Coinbase Global, Inc 10-Q for FY2021 Q3

Coinbase Global, Inc. (COIN)

10-Q 2021-11-10 For: 2021-09-30

Added on April 07, 2026

About this 10-Q

Coinbase Global, Inc filed this 10-Q on November 10, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.31B; up 316.0% from $315.36M a year earlier
Net income: $406.1M; up 399.5% from net income of $81.3M a year earlier
Diluted EPS: $1.62; up 604.3% from $0.23 a year earlier

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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 30, 2021
			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to .


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.00001 par value per share	COIN	Nasdaq Global Select Market


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐


			Page
Part I - Financial Information
Item 1. Financial Statements			4
Condensed Consolidated Balance Sheets			4
Condensed Consolidated Statements of Operations			5
Condensed Consolidated Statements of Comprehensive Income			6
Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity			7
Condensed Consolidated Statements of Cash Flows			9
Notes to Condensed Consolidated Financial Statements			11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			45
Item 3. Quantitative and Qualitative Disclosures About Market Risk			68
Item 4. Controls and Procedures			70
Part II - Other Information
Item 1. Legal Proceedings			71
Item 1A. Risk Factors			72
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			136
Item 3. Defaults Upon Senior Securities			137
Item 4. Mine Safety Disclosures			137
Item 5. Other Information			137
Item 6. Exhibits			138
Signatures			140


	September 30,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	6,352,775	$	1,061,850
Restricted cash	30,884		30,787
Customer custodial funds	8,956,966		3,763,392
USDC	92,107		48,938
Accounts and loans receivable, net of allowance	237,131		189,471
Income tax receivable	94,689		—
Prepaid expenses and other current assets	105,165		39,510
Total current assets	15,869,717		5,133,948

Crypto assets held	833,763		316,094
Lease right-of-use assets	105,583		100,845
Property and equipment, net	55,632		49,250
Goodwill	567,420		77,212
Intangible assets, net	142,183		60,825
Other non-current assets	879,973		117,240

Total assets	$	18,454,271	$	5,855,414

Liabilities, Convertible Preferred Stock, and Stockholders’ Equity
Current liabilities:
Custodial funds due to customers	$	8,807,978	$	3,849,468
Accounts payable and accrued expenses	290,471		85,111
Crypto asset borrowings	445,172		271,303
Lease liabilities, current	31,854		25,270
Other current liabilities	39,684		15,703

Total current liabilities	9,615,159		4,246,855

Lease liabilities, non-current	81,602		82,508


Long-term debt	3,382,185		—
Other non-current liabilities	14,828		—
Total liabilities	13,093,774		4,329,363

Commitments and contingencies (Note 17)

Convertible preferred stock, $0.00001 par value; 500,000 and 126,605 shares authorized at September 30, 2021 and December 31, 2020, respectively; zero and 112,878 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $0 and $578,750 at September 30, 2021 and December 31, 2020, respectively	—		562,467
Stockholders’ equity:
Class A common stock, $0.00001 par value; 10,000,000 and 267,640 shares authorized at September 30, 2021 and December 31, 2020, respectively; 153,701 and 12,204 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	1		—
Class B common stock, $0.00001 par value; 500,000 and 208,414 shares authorized at September 30, 2021 and December 31, 2020; 59,961 and 60,904 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	1		—

Additional paid-in capital	1,850,711		231,024
Accumulated other comprehensive (loss) income	(432)		6,256
Retained earnings	3,510,216		726,304
Total stockholders’ equity	5,360,497		963,584
Total liabilities, convertible preferred stock, and stockholders’ equity	$	18,454,271	$	5,855,414


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020








Revenue:
Net revenue	$	1,234,736	$	286,663	$	4,864,727	$	644,076
Other revenue	77,172		28,694		476,254		48,293
Total revenue	1,311,908		315,357		5,340,981		692,369
Operating expenses:
Transaction expense	197,251		36,766		766,743		85,568
Technology and development	356,264		73,319		831,950		181,234
Sales and marketing	105,395		11,977		419,117		33,281
General and administrative	242,642		71,433		612,068		182,379

Other operating expense, net	118,548		20,357		556,857		27,541


Total operating expenses	1,020,100		213,852		3,186,735		510,003
Operating income	291,808		101,505		2,154,246		182,366

Other expense (income), net	20,948		(1,211)		17,839		5,935

Income before provision for income taxes	270,860		102,716		2,136,407		176,431

(Benefit from) provision for income taxes	(135,240)		21,417		(647,505)		30,899

Net income	$	406,100	$	81,299	$	2,783,912	$	145,532

Net income attributable to common stockholders:
Basic	$	402,343	$	17,437	$	2,241,790	$	41,012
Diluted	$	405,340	$	20,505	$	2,338,407	$	48,046

Net income per share attributable to common stockholders:
Basic	$	1.92	$	0.25	$	13.58	$	0.61
Diluted	$	1.62	$	0.23	$	11.19	$	0.55

Weighted-average shares of common stock used to compute net income per share attributable to common stockholders:
Basic	209,604		68,981		165,045		67,653
Diluted	250,536		90,708		209,052		88,140


	Three Months Ended September 30, 2021
	Convertible Preferred Stock						Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
				Common Stock
	Shares	Amount		Shares	Amount								Total
Balance at July 1, 2021	—	$	—	209,876	$	2	$	1,516,533	$	2,774	$	3,104,116	$	4,623,425
Issuance of common stock upon exercise of stock options, net of repurchases	—	—		2,964	—		43,221		—		—		43,221
Stock-based compensation expense	—	—		—	—		264,941		—		—		264,941
Issuance of equity instruments as consideration for business combinations	—	—		211	—		77,482		—		—		77,482


Issuance of common stock upon settlement of RSUs and restricted common stock, net of shares withheld	—	—		611	—		(51,466)		—		—		(51,466)

Comprehensive loss	—	—		—	—		—		(3,206)		—		(3,206)
Net income	—	—		—	—		—		—		406,100		406,100

Balance at September 30, 2021	—	$	—	213,662	$	2	$	1,850,711	$	(432)	$	3,510,216	$	5,360,497


	Three Months Ended September 30, 2020
	Convertible Preferred Stock						Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings
				Common Stock
	Shares	Amount		Shares	Amount								Total
Balance at July 1, 2020	114,959	$	564,697	67,102	$	—	$	115,141	$	(245)	$	468,220	$	583,116
Issuance of common stock upon exercise of stock options, net of repurchases	—	—		345	—		2,388		—		—		2,388
Stock-based compensation expense	—	—		—	—		16,180		—		—		16,180
Conversion of preferred stock	(2,081)	(2,230)		2,081	—		2,230		—		—		2,230
Issuance of equity instruments as consideration in business combination	—	—		1,304	—		31,349		—		—		31,349
Issuance of common stock to settle contingent consideration	—	—		691	—		16,205		—		—		16,205
Comprehensive income	—	—		—	—		—		2,844		—		2,844
Net income	—	—		—	—		—		—		81,299		81,299

Balance at September 30, 2020	112,878	$	562,467	71,523	$	—	$	183,493	$	2,599	$	549,519	$	735,611


	Nine Months Ended September 30, 2021
	Convertible Preferred Stock						Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings
				Common Stock
	Shares	Amount		Shares	Amount								Total
Balance at January 1, 2021	112,878	$	562,467	73,108	$	—	$	231,024	$	6,256	$	726,304	$	963,584
Issuance of common stock upon exercise of stock options, net of repurchases	—	—		22,257	—		181,025		—		—		181,025
Stock-based compensation expense	—	—		—	—		559,652		—		—		559,652
Issuance of equity instruments as consideration for business combinations	—	—		3,891	—		509,379		—		—		509,379
Conversion of preferred stock	(112,878)	(562,467)		112,878	2		562,465		—		—		562,467
Issuance of shares from exercise of warrants	—	—		412	—		433		—		—		433
Issuance of common stock upon settlement of RSUs and restricted common stock, net of shares withheld	—	—		1,116	—		(103,136)		—		—		(103,136)
Purchase of capped calls	—	—		—	—		(90,131)		—		—		(90,131)
Comprehensive loss	—	—		—	—		—		(6,688)		—		(6,688)
Net income	—	—		—	—		—		—		2,783,912		2,783,912

Balance at September 30, 2021	—	$	—	213,662	$	2	$	1,850,711	$	(432)	$	3,510,216	$	5,360,497


	Nine Months Ended September 30, 2020
	Convertible Preferred Stock						Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings
				Common Stock
	Shares	Amount		Shares	Amount								Total
Balance at January 1, 2020	114,959	$	564,697	66,994	$	—	$	93,820	$	(721)	$	403,987	$	497,086
Issuance of common stock upon exercise of stock options, net of repurchases	—	—		453	—		1,323		—		—		1,323
Stock-based compensation expense	—	—		—	—		38,566		—		—		38,566
Conversion of preferred stock	(2,081)	(2,230)		2,081	—		2,230		—		—		2,230
Issuance of equity instruments as consideration in business combination	—	—		1,304	—		31,349		—		—		31,349
Issuance of common stock to settle contingent consideration	—	—		691	—		16,205		—		—		16,205
Comprehensive income	—	—		—	—		—		3,320		—		3,320
Net income	—	—		—	—		—		—		145,532		145,532

Balance at September 30, 2020	112,878	$	562,467	71,523	$	—	$	183,493	$	2,599	$	549,519	$	735,611


Common stock of the Company	$	389,314
Previously held interest on acquisition date	10,863
Cash	28,726
Replacement of Bison Trails options	28,365
Total purchase consideration	$	457,268


Cash and cash equivalents	$	12,201
Crypto assets held	5,177
Accounts and loans receivable, net of allowance	2,323
Prepaid expenses and other current assets	122

Intangible assets	39,100
Goodwill	404,167
Other non-current assets	1,221
Lease right-of-use assets	808
Total assets	465,119

Accounts payable and accrued expenses	2,446
Lease liabilities	808
Other liabilities	4,597
Total liabilities	7,851
Net assets acquired	$	457,268


	Fair Value		Useful Life at Acquisition (in years)
Developed technology	$	36,000	3
In-process research and development ("IPR&D")	1,200		N/A
User base	1,900		3


Common stock of the Company - issued	$	51,760
Common stock of the Company - to be issued	39,940
Cash	27,795
Cash payable	412
Contingent consideration arrangement	15,752
Aggregate total purchase consideration	$	135,659


Cash and cash equivalents	$	4,915
Accounts receivable, net of allowance	57
Prepaid expenses and other current assets	209
Intangible assets	46,100
Goodwill	86,041
Total assets	137,322

Accounts payable and accrued expenses	281
Other liabilities	1,382
Total liabilities	1,663
Net assets acquired	$	135,659


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities
Net income	$	2,783,912	$	145,532
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	40,633		22,385
Impairment expense	234,023		8,352
Stock-based compensation expense	558,157		37,800
Provision for transaction losses and doubtful accounts	14,816		(2,388)


Loss on disposal of property and equipment	361		—
Deferred income taxes	(572,044)		7,637
Unrealized loss on foreign exchange	16,084		6,207
Non-cash lease expense	27,151		18,366
(Gain) loss on investments	(14,209)		397
Change in fair value of contingent consideration	(924)		3,281
Realized gain on crypto assets	(125,822)		(15,609)
Crypto assets received as revenue	(661,254)		(46,892)
Crypto asset payments for expenses	465,157		20,421
Fair value gain on derivatives	(23,823)		(10,995)
Amortization of debt discount and issuance costs	2,420		—
Changes in operating assets and liabilities:
USDC	(56,710)		36,696
Accounts and loans receivable	37,244		(8,859)

Income taxes, net	(95,756)		43,805

Other assets	(26,331)		(28,190)
Custodial funds due to customers	4,938,326		616,517
Accounts payable and accrued expenses	194,290		12,192

Lease liabilities	(18,899)		(18,286)
Other liabilities	19,909		(2,542)



Net cash provided by operating activities	7,736,711		845,827
Cash flows from investing activities


	September 30,		December 31,
	2021		2020
In-transit customer receivables	$	58,355	$	90,571
Post-trade credit receivables	2,205		66,326
Custodial fee revenue receivable	19,757		4,636
Loans receivable(1)	109,317		6,790
Interest and other receivables	64,474		23,309
Allowance for doubtful accounts(2)	(16,977)		(2,161)
Total accounts and loans receivable, net of allowance	$	237,131	$	189,471


As of September 30, 2021	Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net		Weighted Average Remaining Useful Life (in years)
Amortizing intangible assets
Acquired developed technology	$	88,708	$	(26,087)	$	62,621	2.24
User base	2,997		(735)		2,262		2.00
Customer relationships	76,391		(24,247)		52,144		4.04

Non-compete agreement	2,402		(1,041)		1,361		2.84
Assembled workforce	24,000		(3,255)		20,745		1.73
In-process research and development(1)	2,800		—		2,800		N/A
Indefinite-lived intangible assets
Domain name	250		—		250		N/A

Crypto assets held	833,763		—		833,763		N/A
Total	$	1,031,311	$	(55,365)	$	975,946


As of December 31, 2020	Gross Carrying Amount		Accumulated Amortization		Intangible Assets, Net		Weighted Average Remaining Useful Life (in years)
Amortizing intangible assets
Acquired developed technology	$	20,708	$	(13,024)	$	7,684	2.09
Customer relationships	66,591		(15,771)		50,820		4.58
Trade name	30		(30)		—		0
Non-compete agreement	2,402		(681)		1,721		3.58

Indefinite-lived intangible assets
Domain name	250		—		250		N/A
Licenses	350		—		350		N/A
Crypto assets held	316,094		—		316,094		N/A
Total	$	406,425	$	(29,506)	$	376,919


Common stock of the Company	$	30,589
Replacement of Tagomi options and warrants	760
Cash	1,906
Settlement of pre-existing receivable	8,537

Total purchase consideration	$	41,792


Cash and cash equivalents	$	13,777
Customer custodial funds	19,837
Crypto assets held	5,687
Accounts and loans receivable, net of allowance	5,795
Prepaid expenses and other current assets	633
Intangible assets	7,350
Goodwill	22,516
Other non-current assets	1,611

Total assets	77,206

Custodial funds due to customers	20,787
Accounts payable and accrued expenses	5,953
Crypto borrowings	8,674

Total liabilities	35,414
Net assets acquired	$	41,792


	Nine Months Ended September 30, 2021		Year Ended December 31, 2020


Balance, beginning of period	$	77,212	$	54,696
Additions due to business combinations	490,208		22,516

Balance, end of period	$	567,420	$	77,212


2021 (for the remainder of)	$	14,474
2022	56,799
2023	41,437
2024	14,591
2025	9,694
Thereafter	2,138
Total expected future amortization expense	$	139,133


	Gross derivative assets						Gross derivative liabilities
September 30, 2021	Not designated as hedges		Designated as hedges		Total derivative assets		Not designated as hedges		Designated as hedges		Total derivative liabilities
Crypto asset borrowings with embedded derivatives	$	—	$	221,974	$	221,974	$	—	$	243,508	$	243,508
Total fair value of derivative assets and liabilities	$	—	$	221,974	$	221,974	$	—	$	243,508	$	243,508


	Gross derivative assets						Gross derivative liabilities
December 31, 2020	Not designated as hedges		Designated as hedges		Total derivative assets		Not designated as hedges		Designated as hedges		Total derivative liabilities
Crypto asset borrowings with embedded derivatives	$	—	$	—	$	—	$	12,696	$	114,395	$	127,091
Warrant to purchase crypto assets	2,575		—		2,575		—		—		—
Total fair value of derivative assets and liabilities	$	2,575	$	—	$	2,575	$	12,696	$	114,395	$	127,091


	(Losses) gains recorded in income
	Three months ended September 30, 2021						Three months ended September 30, 2020
	Derivatives		Hedged items		Income statement impact		Derivatives		Hedged items		Income statement impact
Crypto asset borrowings with embedded derivatives	$	(75,999)	$	75,143	$	(856)	$	369	$	(369)	$	—


	Gains (losses) recorded in income
	Nine months ended September 30, 2021						Nine months ended September 30, 2020
	Derivatives		Hedged items		Income statement impact		Derivatives		Hedged items		Income statement impact
Crypto asset borrowings with embedded derivatives	$	105,558	$	(93,973)	$	11,585	$	369	$	(369)	$	—


			Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged items
September 30, 2021	Carrying amount of the hedged items		Active hedging relationships		Discontinued hedging relationships		Total
Crypto assets held	$	439,637	$	18,520	$	—	$	18,520


	September 30, 2021								December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents(1)	$	4,648,637	$	—	$	—	$	4,648,637	$	212,818	$	—	$	—	$	212,818
Customer custodial funds(2)	2,265,874		—		—		2,265,874		1,171,274		—		—		1,171,274
Crypto assets held(3)	—		439,637		—		439,637		—		247,735		—		247,735
Derivative assets(4)(5)	—		221,974		—		221,974		—		—		2,575		2,575

Total assets	$	6,914,511	$	661,611	$	—	$	7,576,122	$	1,384,092	$	247,735	$	2,575	$	1,634,402

Liabilities
Derivative liabilities(5)	$	—	$	243,508	$	—	$	243,508	$	—	$	127,091	$	—	$	127,091
Contingent consideration arrangement	—		—		14,828		14,828		—		—		—		—
Total liabilities	$	—	$	243,508	$	14,828	$	258,336	$	—	$	127,091	$	—	$	127,091


Balance as of January 1, 2021	$	2,575
Change in fair value	14,757
Exercise of warrant	(17,332)
Balance as of September 30, 2021	$	—


	Three Months Ended September 30, 2021	Nine Month Ended September 30, 2021
Discount rate	0.01% - 0.15%	0.01% - 0.15%
Historical volatility of comparable crypto assets	105% - 175%	105% - 175%


Balance as of January 1, 2021	$	—
Fair value recorded in connection with business combination	15,752
Change in fair value	(924)
Balance as of September 30, 2021	$	14,828


	As of December 31, 2020
	Shares Authorized	Shares Issued and Outstanding	Original Issue Price per Share		Liquidation Preference		Carrying Value

FF Preferred	5,739	5,739	$	—	$	—	$	11
Series A	30,929	27,349	0.19721		5,394		4,946
Series B	25,416	21,831	1.00676		21,978		19,228
Series C	32,542	31,656	2.76488		87,525		83,146
Series D	17,471	17,471	8.25390		144,205		135,738
Series E	14,508	8,832	36.19220		319,648		319,398
	126,605	112,878			$	578,750	$	562,467


	Series FF	Series A	Series B	Series C	Series D	Series E
Balance at January 1, 2021	5,739	27,349	21,831	31,656	17,471	8,832
Conversion to Class A common stock	—	(117)	—	(36)	(43)	(8,832)
Conversion to Class B common stock	(5,739)	(27,232)	(21,831)	(31,620)	(17,428)	—
Balance at September 30, 2021	—	—	—	—	—	—


	Options Outstanding	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance at January 1, 2021	63,256	$	14.84	8.17	$	2,527,396
Assumed options from acquisition	470	3.45
Exercised	(22,272)	8.41
Forfeited and cancelled	(1,308)	19.54

Balance at September 30, 2021	40,146	18.13		8.01	8,404,654
Vested and exercisable at September 30, 2021	16,228	13.91		7.24	3,465,888
Vested and expected to vest at September 30, 2021	34,012	17.17		7.86	7,153,199


	Number of shares	Weighted- Average Grant Date Fair Value Per Share
Balance at January 1, 2021	3,766	$	54.80
Granted	6,026	229.53
Vested	(1,291)	220.63
Forfeited and cancelled	(242)	202.03
Balance at September 30, 2021	8,259	152.05


	Three Months Ended September 30,				% Change		Nine Months Ended September 30,				% Change
	2021		2020				2021		2020

Verified Users (in millions)	73		39		87	%	73		39		87	%
MTUs (in millions)	7.4		2.1		252	%	7.4		1.6		363	%
Assets on Platform (in billions)	$	255	$	36	608	%	$	255	$	36	608	%
Trading Volume (in billions)	$	327	$	45	627	%	$	1,124	$	104	981	%
Net income (in millions)	$	406	$	81	401	%	$	2,784	$	146	1,807	%
Adjusted EBITDA(1) (in millions)	$	618	$	123	402	%	$	2,885	$	240	1,102	%


	As of September 30,
	2021		2020
Assets on Platform:
Bitcoin	42	%	57	%
Ethereum	22	%	15	%
Other crypto assets	33	%	23	%
Fiat	3	%	5	%
Total	100	%	100	%


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share
July 1 – July 31, 2021	264	$	22.61
August 1 – August 31, 2021	453	18.13
September 1 – September 30, 2021	119	23.46
Total	836	$	20.30