we also supported Stan with Crypto.org. There are the grassroots advocacy groups that I mentioned. They're now up to 1.8 million crypto advocates who have raised their hand. It's an incredible number. These are folks who have raised their hand and said they want to elect pro-crypto candidates in this election.
So this is this is a huge number of voters and.
Speaker Change: You know by the way all of you I think can help if you'd want to see if this this industry get built in America.
Speaker Change: Cause you to go check out stand with scripted out Oregon look up your state.
Speaker Change: She sees the scores of the different candidates running where you live and so we'll we'll see how this election turns out in five days or so but you.
So this is a huge number of voters and...
By the way, all of you, I think can help if you want to see this industry get built in America.
Speaker Change: I think regardless of what's happening what happens with this election, it's actually already been a huge positive success and I one thing I want to make a really big point of talking about today is that.
and I encourage you to go check out stand with Crypto.org and look up your state. See the scores of the different candidates running where you live. We'll see how this election turns out in five days or so.
We're not going to slow down post election, right, where five six days, we're going to get our our results, but we know that this is gonna be an ongoing focus.
I think regardless of what happens at this election, it's actually already been a huge positive success. And one thing I want to make a really big point of talking about today is that...
Speaker Change: And we need to make sure we get pro crypto legislation passed in this country.
We're not going to slow down post-election, right? In five, six days we're going to get our results, but we know that this is going to be an ongoing focus.
Speaker Change: To really unleash the floodgates of new sources of capital and innovation and we can't have this environment of regulation by enforcement that's kind of.
Speaker Change: Killing all these startups that are trying to innovate in the space and so I think it's gonna be a huge tailwind for this industry. If we can get regulatory clarity so.
and we need to make sure we get pro-crypto-led distillation past in this country to really unleash the floodgates of new sources of capital and innovation. We can't have this environment of regulation-vind enforcement that's kind of...
Speaker Change: We're announcing today that we're gonna be committing another $25 million to fair Shake ahead of this election, regardless of the results and that's going to be used not in this current election, but actually just to continue momentum going into the 2026 midterms.
Speaker Change: is killing all these startups that are trying to innovate in the space. And so I think it's going to be a huge tailwind for this industry if we can get regulatory clarity. So, you know, we're announcing today that we're going to be committing another $25 million to fair shake.
Speaker Change: In addition to that were.
Speaker Change: It's going to continue to support standards scripted out org. After the selection they have a stretch goal of getting to 4 million advocates by 2026 midterms and so we're going to support them in that result. So these had been two of our highest ROI investments to date on the policy side I do think it's one of the biggest levers that we can pull to try to.
Speaker Change: Head of this election, regardless of the results, and that's going to be used not in this current election, but actually just to continue momentum going into the twenty twenty six midterms.
In addition to that, we're...
I'm going to continue to support Stan with Crypto.org. After this election, they have a stretch goal of getting to 4 million advocates by 2026 midterms.
Speaker Change: Helped us industry thrive support our customers.
Speaker Change: When I go meet with big financial institutions, or just regular people who are using crypto. The number number one thing I hear and I asked them.
and so we're going to support them in that result. So these have been two of our highest ROI investments to date on the policy side. I do think it's one of the biggest levers that we can pull to try to help this industry thrive, support our customers when I go meet with.
Speaker Change: Why aren't you using it more and they tell me, it's regulatory clarity, especially on the institutional side I think that's gonna be a massive source of inflow of capital. If we can get that check box for many of them.
Big Financial Institutions or just regular people who are using crypto. The number one thing I hear and I ask them, you know, where I'm just using it more, and they tell me it's regulatory clarity, especially on the institutional side. I think that's going to be a massive source of inflow of capital if we can get that checkbox for many of them.
Speaker Change: So yeah.
Yeah, that's our summary on driving driving revenue utility and regulatory clarity just to close here I think.
Speaker Change: We're really well positioned.
Speaker Change: We've got.
Speaker Change: Positive adjusted EBITDA in all macro environments for seven consecutive quarters now I think the business is in a really healthy place from a cost point of view managing expenses and that's given us the resources to go fund driving utility in this regulatory clarity, which can really.
So yeah, that's our summary on driving revenue, utility and regulatory clarity. Just to close here, I think we're really well positioned. We've got...
Speaker Change: The next chapter of crypto to grow this hopefully to 1 billion users or more overtime. So all in there and pass it over to Alicia.
Positive Adjusted Evidate and All Macroenvironments for 7 consecutive quarters now, I think.
The business isn't a really healthy place from a cost point of view managing expenses. And that's given us the resources to go fund driving utility and this regulatory clarity, which can really be the next chapter of crypto to grow this hopefully to a billion users or more over time. So I'll end there and pass it over to Alicia.
Alicia: Thanks, Brian.
Alicia: Brian shared that we have three goals for the company. This year. We also have three financial goals and we made progress on each of these in the third quarter. The first is to continue to diversify our revenue.
Alicia: Maintaining expense discipline and third.
Alicia: Thanks, Brian.
So just as Brian shared that we have three goals for the company this year, we also have three financial goals. And we made progress on each of these in the third quarter. The first is to continue to diversify our revenue. Second, main daily expense discipline, and third, generating positive adjusted e-pidot in all market conditions.
Alicia: Generating positive adjusted EBITDA in all market conditions.
Alicia: I wanted to introduce status, but then dive deep into our results. Our Q3 total revenue was $1 2 billion.
Alicia: Our expenses for like any outlook ranges, we provided last quarter and adjusted EBITDA was $449 million.
Alicia: Our balance sheet strengthened and our total USD resources grew 5% quarter over quarter to end the quarter at $8 $2 billion.
So, what does the introduce those that then dive deep into our results?
Arc U3 total revenue was $1.2 billion.
Speaker Change: Our expenses for within the Outlook range as we provided last quarter, and adjusted EBITDA with $449 million. Our balance sheet strengthened in our total U.S.C. resources group 5% quarter of a quarter, to end the quarter at $8.2 billion.
Alicia: Now starting with transaction revenue, our total trading volume with $185 million down 18% quarter by quarter.
Alicia: This was driven by lower crypto asset volatility and average asset prices that we saw during the quarter.
Alicia: In turn our total transaction revenue was $573 million down 27% requirement.
Now starting with transaction revenue. Our total trading volume was $185 billion down 18% quarter-quarter.
Alicia: You can see the observable difference in our trading volume in our transaction revenue growth rates in Q3. So I wanted to highlight a few trends could partly explain these results.
This was driven by lower crypto asset volatility and average asset prices that we saw during the quarter. In turn, our total transaction revenue was $573 million down 27% quarter of a quarter.
Alicia: First importantly, our share of Fiat to crypto trading volume in the U S where the majority of our consumer revenue is derived was steady quarter over quarter.
You can see the observable difference in our trading volume and our transaction revenue growth rates in Q3. So I wanted to highlight a few trends, to partly explain these results.
Alicia: Second.
But we did see that with consumer stable coin pair trading volume grow significantly quarter on quarter.
Speaker Change: First Importantly, our share of Fiat to Crypto Trading volume in the US, where the majority of our consumer revenue was derived with steady quarter of a quarter.
Alicia: We believe this growth was driven by a product update which enabled an easier way for advanced traders to trade stable claims on our platform.
Second, what we did see though was consumer stablecoin pair trading volume growth significantly quarter-and-quarter. In part we believe this growth was driven by a product update, which enabled an easier way for advanced traders to trade stablecoins on our platform.
Alicia: And why do we generate little to no fees unstable clean pair trades growing adoption of stable claims and U S. D. C. Specifically is core to our strategy and we monetize you'd have to see by our commercial relationship with the issue that you see.
Alicia: Sorry, we.
Speaker Change: and while we generate little to no fees on stablecoin pair trades, growing adoption of stablecoins and U.S.D.C. specifically is core to our strategy. And we monetize U.S.D.C. via our commercial relationship with the issue of U.S.D.C.
Alicia: We saw a decrease in non trading consumer transaction revenue. So non trading consumer transaction revenue includes revenue from Texas.
Alicia: And minor fees.
Alicia: Switching over to the institutional side, we did see a decline in institutional spot revenue required for choir, but we saw relative outperformance of our prime broker and our derivatives fitness.
Thurn, we saw a decrease in non-trading consumer transaction in revenue. So non-trading consumer transaction revenue includes revenue from dexes and minor fees.
Alicia: And while not yet material, we're really pleased to see the beginnings of rapid revenue growth and our efforts to diversify the sources of our revenue continue to be a priority for us.
Fishing over to the institutional side. We did see a decline in the institutional spot revenue according to the court of the court. We saw relative outperformance of our prime broker and our derivative business.
Alicia: Turning to our subscription and services revenue, which was $556 million down 7% quarter over quarter.
And while not yet material, we're really pleased to see the beginnings of the derivatives of revenues. As our efforts to diversify the sources of our revenue can continue to be a priority for us.
Alicia: We were really pleased to grow native units and sticking in custody.
Alicia: However, if made up unit growth was offset by lower average crypto asset prices, which impacted these revenues during the quarter.
Turning to a subscription and services revenue, which was $556 million down 7% quarter a quarter.
Alicia: Our Q3 stable claim revenue grew 3% as U S. D C market cap and our on platform in the U S. D C balance well exceeded the impact of lower interest rates.
We were really pleased to grow native units in staking and custody.
However, this native unit growth was offset by lower average crypto asset prices, which impacted these revenues during the quarter.
To finish that revenue I wanted to share that the number of coinbase, one paid subscribers continued to ground and we saw all new all time highs in the third quarter.
RQ3's stablecoin revenue grew 3%. As USDC market cap growth and are on-plot for USDC balance growth exceeded the impact of lower interest rates.
Alicia: Turning now to expenses.
Alicia: Total Q3 operating expenses were $1 billion down 6% quarter over quarter.
Speaker Change: To finish out revenue, I wanted to share that the number of Coinbase 1 paid subscribers continue to grow. And we saw all new all-time highs in the third quarter.
Alicia: Adjusted EBITDA was $449 million and net income was $75 million.
Alicia: Net income was impacted by $121 million in pre tax losses on our crypto asset investment portfolio.
Speaker Change: Turning now to expenses.
Total Q3 operating expenses were $1 billion, down 6% quarter per quarter.
Alicia: The vast majority of which was unrealized.
Our adjusted EBITDA was $449 million and net income was $75 million.
Alicia: Losses were about $92 million after reflecting the tax impact.
Speaker Change: Knitting come was impacted by $121 million in pre-tax losses on our crypto-asset investment portfolio. So vast majority of which was unrealized, these losses were about $92 million after reflecting the tax impact.
We ended the third quarter with $8 2 billion and USD resources up 5% quarter over quarter.
Speaker Change: As Brian shared earlier, we announced today that our board of directors has authorized our first stock repurchase program about $2 billion with no expiration.
Speaker Change: We ended a third quarter with $8.2 billion in U.S.E resources up 5% quarter of a quarter. As Brian shared earlier, we announced today that our board of directors has authorized our first stock repurchase program, above $2 billion with no expiration.
As we've now seen seven quarters of consecutive positive adjusted EBITDA and meeting our financial objectives in all market conditions, we're looking to be increasingly strategic with our capital allocation and this program gives us another tool that we will look to use opportunistically.
Speaker Change: Finally to close I wanted to highlight a few things on our Q4 outlook.
As we've now seen seven quarters of consecutive positive adjusts to be done and meeting our financial objectives and all market conditions, we are looking to be increasingly strategic with our capital allocation and this program uses another tool that we will look to use opportunistically.
Speaker Change: Zooming out we're really pleased to see our long term revenue diversification efforts paying off as subscription and services revenue was on pace to exceed $2 billion. This year.
Speaker Change: Nevertheless, our Q4 subscription services outlook reflects certain headwinds, including a 10% price decline and a theory them in October compared to the Q3 average as well as lower interest rates.
Finally, to close, I wanted to highlight a few things on our Q4 outlook.
Zooming out, we're really pleased to see our long-term revenue diversification efforts paying off. As subscription and services revenue is on pace to exceed $2 billion this year.
Speaker Change: Meanwhile, we will continue to work on growing product adoption and growing native units on platform to help offset these headwinds.
Nevertheless, our Q4 subscription service is outworked with like certain headwinds, including a 10% price decline in Ethereum, in October compared to the Q3 average, as well as lower interest rates.
Speaker Change: Second on technology, and development and general and administrative expenses, we continue to be disciplined in adding fixed expenses to our cost structure.
Meanwhile, we will continue to work on growing product adoption and growing native units on platform to help us set these headwinds.
Speaker Change: We are expecting Q4 in tech and Dev and G&A expenses to be in the range of $690 million to $730 million.
Speaker Change: Second, on technology and development and general and administrative expenses, we continue to be disciplined in an adding six expenses to our cost structure. We're expecting Q4 tech and dev and GMA expenses to be in the range of 690 to 730 million dollars.
Speaker Change: Third and finally on sales and marketing we have increased variable expenses over the last year, notably U S. D C reward rates and performance marketing.
Speaker Change: In Q4, we expect sales and marketing to be between $170 million and $220 million driven by higher on platform, you'll actually see balances and higher brand spend.
Third and finally, on sales and marketing, we have increased variable expenses over the last year. Notably, U.S. to see reward rates and performance marketing.
With that let's go to questions.
Speaker Change: Great. Thanks, So we'll take the top three questions voted on from say and then we'll turn it over to some live questions from analysts.
In Q4, we expect failed in marketing to be between 170 million and 220 million dollars. Driven by higher on-platform USTC balances and higher brand spend.
Speaker Change: So the first one we had two questions two shareholders, who asked a similar question with the same theme with Coinbase consider a bitcoin ethereum or other reserve strategy like micro strategy.
Speaker Change: With that, and you'll let's go to questions. Okay, great. Thanks. So we'll take the top three questions voted on from say and then we'll turn it over to some live questions from the analyst.
Speaker Change: Felicia.
Felicia: Good news, we do investment wiped out and we have an investment portfolio on the balance sheet.
So the first one, we had two questions, two shareholders who asked a similar question with the same theme. Would Coinbase consider a Bitcoin, Ethereum, or other reserve strategy like MicroStrategy?
Felicia: The fair market values are kept up with investments with about $1 $3 billion at the end of the third quarter, you can see more detail in our filings, but we hold decline in addition to our CRM and a mix of other crypto assets.
Speaker Change: Alesia.
Good news, we do invest in crypto and we have a now investment portfolio on the balance sheet.
These are intended to be long term investments.
The Fair Market Values are crypto investments was about $1.3 billion at the end of the third quarter. You can see more detail in our filings that we hold bitcoins, in addition to a theorem, and a mix of other crypto assets. These are intended to be long-term investments.
One way to contextualize. This is that our crypto investment portfolio of $1 $3 billion is about 25% of our net cash balance that is total cash minus all of that.
We do need to keep cash on hand for a variety of purposes first capital requirements for our regulators legal entities, we keep cash on hand for M&A opportunities and ventures and to hedge our operational activities.
One way to contextualize this is that our crypto investment portfolio of $1.3 billion is about 25% of our net cash balance. That is total cash minus our debt.
Felicia: To be clear, we are an operating company and not an investment company, but over time, we absolutely want to grow our operations such that we hold and transact with an increasing amount of prep that transaction and we're going to look for opportunities to do so.
Speaker Change: We do need to keep cash on hand for variety of purposes. First, capital requirements for our regulated legal entities. We keep cash on hand for M&A opportunities and ventures and to hedge our operational activities.
Speaker Change: Alright second question, how our base smart wallet and CB BTC driving revenue for coin base, how is based performance relative to other L twos or L ones.
Speaker Change: To be clear, we are an operating company and not an investment company, but over time, we absolutely want to grow our operations such that we hold and transact with an increasing amount of crypto transactions and we are going to look for opportunities to do so.
Speaker Change: What is what are corn basis plants onboard more users and drive adoption also how do you see CDP evolving could it become the AWS of crypto Brian.
Speaker Change: Alright, second question, how are base smart wallet and CBBTC driving revenue for Coinbase? How is base performance relative to other L2s or L1s?
Brian Armstrong: Yeah, So I'll try to take each of these one by one so.
Brian Armstrong: To start with a base earns revenue via a sequencer fees or think of it as transaction fees, we're keeping those very low right now to help it scale.
What are Coinbase's plans on board more users in drive adoption? Also, how do you see CDP evolving? Could it become the AWS of crypto?
Brian Armstrong: But those could be meaningful overtime, and then smart wallet is really just about simplifying the onboarding process for especially soft custodial wallets, but maybe other products over time, not just going to accelerate growth.
and I'm going to try to take you to these one by one.
So start with bass earns revenue via sequence of fees or think of it as transaction fees. We're keeping those very low right now to help it scale.
Brian Armstrong: Open up new user groups that could onboard less technical folks.
But it could be meaningful over time. And then smart wallet is really just about simplifying the onboarding process for especially self-cocassilial wallets, but maybe other products over time and that's just going to accelerate growth.
Brian Armstrong: C B BTC that really in part it just drives usage of base, but it also brings more assets on platform people have bitcoin that they want to use in different defy applications like borrowing and lending there are potential opportunities to monetize that so these are all somewhat early in there.
Speaker Change: Open up new user groups that could onboard less technical folks.
Speaker Change: CBBTC, that really imparted just drives usage of base, but it also brings more assets on platform, people have Bitcoin that they want it.
Brian Armstrong: And their growth stage, but these are the building blocks I would say, they're going to enable us to really drive the utility phase of crypto you'd.
Use in different defy applications like borrowing and lending, their essential opportunities to monetize that. These are all somewhat early in their growth stage, but these are the building blocks I would say they're going to enable us to really drive the utility phase of crypto.
Speaker Change: You'd asked about how base is doing and I mentioned in the opening statement. It's number one the number one layer two solution now by transactions processed and total value on our platform.
Just to give a little more detail on that.
Speaker Change: Transactions increased 55% on base quarter over quarter for it's pretty incredible pace of growth right now and.
You'd asked about how base is doing and I mentioned the opening statement, you know, it's number one, the number one layer two solution now by transactions process and total value on a platform. It's just to give a little more detail on that.
Actually the number of well that was all actually while the median transaction fee we kept it below one.
Speaker Change: So you know, we're really trying to keep that low to help with growth.
Speaker Change: The transactions increased 55% on days quarter of a quarter, it's pretty incredible pace of growth right now.
Speaker Change: You asked about CDP, that's Queen based developer platform for anybody who's not familiar I do think this could become the AWS of crypto, we're really trying to take a lot of the hard technical challenges that we've built internally to create our own products and make them available to third parties, it's kind of like selling picks and shovels in the gold rush or whatever analogy you want to use and I think that.
Speaker Change: Actually, the number of, well, that was all actually while the media in transaction view, we kept it below one cent. So, you know, we're really trying to keep that low to help with growth.
You asked about CDP, that's Coinbase Developer Platform, for anybody who's not familiar. I do think this could become the AWS of crypto. We're really trying to take a lot of the hard technical challenges that we've built internally to create our own products and make them available to third parties, selling pictures and shovels, in the gold rush or whatever analogy you want to use.
Speaker Change: This could help hopefully thousands of crypto companies or even just non crypto companies really start to integrate crypto in different ways over time.
Speaker Change: We've seen a big surge of developers building AI agents that actually have an embedded crypto wallet, which I think is a very interesting trend.
I think that...
Speaker Change: And we've seen what we're seeing a lot of startups use CDP for that so that's pretty cool.
This could help hopefully thousands of cryptocurrencies or even just non-crypto companies really start to integrate crypto in different ways over time. Recently we've seen a big surge of developers building AI agents that actually haven't embedded crypto wallet, which I think is a very interesting trend.
Speaker Change:
Speaker Change: Yeah. So I I don't know I think just in conclusion I would say that all of these pieces are coming together to help us drive utility and we'll monetize them in different ways over time, but if we can if we can help 1 billion people get more economic freedom with good financial infrastructure are sound money global rails.
Speaker Change: Yeah, so I don't know, I think just in conclusion I'd say that all of these pieces are coming together to help us drive utility and we'll monetize them in different ways over time, but
Speaker Change: You centralize identity systems, there's there's all kinds of things that will be possible to monetize there.
Speaker Change: If we can help a billion people.
Speaker Change: And so hopefully that answers your question.
Get more economic freedom with good financial infrastructure, sound of money, global rails, you know
Speaker Change: And then a final question from say any plans to provide dividends to shareholders in the future Felicia.
Speaker Change: Thank you for the question.
decentralized identity systems. There are all kinds of things that will be possible to monetize there. And so hopefully that answers your question.
Speaker Change: So while not a dividend we did announce today that we have an authorization to repurchase up to $1 billion in shares.
Speaker Change: And this is the way every turn capital to shareholders.
And then our final question from say any plans to provide dividends to shareholders in the future. Alicia.
Speaker Change: I wanted to talk a little bit about our rationale and how we think about capital allocation as it continued to strengthen our balance sheet over the past few years, we now have about $8.2 billion and USD resources. In addition to the $1 $3 billion in fair market value of crypto investment assets that I mentioned earlier.
Alicia: Thanks for the question.
Speaker Change: So, while not a dividend, we did amount today that we have an authorization to repurchase up to a billion dollars in shares. And this is a way of returning capital to shareholders.
I wanted to talk a little bit about our rationale and how we think about capital allocation.
Speaker Change: Our primary goal is to invest in our business, we want to find new products, we want to expand internationally, we want to do product development.
Speaker Change: has continued to strengthen our balance sheet over the past few years. We now have about $8.2 billion in U.S.D. resources in addition to the $1.3 billion in fair market value of crypto investment assets that I mentioned earlier.
Speaker Change: He also.
Speaker Change: Use our balance sheet to help scale, our funding business, our prime financing business with any institutional proxy.
Our primary goal is to invest in our business. We want to fund new products. We want to expand internationally. We want to do product development.
Speaker Change: But beyond that we see a number of other opportunities to utilize our available cash resources.
Speaker Change: M&A and ventures have always been a focus area for us we made some opportunistic debt repurchases over the past few years, notably our 2026 converts and today, we're now announcing that we opportunistically, we'd like to start exploring returning capital to shareholders with the buyback authorization. So no dividends that we are being more strategic with our capital and look to clean.
We also use our balance sheet to help scale our funding business, our prime financing business within the institutional product fleet.
But beyond that, we see a number of other opportunities to utilize our available cash resources.
and Ventures have always been a focus area for us. We made some opportunities to get repurchases over the past few years, notably our 2026 converts. And today we're now announcing that we are opportunistically, would like to start exploring returning capital shareholders with the ViveBAC authorization.
Speaker Change: And opportunities to return this capital to repurchases.
Speaker Change: Thank you and Sarah with that lets take our first question. Please.
Thank you.
First question comes from the line of Pete Christiansen with Citi. Your line is open.
Speaker Change: So, no evidence that we are being more strategic with our capital and look to create an opportunity to return this capital through reproductive.
Pete Christiansen: Good evening. Thanks, Thanks for the question here.
Thank you and so Sarah with that, let's take our first question, please.
Pete Christiansen: Brian Alicia I'm curious on your views on on.
Thank you. Your first question comes from the line of Pete Christensen with City, Your Line is open.
Pete Christiansen: Clearly, it's a share of other crypto assets I guess all coins.
Pete Christiansen: I guess, if we look at.
Good evening. Thanks for the question here. Brian Alicia, I'm curious on your views on Coinbase this year of other crypto assets, I guess all coins. I guess if we look at
Pete Christiansen: Q4, Q1 earlier this year it was a much higher percentage of your overall volume.
Pete Christiansen: It's come down quite a bit since then maybe 10 points just.
Pete Christiansen: Just curious if she any meaningful shifts there and coinbase his ability to drive share in some of the lesser.
Speaker Change: Q4, Q1, earlier this year was a much higher percentage of your overall volume. It's come down quite a bit since then, maybe 10 points. Just curious.
Pete Christiansen: Trade it took us.
Speaker Change: Let me start with that one piece and then Brian can or Emily can add on thoughts.
What we see with especially the long tail is oftentimes trading is correlated to very much with volatility and so when there's more volatility in that long tail, we tend to get more market makers hedge funds as well as advanced traders trading that long tail crypto asset volatility came down in Q3 as compared to Q2, and so we didn't see him.
Speaker Change: and the Cignaing meaningful shifts there in coin business ability to drive share in some of the lesser traded tokens.
Let me start with that one, Pete, and then Brian and I'm Alie Canadall and Thoughts. What we see with especially the long tail is oftentimes trading as correlated to very much with volatility.
Speaker Change: But that that volume shift.
And so when there's more volatility in that long tail, we tend to get more market makers, hedge funds, as well as advanced traders trading that long tail. Crypto-ass volatility came down in Q3 as compared to Q2 and so we did see a little bit of that volume shift.
Speaker Change: The other thing that we've seen is post the etf's getting approved.
Speaker Change: There's just been more focused on bitcoin and ethereum and Etfs have been the tide that lifts all ships and that has driven volume on our own platform as more volume has come to the cleaner theory them as well.
The other thing that we've seen is post the ETFs getting approved. There's just been more focus on Bitcoin and Ethereum and the ETFs have been the tie that lifts all ships, and that has driven volume on our own platform as more volume has come to Bitcoin and Ethereum as well.
Speaker Change: Your next question comes from the line of Owen Lau with Oppenheimer. Your line is open.
Speaker Change: Good afternoon, and thank you for taking my question.
Owen Lau: Would you please add more color on the drive for off the retail fee rate and I don't I didn't show you mentioned the three key points. So it's a sequential decline mainly driven by the mix shift towards stable coin paired trade, we should tenure rates, leading to the northeast and how about the coffee trending.
Speaker Change: [inaudible]
Speaker Change: The National Security Service,
Your next question comes from the line of Owen Lau with Oppenheimer. Your line is open.
Owen Lau: Good afternoon and thank you for all of the question.
Owen Lau: Could you please add more color on the driver of the retail fee rate and I don't I'll issue you mentioned the three key points, so it's the sequential decline magnitude from by the makeshift.
Owen Lau: To peers. Thank you.
Speaker Change: Thanks, Yeah, thanks for the opportunity to clarify because I. Appreciate that this is an area of focus. So first we made no changes no material changes to our fee rate structure and the consumer app.
and two words they will go in PAV tray which generates a little to no fees and how about the core fee trending product pairs. Thank you.
Speaker Change: The blended average change that you see quarter over quarter is due to two key factors first is mix shift where we saw more stable pair trading.
Thanks, Owen. Yes, thanks for the opportunity to clarify because I appreciate that this.
Speaker Change: This is an area of focus. So first we made no changes, no material changes to our fee rate structure in the consumer app. So the blended average change that you see in quarter of a quarter is due to two.
Speaker Change: <unk> is we did not see as much revenue in Q3 from the non trading transaction types and so it was those two drivers that led to the change in the blended average feet quite require but no underlying changes to the fees.
and Key Freighters. First is next shift, where we saw more stable pair trading. Second is we did not see as much revenue in Q3 from the non-trading transaction type.
Speaker Change: That mix and then non trading revenue changes.
and so it was those two drivers that led to the change in the blended average street quarter recorder but no underlying changes to the fees of the product. Mix and then non-training revenue changes.
Speaker Change: Your next question comes from the line of Ken Worthington with J P. Morgan Your line is open.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Sorry, 10 square.
Speaker Change: We're unable to make out what you're saying.
Your next question comes from the line of 10 Worthington with JP Morgan. Your line is open.
Speaker Change: Okay can you hear me now where we go yeah. Okay I wanted to focus on regulation and the election. So first congratulations on the leadership position and success, you've had making cryptic issue for elections. This year in terms of the election. There is the expectation that a white house that is more friendly to crypto can have a more accommodative.
Speaker Change: Shory 10th work.
We're unable to make out what you're saying.
Okay, can you hear me now? Oh, there we go, yes. Okay.
Speaker Change: I want to focus on regulation in the election so first congratulations.
Speaker Change: Regulatory backdrop from a top down perspective. This makes sense that things will be better for coinbase I'd like to dig in a bit deeper on the bottoms up perspective, apart from the benefit of a less litigious FCC, what can coinbase do in a more friendly regulatory environment in the U S that it's not doing now.
on the leadership position in success you've had, making crypto an issue for elections this year. In terms of the election, there's the expectation that a White House...
That is more friendly to crypto, can have a more accommodative.
of Regga Toy backdrop.
From a top-down perspective, this makes sense that things will be better for Coinbase. I like to dig in a bit deeper on the bottoms up perspective. Apart from the benefit of a West-Littigious SEC, what can Coinbase do in a more friendly regulatory environment in the US?
Speaker Change: And what's high on your priority list to jumpstart or expand with a 10 year U S regulatory environment and then for Paul The states have stepped up their oversight of coin base. We're sticking being an example does it more.
That it's not doing now and what's high on your priority list to jumpstart or expand with a friend your US regulatory environment.
Speaker Change: Friendly federally federal regulatory environment diminish the roles that states currently have restricting coinbase activity.
and then for Paul, the states have stepped up their oversight of Coinbase, with Staking Being Example. There's a more friendly, federally regulatory environment to minister the roles that states currently have restricting Coinbase activity.
Speaker Change: Thanks for the question Ken This is Paul Great wall.
Paul Great: To start let me just clarify what we're not what we're looking for is not an accommodation, but really focused on clarity and ultimately fair treatment rather than the the regulation by enforcement that we faced alongside so many of our industry, that's really stifling U S innovation.
Thanks for the question, Candice Paul Grewal. To start, let me just clarify what we're looking for is not an accommodation. We're really focused on clarity and ultimately fair treatment.
Paul Great: The good news is we think that either.
Paul Great: Either presidential candidates is absolutely going to be an improvement and upgrade to the approach of the current administration and the debt in a new administration with an administration, you'll see a step towards an improved environment towards regulation the <unk>.
and the regulation by enforcement that we've faced alongside so many of our industry that's really stifling US innovation. The good news is we think that
Either Presidential Candidates is absolutely going to be an improvement and upgrade to the approach of the current administration and that in a new administration and with an administration, you'll see a step towards an improvement towards regulation.
Paul Great: They were looking for at the federal level.
Paul Great: Well, absolutely unlock innovation across the financial system and critically from our perspective make sure that the industry is built in America.
Paul Great: In large part and beyond the federal impact states as well are absolutely looking to federal regulators to determine the rules of the road. So there would be positive.
The clarity that we're looking for at the federal level.
With absolutely unlocked innovation across the financial system.
and critically from our perspective, make sure that the industry is built in America.
Paul Great: Follow on effects at the state level as well, if we were to achieve that clarity.
at Leaston Large Part. And beyond the federal impact, states as well are absolutely looking to federal regulators to determine the rules of the road. So there would be positive the follow-on effects at the state level as well if we were to achieve that clarity with our federal regulators.
Paul Great: With our federal regulators.
Paul Great: The goal of all of this is from our perspective to make sure that we have consistency and the protections that are afforded to consumers across all states. It's one of the reasons why we have supported the fit 21, Bill which would.
Paul Great: Allow us to not only come in and register as we've been.
The goal of all this is...
from our perspective to make sure that we have consistency in the protections that are afforded at consumers across all states.
Paul Great: Encourage to do but also to establish certainty of critical elements of our business everything from side by side trading.
It's one of the reasons why we have supported the Fit 21 bill, which would allow us to not only come in and register as we've been...
Paul Great: Retention under the auspices of spot market authority with the C. F. T C. A whole range of a positive than it was would follow and.
and encouraged to do. But also the stat was certainty of critical elements of our business and everything from side by side, trading, protection under the auspicious spot market authority with the CFTC, a whole range of positive benefits would follow up.
Among other things it would also give us a.
Paul Great: Clarity and provide authority for listing of our assets as commodities as a decentralized.
Paul Great: And again, because the states take tend to take their cue from the federal regulators when it comes to how we test and how that applies to different assets. We do think that would improve the climate at the state level as well now just to turn a bit to what that clarity could mean for our products and.
I'm on my way to think he will also give us
Speaker Change: Clarity and Provided Authority for Listing of Assets as Commodities as they decentralize.
And again, because the states tend to take their cue from the federal regulators when it comes to how we test and how that applies to different assets.
Paul Great: And just to give a few examples one with respect to training. We do think there is a.
We do think that would improve the climate at the state level as well. Now, just to turn a bit to what that clarity can mean for our products.
Paul Great: A significant growth opportunity to serve them a larger portion of the market. If we were to achieve the clarity that were seeking through this legislation and rulemaking and that would happen because traders of all types are just going to be much more confident and comfortable trading and we do think that would ultimately drive increased revenue you'd see listing of.
and just to give a few examples, one with respect to training, we do think there's a significant growth opportunity to serve a larger portion of the market if we were to achieve the clarity that we're seeking through this legislation.
Paul Great: Of assets accelerate.
Paul Great: And we also think that over time, we would be able to activate our license to list tokens.
and Rulemaking. And that would happen because traders of all types are just going to be much more confident and comfortable trading. And we do think that would ultimately drive increased revenue. You see listing of assets accelerate.
Tokens, which implicate the federal securities laws as well so crypto securities could also come online stable claims would also benefit there's no question.
Speaker Change: And we also think that over time we would be able to activate our license to list.
Paul Great: We would see benefits for payments at scale because of course significant players are looking for clarity before before really plunging into that and the way that we think is entirely likely staking a benefit right now as I'm sure you know incremental staking is temporarily paused in a number of <unk>.
and a token to which implicate the federal securities law as well. So, cryptosicurities could also come online.
Speaker Change: Stablecoin is also benefit. There's no question that...
We would see benefits for payments at scale because of course significant players are looking for clarity before we're really plunging into that in the way that we think is entirely likely.
Paul Great: And we think we could bring that back. So there's just a large opportunity we think to be a trusted partner and to provide support to an ecosystem that would grow and that of course would attract.
Staking with benefit right now, as I'm sure you know, incremental staking is temporarily paused in a number of states and we think we could bring that back. So there's just a large opportunity we think to be a trusted partner and to provide support to an ecosystem that would grow. And that of course would attract.
Paul Great: And continue to attract strong support from banking and payment partners are going to be much more likely and much better positioned to offer on ramps and off ramps to crypto and that of course with what would lead to growth in E. Commerce apps that use crypto and all of that.
and Continental Track, Strong Support from Banking and Payment Partners, are going to be much more likely and better positioned off our on-ramps.
Paul Great: One other one.
Paul Great: One other category, we think it's also.
Paul Great: Quite significant here, we do think that the creator platforms advertising social networks.
Speaker Change: and Offrams to Crypto.
Speaker Change: and that of course would lead to growth in e-commerce.
Paul Great: Networks, all would be interested in integrating crypto, but right now they're waiting on the clarity and so with clarity we think there would be a major unlocked.
Speaker Change: [inaudible]
Coite significant here. We do think that the greater platforms, advertising, social networks, all would be interested in integrating crypto. But right now, they're with a waiting on the clarity. And so with clarity, we think there would be a major unlock.
Speaker Change: Your next question comes from the line of John <unk> with Needham <unk> Company. Your line is open.
Speaker Change: Great. Thanks for taking my question.
Speaker Change: I guess I wanted to drill down into the stable coin stuff a little bit more so tether volume on the platform increased to 15%.
Speaker Change: Your next question comes from the line of John TaDero with Needham and Company, your line is open.
Speaker Change: I believe U S. D C isn't broken out that same way, but just wondering are.
Great, thanks for taking my questions. I guess I wanted to drill down into the stablecoin, stuff a little bit more, so Teather, volume on the platform, increase to 15% of the U.S.G.C. isn't broken out that same way.
Speaker Change: Are we seeing a shift towards tether away from U S. D. C or is that is that a wrong way to be looking at that.
Speaker Change: So what's reported in our disclosures around Heather is just trading volume.
But just wondering, are we seeing a shift towards Teather or Wake on U.S. D.C. or is that around where it's looking at that?
Speaker Change: And I would comment that we've had a couple of quarters, where we've broken out Heather in terms of trading volume I shared earlier that.
We made it easier to train staple pairs on our platform and so in part you're seeing that increase in stable clean trading Paris reflected in overall tether volumes, but no. We don't believe that there is a shift what we would share with you with what you see with the fastest growing major staple claim in Q3 and year to date, it's reached new all time highest post the financial crisis of Q1.
Speaker Change: So, let's report it in our disclosures around Tether is just trading volume. And I would comment that we've had a couple quarters where we've broken out Tether in terms of trading volume. I shared earlier that
We made it easier to trade stable pairs on our platform and so in part you're seeing that increase in stable coin trading pairs reflected in overall tether volumes but no. We don't believe that there is a shift. What we would share with you is you see with the fastest growing major stable coin in Q3 and your did date.
Speaker Change: In 2023 and hit 36 billion, we're integrating it more deeply across our product family and we think that we have significant upside to continue to put forth a more trusted stable point into the market and gain consumer adoption here in the U S and around the world.
It's reached new all-time highs to post the financial crisis of Q1, 2023. It hit 36 billion. We're integrating it more deeply across our product family and we think that we have a significant upside to continue to put forth a more trusted stable-point into the market and gain consumer adoption here in the US and around the world.
Speaker Change: Your next question comes from the line of Devin Ryan with citizens JMP. Your line is open.
Devin Ryan: Thanks for taking the question just a question on expenses here as we approach 2025.
Your next question comes from the line of Devon Ryan with Citizens JMP. Your line is open.
Devin Ryan: To get a little bit of a sense of.
Devin Ryan: Spending plans areas, you expect to lean into and just if there's any way to think about the relationship with between the expense growth relative to revenue growth and I appreciate there'll be some fixed expense and longer term investment. But then you also have some variable items that you can kind of lean in or pull back on based on the environment. Thanks.
Thanks for taking a question. Just a question on expenses here as we approach 2025. We just great to get a little bit of a sense of...
You know, spending plans, areas you expect to lean into and just if there's any way to think about the relationship between the expense growth relative to revenue growth and I appreciate.
Speaker Change: Sure. So we're not giving any outlook on 2025 today, but we are continuing to focus on our overall financial goal of exercising expense discipline will be prudent.
There will be some fixed expense in law recruitment investment, but then you also have a some variable items that you can lean in or pull back on based on the environment. Thanks.
Speaker Change: Like we did that this year, we are selectively increasing head count and putting resources towards areas, where we see growth opportunities. We are flexing our muscles around variable spend two notch marketing consumer support against volumes that we see them to support our customers in areas and so we'll probably take the same approach in 'twenty 'twenty five we'll be disciplined well invest after growth.
Sure, so we're not giving any outlook on 2025 today, but we are continuing to focus on our overall financial goal of exercising expense discipline. We'll be prudent.
Speaker Change: Just like we did that, this year we are selectively increasing head count and putting resources towards areas where we see growth opportunities.
Speaker Change: <unk> spent a very prudent way.
We are flexing our muscle around variable spend to match marketing, consumer support, against volumes that we see and support our customers in areas. And so we'll take the same approach in 2025. We'll be disciplined. We'll invest after growth opportunities, but in a very prudent way.
Speaker Change: Your next question comes from the line of Bangladesh with Barclays. Your line is open.
Speaker Change: Hi, good evening and thanks for taking the question I wanted to ask another capital allocation question.
Speaker Change: We've seen another crypto company benefit from a market cap perspective from having bitcoin on their balance sheet. Just curious I understand there are different considerations, considering you run an exchange.
Your next question comes from the line of bedabudish with barkleets. Your line is open.
Hi, good evening and thanks for taking the question. I wanted to ask another capital allocation question. We've seen another crypto company benefit from a market gap perspective from having Bitcoin under Balanchine. Just curious, I understand there are different considerations considering you run an exchange. But what do your thoughts to sort of following that playbook as well and how do you think about potentially doing that for Coinbase?
Speaker Change: But what are your thoughts just sort of following that playbook as well and how do you think about you'll.
Speaker Change: Potentially doing that for corn basis.
So we do have kept on our balance sheet I used I mentioned in my comment on again. The same question earlier that crypto represents about 25% of our net cash after we back out the debt and so we do think about allocating excess capital or liquidity that we have to building a crypto portfolio, but we still.
So we do call Krypton our balance sheet. I have to mention in my comments on the say question earlier that Krypton represents about 25% of our net.
Speaker Change: We need a lot of cash to support our business and the opportunities that we see ahead. So we are not a company that looks to be an investment company in whole just investments assets on our balance sheet. We are an operating company, but we do look to build more and more of our transaction activity and crypto as we go over time.
After we back out the debt.
And so we do think about allocating excess capital or liquidity that we have to building a crypto portfolio, but we still need a lot of cash to support our business and the opportunities that we see ahead. So we are not a company that looks to be an investment company and holds just investments out to its owner balance sheet. We are an operating company but we do look to build more and more of our transaction activity in crypto as we grow over time.
Speaker Change: Your next question comes from the line of my colonies, you with H C. Wainwright Your line is open.
Speaker Change: Hi, good afternoon, and thank you for taking my question.
Speaker Change: For me because when we look at your portfolio of products and services today, where do you believe there is a gap based on current and future market opportunities and would you say you're more likely to build this set of products in house to fill that void or really go out and acquire especially given your strong balance sheet and liquidity position here and then as a quick follow up to that do you think we could see and access.
Your next question comes from the line of Mike Colenezi with H.C. Wayne Wright. Your line is open.
and I could have for me or thank you for taking my question out.
For me, you guys, when you can't your portfolio, your product concerns you today.
We believe there's a gap based on current and future market opportunities and would you say you're more likely to build this set of products in house to till that void or really go out and acquire, especially given your strong balance sheet and the clarity of position here. And as a quick follow-up to that, do you think we could see an acceleration and crypto-emine activity once we get greater regulatory clarity here in the US?
Speaker Change: <unk> and crypto M&A activity once we get greater regulatory clarity here in the U S.
Speaker Change: Yeah, and this is Emily thanks for the question.
Speaker Change: We've actually been quite active on the M&A front and I think we've had a pretty good track record here.
Speaker Change: In August we closed the acquisition of a method license, which will unlock derivatives and 20 plus EU markets are working to operationalize. This now in June we brought on station lab seem to accelerate smart wallet development.
Yeah, this is Emily, thanks for the question. We've actually been quite active on the Aminay front and I think we've had a pretty good track record here.
Speaker Change: Historically, we've had great success with deals like Zappos for custody to call me for Prime brokerage, there extra derivatives or dam, they've given us all a nice position in the institutional market. We you can expect we're basically looking at everything we are selective we're disciplined.
Speaker Change: In August we closed the acquisition of a method license, which will unlock derivatives in 20 plus EU markets. We're working to operationalize this now. In June we brought on station labs, team to accelerate smart wallet development.
and historically we've had great success with deals like Zapho for custody, to go meet for prime breadbridge, Fairx for derivatives, or dam they've given us all a nice position in the institutional market. We're basically looking at everything. We are selective, we're disciplined.
We tend to succeed when we have a vision for something on our product roadmap and Theres a great asset out there that can help us extend that lead them. Currently looking at everything I think international is going to be a great opportunity for us to think about consolidating and enhancing our position outside of the U S. B.
We tend to succeed when we have a vision for something on our product roadmap and there's a great asset out there that can help us extend that lead.
Speaker Change: Base, we are looking at great Tech and talent that can help bring new capabilities and added up to our momentum there and then on the utility front, we're always looking at driving new use cases on the payments and stable claims spread so lots of opportunity on the M&A side.
Speaker Change: Currently looking at everything, I think international is going to be a great opportunity for us to think about consolidating and enhancing our positions outside of the U.S.
Speaker Change: Yeah, I would just say.
Speaker Change: Based, we are looking at great tech and talent that can help bring new capabilities and add to our momentum there. And then on the utility front, we're always looking at driving new use cases on the payments and stablecoin spreads. So lots of opportunities on the M&A side.
Speaker Change: We do it internally, we often say, we build buy and invest so meaning we were gonna grow and have innovation from wherever we can get it.
Speaker Change: We oftentimes tried to build it in house there there's lots more that we're doing on that front.
Yeah, I would just say um
Speaker Change: If we see something take off that we think we can acquire that we havent built successfully internally we're open to that and then sometimes they aren't willing to let us buy it and we will invest as well we have an amazing portfolio from the 20th century side. So.
We do what we offer, we build by and invest. We're going to grow and have innovation from wherever we can get it.
We often try to build it in house. There's lots more that we're doing on that front. If we see something take off that we think we can acquire that we haven't...
Speaker Change: We're going to keep doing all three and.
Speaker Change: You know, it's always there's a there's some stat out there right about like 80% of M&A is not accretive. It's the easy thing is buying at the hard part is successfully integrating it into the company. So.
built successfully internally, we're open to that, and then sometimes they aren't willing to let us buy it and we'll invest as well. We have an amazing portfolio from the Cuymea's Ventures side, so we're going to keep doing all three.
Speaker Change: It's a little easier to do with smaller teams tech and talent and.
Speaker Change: It's always, there's some stat out there right about like 80% of M&A is not a creative, the easy thing is buying at the hard part is successfully integrating it into the company.
Speaker Change: But if you're talking about big M&A, we as Emily said, we look at almost all of them but.
Speaker Change: It was kind of like you know Warren Buffett were only going to swing. It a few pitches, where we think we can really have accretive value and that's that's the hard part of M&A. It's it's it's not just buying it itself the actual integration and making it work.
It's a little easier to do with smaller teams, tech and talents, but if you're talking about big M&A, we, as Emily said, we look at almost all of them, but...
Speaker Change: is kind of like Warren Buffett. We're only going to swing at a few pitches where we think we can really have a creative value and that's the hard part of emanates. It's not just buying it. It's the actual integration and making it work.
Speaker Change: Your next question comes from the line of Joseph <unk> with.
Speaker Change: Yeah.
Speaker Change: Canaccord Genuity.
Speaker Change: Your line is open.
Speaker Change: Hi can you guys hear me Okay Yep.
Speaker Change: [inaudible]
Speaker Change: Great Hey, thanks for the time and to ask a question just wanted to circle back on base.
Speaker Change: And you know basically you're clearly the most capitalized player in the layer to space out there just wondering how you are looking at that kind.
Speaker Change: Can a court genuity?
Speaker Change: Your line is open.
Hi, can you guys hear me okay? Yeah.
Great, thanks for the time and to ask a question. Just want to circle back on base.
Speaker Change: Kind of strategic positioning you have there where you can flex or <unk>.
and basically you are clearly the most capitalized player in the...
Speaker Change: More than others.
You know cause.
Speaker Change: Layer 2 space out there.
Speaker Change: To kind of drive that and kind of maybe become dominant here as we look forward.
Just wondering how you are looking at that kind of strategic positioning you have there where you can slack or invest more than others to, you know.
Speaker Change: The crypto space here in the next couple of years. Thanks.
Speaker Change: Yeah well.
Speaker Change: It's interesting question.
Speaker Change: Continue to kind of drive that and kind of maybe become dominant here as we look forward into the crypto space here in the next couple of years. Thanks.
Speaker Change: So far it base has been really successful just on its merits as a really great tool that builders find easy to get work done and so there have been other layer choose in the past that.
Well, it's interesting question. So far, base has been really successful just on its merits, as a really great tool that builders find easy to get worked on. And so there have been other layer clues in the past that
Speaker Change:
I would say tried to.
Speaker Change: More aggressively sure economics and I.
Speaker Change: Even creating their own token and things like that and I don't think it really.
Speaker Change: You want people to be integrating it for the right reasons.
Speaker Change: So you know I will say base was and is built on top of the optimism stack them. That's a really a great team that we've enjoyed working with and I think they've actually done a really good job of.
I would say try to more aggressively share economics and even creating their own token and things like that. And I don't think it really, you want people to be integrating it for the right reasons.
Speaker Change: Bringing in new partners to build on top of this optimism, which are interoperable with base and I think basically end up being really like a hub for many of these different partners out there. So.
And so, you know, I will say base was and is built on top of the optimism stack. That's a really great team that we've enjoyed working with and I think they've actually done a really good job of.
Speaker Change: We're not we're not opposed to sharing economics are getting grants in certain situations to bring folks on the base and there's certainly lots of builders that have gotten small grants.
Speaker Change: Bringing in new partners to build on top of optimism which are interoperable with base and I think based on it being really like a hub for many of these different partners out there.
Speaker Change: But sometimes I feel like.
Speaker Change: The large amounts of money to go out for these deals if someone's really getting paid that much two.
We're not opposed sharing economics or getting grants in certain situations to bring folk tongue to base and there's certainly lots of builders that have gotten small grants, but sometimes I feel like...
Speaker Change: To integrate it like a question a little bit if it's the right motive for it we want them to build on top of base for the right reason.
Speaker Change: So I hopefully that gives you a sense maybe I'll just add on if I could I think one of the unique benefits of claim basis, we're bringing together our entire product suite. So we're building a great product for developers, but then we're making those developers have access to our retail platform and integrating it deeply into our products and so we are trying to connect the whole ecosystem with base and we bring a lot of unique assets.
The large amounts of money that go out for these deals, if someone's really getting paid that much to...
Speaker Change: To integrate it, like, I question a little bit if it's the right motive for, you know, we want to build on top of base for the right reason.
So I hope that gives you a sense.
Speaker Change: Maybe I'll just add on if I could.
Speaker Change: I think one of the unique benefits that claimed basis were bringing together our entire product fleet. So we're building a great product for developers, but then we're making those developers have access to our retail platform and integrating it in deeply into our products. And so we are trying to connect the whole ecosystem with base and we bring a lot of unique assets to that table when we're connecting the ecosystem that we think.
Speaker Change: To that table when we're connecting the ecosystem that we can create a flywheel for developers to build on our platform and then participate in our entire product suite.
Speaker Change: It is unique compared to many others, who are building layer two solutions.
Speaker Change: Your next question comes from the line of bone pain with U S. Tiger Securities. Your line is open.
Create the flywheel for developers to build on our platform and then participate in our entire product fleet.
which is unique compared to many others who are building layer two solutions.
Speaker Change: Hi management. Thanks for taking my question. So I also have a follow up on the retail takeaway.
Your next question comes from the line of Bob Pay with U.S. Tiger Securities, your line of soapin.
Speaker Change: Okay sure the wardroom contribution from stable corn, specifically for retail trading volume in these niches.
Speaker Change: These shifts to stable coin struck Shaw.
Speaker Change: Hi, management class, what's the question? So I also have a follow on the retail tech grade. Can share the volume contribution from stable points specifically for retail trading volume? And if this makes shift to stable points, rock show.
Speaker Change: It's just to do ongoing on basically on meaning the mix will.
Speaker Change: It will be stable going forward.
Speaker Change: Thanks, Bill so.
Speaker Change: What I want to share is like we see different mix it every quarter.
Speaker Change: When people are trading stable claims are looking for arb opportunities throughout the ecosystem. So there's no guarantee that the arb opportunities will exist every corner. So I don't think that this is a structural change to trading volume or the market, but it's what we saw this quarter.
Speaker Change: and just do ongoing or basically done, meaning the means will be stable going forward.
Speaker Change: Thanks for all. So...
What I want to share is like we see different mix of every quarter.
Speaker Change: We are not breaking out or quantifying specific volume, but what I'll say is that if you exclude stable quite impact the mix of advanced volume was slightly higher in Q3 versus Q2.
When people are trading stable coins they're looking for our opportunities throughout the ecosystem, so there's no guarantee that our opportunities will exist every quarter. So I don't think that this is a structural change to trading volume or the market, but it's what we saw this quarter.
And so.
Speaker Change: We did not have any change in market share as I mentioned earlier it was relatively steady in our Fiat to crypto trading volume, which is like the core of our revenue engine and here in the U S and so backing out stable a little bit more on the advanced side, but the stable claim impact with the most material contributor to that change in rate this quarter.
We are not breaking out or quantifying specific volume, but what I'll say is that if you exclude stable-point impact, the mix of advanced volume was slightly higher in Q3 versus Q2. And so...
We did not have any change in market share as I mentioned earlier was relatively steady in our Beats, a crypto trading volume which is like the core of our revenue engine and here in the US and so backing out stables a little bit more on the advanced side but the stable coin impact with the most material contributor to that change in rate this quarter.
Speaker Change: Sarah we have time for one more question. Please.
Sarah: Thank you our final question will come from the line of Mark Mclaughlin with Bank of America. Your line is open.
Mark Mclaughlin: Hey, good afternoon. Thank you for taking my question.
Speaker Change: Sarah, we have time for one more question, please.
Mark Mclaughlin: So you guys have made meaningful progress expanding your derivatives offering both abroad and more recently domestically.
Sarah: Thank you. Our final question will come from the line of Mark McLaughlin with Bank of America. Your line is open.
Mark Mclaughlin: Hoping to get a little bit more color around what additional steps you plan to take to help increase adoption and scale given the large tam, but it's also a highly competitive market.
Hey, good afternoon. Thank you for taking my question. So you guys have made meaningful progress, expand your derivatives offering both abroad and more recently domestically.
Speaker Change: Yeah sure I can take that one.
Speaker Change: So.
Mark Mclaughlin: I was hoping to get a little bit more color around what additional steps you plan to take to help increase adoption in scale given the large tam, but it's also a highly competitive market.
Speaker Change: We did launch our derivatives platform, both internationally and here in the U S and it's been a great start, but there's definitely still a lot of work to do so.
Speaker Change: One of the next steps here is we obtained a mifid license in Europe. This is going to allow us to unlock rotors and 20 additional EU countries. That's an important step because of course you know we're doing this in the trusted compliant way, which is what we're known for it takes longer to do it that way, but it's the right way to do it. It's the way that is sustainable and it's by the way it is.
Sure I can take that one.
So in 244 we launched our Grewal's platform both internationally here in the US and it's been a great start but there's definitely still a lot of work to do.
One of the next steps here is we obtained a Mifid license in Europe. This is going to allow us to unlock roaders in 20 additional EU countries.
Speaker Change: Out of customers out there want they want a trusted counterparty that's gonna be round, and it's compliant and meeting the standards and controls that they expect.
and an important step, because of course, you know, we're doing this in the trusted compliant way, which is what we're known for. It takes longer to do it that way, but it's the right way to do it, it's the way that's sustainable. And it's, by the way, it's what a lot of customers out there want. They want a trusted counterparty that's going to be round and...
Speaker Change: So anyway, that's one of the steps around our Mifid license just operationalize that.
Speaker Change: We've also this year added a quite a few more order books and even different asset types.
Speaker Change: Other types of assets people want to trade in commodities like oil and gold we added perpetual futures on our international exchange. That's a something that is high demand for it in the U S. But there's we don't have a pass from the regulator yet to launch that in the U S.
It's compliant and meeting the standards and controls that they expect. So anyway, that's one of the steps around our Mifid license, just operationalizing that.
Sarah: Um...
Sarah: We've also just here added quite a few more order books and even different asset types, other types of assets people want to trade in commodities like oil and gold. We added perpetual futures on our international exchange. That's something that's high demand for in the US, but we don't have a path from the regulator yet to launch that in the US.
Speaker Change: We've been continuing to improve unified margin access this has been another big customer.
Speaker Change: Requests, where they're holding assets across spot and derivatives. They want to have a more unified look at how they can get leverage in margin.
Sarah: We've been continuing to improve Unified margin access. This has been another big customer request where they're holding assets across spot and derivatives. They want to have a more unified look at how they can get leverage in margin.
Just to give you one stat, so previous financial markets, which is our entity regulated entity in the United States to trade futures, we've actually on boarded over 100000 retail advanced traders now to that product.
Speaker Change: So that's been a really great crossover from our existing spot trading business, where these advanced users have onboard to our futures trading entity there.
Sarah: Um...
Let's see if you want to start.
Crime be a financial markets which is our entity regulated entity in the United States to trade futures.
We've actually onboarded over a hundred thousand retail advanced traders now to that product. So that's been a really great crossover from our existing spot trading business where these advanced users have onboarded to our futures trading entity there.
Speaker Change:
Speaker Change: Let's see.
Speaker Change:
Speaker Change: Yeah, well Theres a whole go to market strategy I should talk about too I think which is which is very interesting. So you know our referral program launched which has been driving a lot of volume where people who refer customers can actually get I think about 30% of their trading fee revenue that's been pretty successful.
Sarah: Um...
Well, there's a whole good market strategy I should talk about too, I think, which is very interesting.
Speaker Change: We've been going to just meet a lot of the <unk>.
Speaker Change: Vince trading and derivatives, it's really a whale driven market there's.
Sarah: You know, our referral program launched, which has been driving a lot of volume, where people who refer customers can actually get, I think about 30% of their trading fee revenue, that's been pretty successful. We've been going to just meet a lot of the advanced trading in Drodes. It's really a whale driven market.
Speaker Change: It's a power law distribution of volume and we've been going out to meet with the the large traders out there at different events around the world and really just getting their feedback and understanding what they want to see in our product before they can move over so I think this is going to be there's a lot of work to do still but I think in 2025, it'll be a really pivotal year, where.
It's a power law distribution of volume and we've been going out to meet with the large traders out there at different events around the world and really just getting their feedback and understanding what they want to see in our product before they can move over.
Speaker Change: There will really hit our stride. So yeah. Those are some of the things we've been working on recently and I really are our long term competitive advantage here is that.
I think there's a lot of work to do still, but I think in 2025 it'll be a really pivotal year where we'll really hit our stride. So yeah, those are some of the things we've been working on recently and I really are long from competitive advantage here is that
Speaker Change: We are doing this in a trusted compliance regulated way and.
Speaker Change: We're a U S entity, a public company, we're the trusted counterparty.
Speaker Change: Custody point of view that they really want to trade with they all tell us they really want us to succeed and as we get a couple more of these features online.
We are doing this in a trusted, compliant, regulated way and we're a U.S. entity, public company, we're the trusted counterparty from a custody point of view that they really want to trade with. They all tell us they really want us to succeed and as we get a couple more of these features online.
Speaker Change: The I think we'll see more and more derivatives volume going through our platform.
Speaker Change: Alright, well that does it for today, thanks, everyone for joining us and we look forward to speaking to you again next quarter.
Speaker Change: This concludes today's call you may now disconnect your lines.
and I think we'll see more and more derivatives volume going through our platform.
Alright, well that does it for today. Thanks everyone for joining us and we look forward to speaking to you again next quarter.
This concludes today's call. You may now disconnect your lines.
Sarah: [inaudible]
Sarah: [inaudible]
Sarah: [inaudible]
Raise your hand if you have recently had to introduce yourself or make small talk.
Yes, that is what today is all about. How to speak better in the moment.
My hunch is for many of you introducing yourselves and making small talk at some points was challenging. It's awkward, it can be uncomfortable.
So today I want to talk about how we can think faster in talk smarter in those moments where we're put on the spot to think.
Sarah: and Act Quickly.
We all know that speaking in planned situations.
Presentations, pitches, meetings with agendas can be hard, but it can be much harder to speak in the moment.
And if you think about it, most of our communication happens in the moment.
It's things like making a toast and answering questions, giving feedback, introducing yourself, answering questions. These are the things that can be very challenging for us.
So today I'd like to walk you through a methodology that I developed in service of needs of our students here at Stanford.
Many years ago, the deans came to me and said we have a problem. The problem is this. Our very bright Stanford MBA students are struggling to answer those cold-call questions from their professors. You remember back here when people would say, what do you think and you had to respond?
So I did a deep dive
Into Research in Psychology, Anthropology, Sociology, Improvisation, Neuroscience, and came up with a methodology now that all Stanford MBAs within the first three weeks of their time here have an opportunity to take and it turns out it helps them feel more comfortable and confident, not just answering questions.
But in standing up in class and giving a position, and many other situations that they find themselves in when they leave here, interviewing for jobs, giving feedback to employees, etc.
So today is going to be not just listening to me, but it's going to be participative.
And we're going to start, it's not hard some of you looking each other going, oh no, what's you going to make me do?
Pretty simple, I'd like you all to read this sentence.
And what's more important to me than the meaning of the sentence is I'd like for you to count the number of Fs, the letter F, how many Fs do you find? I'll give you three or four seconds to do it.
Keep the answer quiet to yourself. How many F's?
I wish my MBA students were quiet and thoughtful as you are right now.
Alright, sis sis sis sis sis sis sis sis sis
Sarah: Alright, raise your hand if you found three F's, how many found three? Excellent, very good, in-base find four. Ah, if I find five.
Sarah: How about six? There are six F's.
What Two Letter Word Ending in F Did Many Of Us Mess?
So why do I do this activity? I have done this in every workshop, every keynote I ever deliver. Why?
Sarah: Because this is an exact analogy of what we're going to be doing here today.
Many of us miss little things that make a big difference in our communication.
Now the other reason I do this is 14 years ago and I saw this I found three I felt really stupid and I like to pass that thing down.
So we're going to identify little things that make a big difference to make us more effective in our spontaneous speaking.
So I want to introduce you to a six-step methodology that we can use to become better at speaking in the moment. And the six steps divide into two categories, mindset and messaging.
Sarah: The first step has to do with managing anxiety, taming the anxiety beast. Most people get nervous.
Speaking in spontaneous situations. In fact, most people get nervous speaking in any high-stakes situation. We have some research that says upwards of 85% of people feel nervous in high-stakes situations. And I think the other 15% are lying.
So let me ask you this, how do you feel when you watch a nervous speaker present? Now I know a few of you probably like watching people suffer but most of us don't. How does it feel? Just shut out. How do you feel when you see a nervous speaker present?
Okay, so uncomfortable and pathetic and I heard some people say I actually feel anxious myself. I call that second-hand anxiety. So if for no other reason we should learn to manage our anxiety, so our audience can focus on us and not be distracted.
So when it comes to managing anxiety we have to take a two-pronged approach. We have to manage both symptoms and sources.
symptoms are the things that we physiologically experience with goes on in our body.
and sources of the things that initiate or exacerbate that anxiety.
So I'd like to hear from some of you what happens for you when you get nervous when you're put on the spot. I'll start. I blush and I perspire. What happens for some of you?
Balthgo's dry, called this plumbing reversal. It's normally dry, gets wet, and it's normally wet, gets dry. So you get sweaty palms, but dry mouth really weird, right? What else happens?
Yeah, you freeze, you can't remember what to say. What else happens? Please.
Yeah, you feel your heart pounding, right? Some of us get shaky. These are normal and natural responses to anxiety.
Your body, see speaking in the moment.
Sarah: As being under threat, and it invokes the fight-or-flight response, and these are normal and natural responses, but there are things we can do to address these.
Now allow me to share a few with you. The first and best thing you can probably do is to take a deep belly breath. The kind of breath you would take if you've ever done yoga or tai chi or chigong, a deep belly breath. And what's interesting is it's the exhale that's more important than the inhale.
So, my rule of thumb, or shall I say my rule of lung, if you want your exhale to be twice as long as you're inhale.
And if you take two or three of these deep belly breaths, you'll actually reduce the rapid heart rate, the rapid breathing that causes you to speak faster, and you'll feel calmer.
Sarah: So before you walk into a room where you think you might be asked for feedback or you know questions are coming or before you unmute on that zoom take this deep belly breath and it will help.
Sarah: Now, if you get dry mouth and you know you're going into a situation where you might have to speak in the moment, drink some warm water.
Suck on the Lawsons or choose some gum. Obviously, you don't want to do that while you're in the midst of speaking, but that will help reactivate those salivary glands.
If you're like me and you blush and you perspire, hold something cold in the palms of your hand.
Sarah: The palms of your hand are thermoregulators for your body. Just like your forehead or the back of your neck, if you've ever had a fever and you put a cold compress on your head to cool down.
Because your heart rate is going up, because your body tenses when you're stressed, you have more blood going through tighter tubes, your blood pressure goes up. And that causes you to get hotter. It's like you're exercising.
So we can reduce.
The sweating and the blushing by cooling ourselves down. In fact, before I started speaking today, I was holding a cold bottle of water to help.
So these are some of the things we can do to manage our symptoms of anxiety.
If I didn't talk about a symptom you have?
There are resources I'll share at the end of the talk that can help you find ways to manage your anxiety.
Sarah: Now there's another side too. We have to think about sources, sources of the things that initiate or exacerbate our anxiety.
Sarah: There are many, let me talk about one.
Many of us are made nervous by the goal of what we're trying to achieve when we communicate.
My students want to get a good grade.
The entrepreneurs I coach want to get funding. You might want to get a new job, or you might want to get your project supported. So what makes you nervous is the fact that you might not achieve that goal. In other words, what's making your nervous is a potential negative future outcome.
Sarah: So how do we short-circuit that? We become very present-oriented.
It, because if you're in the moment by definition, you're not worried about the future. So how do we get President Oriented?
Sarah: One way is to do something physical, walk around the building before you go in for that job interview.
Another way is to listen to a song or a playlist just like athletes do.
You can do what I do. I get pres-oriented by talking to people. Before I got up here on stage, I was talking with many of you. That helps me get pres-oriented. I can't engage in a conversation and be thinking about what might go wrong in my presentation or Q&A session.
Start at 100 in count backwards by 17's.
That'll get you, President Oriented. I know I'm in front of a crowd that's trying. The first one's easy, 83, the next one's hard.
My favorite way to get President-oriented is to say tongue twisters.
You can't say a tongue twister right and not be in the present moment.
Some of you are going, oh, oh, that's right. I'm going to ask you to say my favorite tongue twister.