How COIN (Coinbase Global) Makes Money in 2026: A Deep-Dive With Income Statement

Welcome to the Value Sense Blog, your resource for insights on the stock market! At Value Sense, we focus on intrinsic value tools and offer stock ideas with undervalued companies. Dive into our research products and learn more about our unique approach at valuesense.io

Explore diverse stock ideas covering technology, healthcare, and commodities sectors. Our insights are crafted to help investors spot opportunities in undervalued growth stocks, enhancing potential returns. Visit us to see evaluations and in-depth market research.

Understanding how a cryptocurrency exchange like Coinbase makes money is essential for investors and anyone interested in the business of crypto trading and financial services. In this post, we break down Coinbase's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Coinbase Overview

Coinbase operates as a leading cryptocurrency exchange platform, providing trading, staking, custody, and institutional services for digital assets. Revenue comes primarily from transaction fees, interest on customer funds, and subscription services like Coinbase One and stablecoin yields. The business model leverages high-volume crypto trading activity, with additional streams from blockchain rewards and enterprise solutions.

Revenue Breakdown

• Total Revenue (Q4 2025): $1.03B (-54.6% YoY)
  • Trading and Transaction Fees: $1.03B (100% of total)
  • Growth is powered by volatile crypto market volumes, though Q4 saw a sharp YoY decline amid reduced trading activity.

Coinbase's revenue is heavily concentrated in its core trading segment, reflecting its position as a gateway for retail and institutional crypto investors. The -54.6% YoY drop highlights the cyclical nature of crypto markets, where revenue fluctuates with asset prices and user activity.

Gross Profit and Margins

• Gross Profit: $0.74B (71.9% gross margin)
  • Cost of Revenue: $0.29B (-47.8% YoY)
  • Coinbase maintains robust margins due to its scalable digital business model, low variable costs per transaction, and efficient infrastructure for high-volume processing.
• Most costs come from transaction processing, blockchain validation fees, and customer support infrastructure.

The high gross margin underscores Coinbase's asset-light model, where platform scalability allows revenue to grow faster than costs during peak market periods. Cost of revenue declined more sharply than revenue YoY, boosting relative profitability.

Operating Income and Expenses

• Operating Income: -$0.44B (negative margin due to high expenses)
• Operating Expenses: $1.19B (+73.9% YoY)
  • R&D: $0.50B (+34.9% YoY, 48.2% of revenue) — focused on blockchain innovation, new product development like Base layer-2 network, and AI-driven trading tools
  • SG&A: $0.77B (+119.3% YoY, 74.4% of revenue) — driven by expanded sales teams, regulatory compliance, international hiring, and executive compensation
  • Coinbase continues to prioritize innovation while expanding operations amid regulatory scrutiny and global market push.

Elevated operating expenses overwhelmed gross profit, resulting in an operating loss. The surge in SG&A reflects aggressive hiring and marketing to capture market share, while R&D investments aim at long-term differentiation in DeFi and Web3 services.

Net Income

• Pre-Tax Income: Not specified (inferred negative from operating loss offset by other items)
• Income Tax: Not specified
• Net Income: $0.67B (+0.0% YoY, 64.6% net margin)
• Coinbase converts a high portion of sales into profit due to non-operating income like investment gains, interest, and crypto asset revaluations.

Despite operating losses, net income remained positive and flat YoY, likely bolstered by other income streams such as unrealized gains on digital assets or venture investments. The 64.6% net margin appears exceptionally strong, highlighting the impact of one-time or non-cash items.

Most investors waste time on the wrong metrics. We've spent 10,000+ hours perfecting our value investing engine to find what actually matters.

Want to see what we'll uncover next - before everyone else does?

Find Hidden Gems First!

What Drives Coinbase's Money Machine?

• Transaction Fees: 100%+ of revenue / Core driver from spot and derivatives trading on Coinbase's exchange
• User Trading Volume: Key metric with implied high activity supporting $1.03B despite YoY decline
• R&D Investments: Heavy spending on layer-2 scaling (Base), wallet tech, and compliance tools to enable future growth
• Future growth areas: Stablecoin issuance (USDC), international expansion, and institutional custody, though not yet fully profitable amid regulatory hurdles

Coinbase's model thrives on crypto market cycles, with fees scaling directly with volume. Strategic bets on infrastructure position it for Web3 adoption.

Visualizing Coinbase's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after large investments, 64.6% of revenue drops to the bottom line.

The diagram reveals robust gross profit retention but heavy opEx drag, offset by other items for strong net results. Flows emphasize expense intensity in growth mode.

Key Takeaways

• Coinbase's money comes overwhelmingly from transaction fees
• High gross and net margins illustrate the power of Coinbase's scalable exchange platform
• Heavy investment in R&D and SG&A, balanced by efficiency in cost of revenue
• Ongoing growth is driven by crypto market recovery and product innovation

Explore More Investment Opportunities

For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:

📌 50 Undervalued Stocks (Best overall value plays for 2026)

📌 50 Undervalued Dividend Stocks (For income-focused investors)

📌 50 Undervalued Growth Stocks (High-growth potential with strong fundamentals)

🔍 Check out these stocks on the Value Sense platform for free!

FAQ About Coinbase's Income Statement

1. What is the main source of Coinbase's revenue in 2025?

Coinbase generates over 100% of its revenue from trading and transaction fees. No significant additional revenue sources are broken out in Q4 data.

2. How profitable is Coinbase in Q4 2025?

Coinbase reported net income of $0.67B in Q4 2025, with a net margin of approximately 64.6%, reflecting strong profitability driven by high gross margins and non-operating gains.

3. What are the largest expense categories for Coinbase?

The biggest expenses on Coinbase's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $0.50B in Q4 2025, as Coinbase prioritizes blockchain innovation and product development.

4. Why does the operating segment operate at a loss?

Core operations, despite generating $1.03B in revenue, posted an operating loss of over $0.44B in Q4 2025. This is because Coinbase aggressively invests in R&D and SG&A for growth, believing these will drive long-term market dominance—even if unprofitable today.

5. How does Coinbase's effective tax rate compare to previous years?

Coinbase's effective tax rate in Q4 2025 was not specified, consistent with previous years. This moderate rate is primarily due to tax benefits from share-based compensation and international structuring.