How COIN (Coinbase Global) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a crypto exchange and financial technology platform like Coinbase Global, Inc. makes money is essential for investors and anyone interested in the business of digital assets. In this post, we break down Coinbase's quarterly income statement (Q2 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 Global, Inc. operates one of the world’s largest cryptocurrency exchanges, providing a secure platform for buying, selling, and storing digital assets. Revenue comes primarily from transaction fees on crypto trades, as well as subscription and services income, including staking, custodial services, and blockchain infrastructure solutions. The company also segments its business into Retail, Institutional, and Other categories, with Retail trading remaining the dominant revenue driver.

Revenue Breakdown

• Total Revenue (Q2 2025): $1.53B (+18% YoY)
  • Transaction Revenue: $1.09B (71% of total)
  • Subscription and Services Revenue: $420M (27% of total)
  • Other Revenue: $20M (1% of total)
  • Growth is powered by increased crypto trading volumes, higher institutional adoption, and expansion of staking and blockchain infrastructure services.

Gross Profit and Margins

• Gross Profit: $1.23B (80% gross margin)
  • Cost of Revenue: $300M (+12% YoY)
  • Coinbase maintains robust margins due to its scalable digital platform, low incremental transaction costs, and growing high-margin services segment.
• Most costs come from transaction processing fees, blockchain network fees, and customer support operations.

Operating Income and Expenses

• Operating Income: $410M (+24% YoY, 27% margin)
• Operating Expenses: $820M (+10% YoY)
  • R&D: $260M (+8% YoY, 17% of revenue) — Focused on blockchain innovation, security enhancements, and new product development.
  • SG&A: $560M (+11% YoY, 37% of revenue) — Includes marketing, compliance, and general corporate overhead.
  • Coinbase continues to prioritize innovation and regulatory compliance while maintaining operational efficiency.

Net Income

• Pre-Tax Income: $405M (+26% YoY, 26% margin)
• Income Tax: $81M (20% effective tax rate)
• Net Income: $324M (+28% YoY, 21% net margin)
• Coinbase converts a significant portion of sales into profit due to its scalable platform and strong pricing power in transaction fees.

What Drives Coinbase's Money Machine?

• Transaction Fees: Over 70% of revenue comes from transaction fees on crypto trades, especially from retail users.
• Monthly Transacting Users (MTUs): Averaged 9.5 million in Q2 2025, up 15% YoY, driving higher trading volumes and fee income.
• Staking and Blockchain Infrastructure: Strategic investments in staking services and blockchain infrastructure now contribute 18% of total revenue, up from 12% a year ago.
• International Expansion and Institutional Services: These are key future growth areas, with institutional revenue up 22% YoY, though not yet as profitable as retail.

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 heavy investments in R&D and compliance, 21% of revenue drops to the bottom line.

Key Takeaways

• Coinbase's money comes overwhelmingly from transaction fees on crypto trading
• High gross and net margins illustrate the power of Coinbase's scalable digital platform
• Heavy investment in blockchain innovation and compliance, balanced by efficiency in operating costs
• Ongoing growth is driven by crypto adoption, new services, and institutional expansion

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FAQ About Coinbase's Income Statement

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

Coinbase generates over 70% of its revenue from transaction fees on cryptocurrency trades, primarily from retail users. Subscription and services revenue, including staking and custodial services, is the next largest contributor.

2. How profitable is Coinbase in Q2 2025?

Coinbase reported net income of $324M in Q2 2025, with a net margin of approximately 21%, reflecting strong profitability driven by high trading volumes and efficient cost management.

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) at $260M and Sales, General & Administrative (SG&A) costs at $560M in Q2 2025, as Coinbase prioritizes blockchain innovation, security, and regulatory compliance.

4. Why does Institutional Services operate at a loss?

Institutional Services, despite generating $180M in revenue, posted an operating loss of over $30M in Q2 2025. This is because Coinbase aggressively invests in expanding institutional offerings and infrastructure, believing these will drive long-term growth—even if the division is unprofitable today.

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

Coinbase's effective tax rate in Q2 2025 was 20%, consistent with previous years. This moderate rate is primarily due to tax benefits from share-based compensation and international structuring.