Intro
This post is based on the company’s official 10-K filing and investor relations (IR) materials. It summarizes only objective facts and the logical implications that directly follow from them. Personal opinions and forecasts have been minimized. The goal is to help readers understand and interpret the materials more easily.
Table of Contents
👉 1. Business Overview
👉 2. Financial Highlights
👉 3. Valuation
👉 4. Risk
👉 5. MD&A (Management’s Discussion and Analysis)
👉 6. Summary
1. Business Overview 🌐
🚀 What Does Coinbase Actually Do?
Coinbase Global, Inc. (COIN) is one of the largest cryptocurrency platforms in the United States. The company allows individuals and institutions to buy, sell, store, and manage digital assets such as Bitcoin and Ethereum.
At its core, Coinbase operates a crypto trading platform — similar to how traditional brokerages like Charles Schwab allow investors to trade stocks. Instead of stocks and bonds, Coinbase focuses on digital assets.
- Retail Trading: Individual users buy and sell crypto through the Coinbase app or website.
- Institutional Services: Hedge funds, asset managers, and corporations use Coinbase for trading, custody, and liquidity solutions.
- Custody Services: Secure storage of digital assets for large clients.
- Blockchain Infrastructure: Tools that help developers and businesses build on blockchain networks.
💰 How Coinbase Makes Money
The majority of Coinbase’s revenue comes from transaction fees — fees charged when users buy or sell cryptocurrencies.
When trading activity is high (for example, during a crypto bull market), revenue typically increases. When crypto prices fall and trading slows, revenue often declines.
In recent years, Coinbase has also expanded into:
- Subscription & Services Revenue: Recurring income from custody, staking, and blockchain services.
- Interest Income: Revenue generated from customer balances and cash holdings.
This shift toward subscription-based income helps reduce reliance on volatile trading activity.
🏦 Regulatory Environment
Coinbase operates in a heavily regulated environment. As a U.S.-based company, it must comply with financial regulations, anti-money laundering (AML) laws, and securities rules.
Regulatory risk means changes in government policy or enforcement could significantly affect the company’s business model. This is especially important in the crypto industry, where legal frameworks are still evolving.
📊 Competitive Position
Coinbase competes with global crypto exchanges such as Binance and Kraken, as well as newer decentralized platforms.
However, Coinbase differentiates itself through:
- Strong U.S. regulatory positioning
- Public company transparency (files 10-K and 10-Q reports)
- Institutional-grade custody infrastructure
Being a publicly traded company adds credibility but also increases scrutiny.
🧠 Why This Business Model Matters for Investors
Coinbase is highly sensitive to:
- Crypto price cycles
- Trading volume fluctuations
- Regulatory developments
- Institutional adoption of digital assets
This means Coinbase is not just a technology company — it is deeply connected to the broader cryptocurrency ecosystem.
Plain English 📝
Coinbase is basically a digital asset marketplace. When people trade crypto frequently, Coinbase earns more fees. When trading slows down, revenue drops. The company is trying to become more stable by adding subscription and infrastructure services, but its financial performance still depends heavily on crypto market activity.
2. Financial Highlights 📊
Income Statement Summary 💵
| FY 2023 | FY 2024 | FY 2025 | |
|---|---|---|---|
| Revenue | 3,108.4 | 6,564.0 | 7,181.3 |
| Cost of Goods Sold | — | — | — |
| Gross Profit | — | — | — |
| SG&A | 1,406.6 | 1,954.7 | 2,678.2 |
| Operating Income | (161.7) | 2,307.2 | 1,435.4 |
| Non-Operating Income/Expense | — | — | — |
| Interest Income/Expense | (82.8) | (80.6) | (85.4) |
| Income Before Tax | (76.8) | 2,942.6 | 1,522.1 |
| Income Tax | (171.7) | 363.6 | 261.7 |
| Net Income | 94.9 | 2,579.1 | 1,260.3 |
| EPS | 0.4 | 9.5 | 4.5 |
Plain English: Coinbase’s revenue rose from $3,108.4m (FY2023) to $7,181.3m (FY2025). Net income stayed positive in all three years shown here, but operating income swung sharply across the cycle (a loss in FY2023, very strong profit in FY2024, and still positive in FY2025). EPS (earnings per share, or profit per share) also followed that pattern.
Key Financial Ratios 🧮
| Ratio | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| ROE (%) | 1.6 | 31.2 | 10.1 |
| ROA (%) | 0.2 | 13.8 | 4.8 |
| ROTC (%) | (1.7) | 15.6 | 6.4 |
| ROIC (%) | 4.8 | 32.3 | 10.6 |
| Gross Margin (%) | — | — | — |
| Operating Margin (%) | (5.2) | 35.1 | 20.0 |
| Pretax Margin (%) | (2.5) | 44.8 | 21.2 |
| Net Margin (%) | 3.1 | 39.3 | 17.6 |
| Debt-to-Equity Ratio (D/E) (%) | 48.4 | 44.1 | 51.8 |
| Net Debt / EBITDA (x) | 95.2 | (1.6) | (2.2) |
| Interest Coverage Ratio (x) | (2.0) | 28.6 | 16.8 |
| Current Ratio (%) | 207.0 | 228.1 | 234.3 |
| Quick Ratio (%) | 96.8 | 110.9 | 136.8 |
| Fixed Asset to Long-term Capital Ratio (%) | 2.1 | 1.4 | 1.3 |
Plain English: A few beginner-friendly signals stand out. Operating Margin (operating profit as a % of revenue) improved sharply in FY2024 and stayed positive in FY2025. Interest Coverage shows how easily operating profit can pay interest; it was strong in FY2024–FY2025. Net Debt / EBITDA was negative in FY2024–FY2025, meaning the company held more cash than total debt.
Balance Sheet Summary Template 🏦
| FY 2023 | FY 2024 | FY 2025 | |
|---|---|---|---|
| Assets | |||
| Cash & Equivalents | 5,139.4 | 8,543.9 | 11,285.5 |
| Accounts Receivable | 168.3 | 265.3 | 307.1 |
| Inventory | — | — | — |
| Current Assets | 11,356.8 | 18,112.7 | 20,388.4 |
| Property, Plant & Equipment | 192.6 | 200.1 | 264.6 |
| Intangible Assets | 1,226.1 | 1,186.5 | 5,566.8 |
| Non-current Assets | 3,397.1 | 4,429.3 | 9,283.4 |
| Total Assets | 14,753.9 | 22,542.0 | 29,671.8 |
| Liabilities | |||
| Short-term Debt | 63.0 | 300.1 | 1,721.7 |
| Accounts Payable | 39.3 | 63.3 | 117.6 |
| Current Liabilities | 5,485.1 | 7,941.3 | 8,701.3 |
| Long-term Debt | 2,980.0 | 4,234.1 | 5,937.0 |
| Non-current Liabilities | 2,987.1 | 4,323.8 | 6,177.5 |
| Total Liabilities | 8,472.3 | 12,265.1 | 14,878.8 |
| Equity | |||
| Common Equity | 6,281.6 | 10,276.8 | 14,793.1 |
| Total Liabilities + Equity | 14,753.9 | 22,542.0 | 29,671.8 |
Plain English: Coinbase reported $11,285.5m in cash and cash equivalents at FY2025 year-end. Total assets grew to $29,671.8m, and common equity increased to $14,793.1m. Beginners should note that crypto-related companies often carry unique balance sheet items tied to customer activity and collateral, so the mix of assets and liabilities can change meaningfully across market cycles.
Cash Flow Statement Summary Template 💧
| FY 2023 | FY 2024 | FY 2025 | |
|---|---|---|---|
| Cash Flow from Operating Activities | 673.4 | 3,103.9 | 2,426.4 |
| Cash Flow from Investing Activities | (206.2) | (201.0) | (2,049.6) |
| Cash Flow from Financing Activities | (838.2) | 2,903.1 | 740.3 |
| Net Change in Cash | (371.0) | 5,806.0 | 1,117.1 |
| Beginning Cash Balance | 10,288.0 | 9,925.8 | 15,683.5 |
| Ending Cash Balance | 9,925.8 | 15,683.5 | 16,893.4 |
Plain English: Operating cash flow stayed positive across the period shown, with particularly strong generation in FY2024. Investing cash flow was notably negative in FY2025, which typically means the company deployed cash into investments, loans, or acquisitions. The ending cash balance rose to $16,893.4m in FY2025 (including restricted cash and equivalents as presented in the cash flow statement).
Beginner Takeaways ✅
- Cycle sensitivity is real: Coinbase’s profitability can swing with crypto market activity, and FY2023 vs FY2024 shows how dramatic that can be.
- Margins stayed positive in FY2025: Operating and net margins remained solid in FY2025 even after FY2024’s peak.
- Balance sheet strengthened: Cash and equity increased by FY2025 year-end, supporting financial flexibility.
- Cash flow matters more than headlines: Positive operating cash flow suggests the business generated cash from core operations, while FY2025 investing outflows indicate major deployment of that cash.
3. Valuation 🔎
Here are the valuation ratios. These numbers don’t tell you by themselves if the stock is cheap or expensive. Investors typically compare them with peers, the broader market, or with their own view of intrinsic value (DCF). It’s up to each investor to judge whether these multiples signal undervaluation or overvaluation.
Valuation Summary 📌
| Metric | Company |
|---|---|
| P/E | 31.7 |
| Forward P/E | 22.8 |
| P/B | 2.6 |
| EV/EBITDA | 21.2 |
| P/S | 5.3 |
| Dividend Yield (%) | — |
| Free Cash Flow Yield (%) | 6.1 |
💡 Plain English Recap
- P/E (Price-to-Earnings) shows how much investors are paying for each $1 of profit. A higher P/E often implies higher growth expectations (or higher uncertainty about future earnings stability).
- Forward P/E uses expected future earnings instead of past earnings. It can look lower than P/E if analysts expect earnings to grow.
- P/B (Price-to-Book) compares the stock price to the company’s net assets (equity). For asset-light companies, P/B can be less informative than for banks or insurers, but it still provides a balance-sheet anchor.
- EV/EBITDA compares the firm’s total enterprise value (equity plus debt minus cash) to operating profit plus non-cash depreciation and amortization. This is often used to compare companies with different capital structures.
- P/S (Price-to-Sales) compares market value to revenue. It is commonly used when earnings are volatile, but it should be interpreted alongside margins and business cyclicality.
Forward P/E is shown as a consensus estimate (average from major financial data providers) for reference.
Date prepared: 2026-02-12
4. Risks ⚠️
Editorial Note: In order to enhance readability, we have omitted broad, market-wide risks that generally affect all companies. The discussion below focuses only on risks that are specific to Coinbase and the crypto asset industry, based strictly on the company’s Form 10-K disclosures.
1️⃣ Regulatory and Legal Uncertainty in Crypto Markets
Regulatory investigations, enforcement actions, and litigation represent a significant risk to the company.
- The company is subject to ongoing and potential future investigations by U.S. federal and state regulators.
- State securities regulators have alleged violations related to staking services (staking = earning rewards by locking crypto assets to support blockchain networks).
- The company is involved in securities-related litigation, including class action lawsuits alleging violations of U.S. securities laws.
- Additional subpoenas and regulatory inquiries have been received regarding asset listings, staking programs, stablecoins, and yield-generating products.
If regulatory bodies determine that certain crypto assets or services violate securities laws, the company may face fines, operational restrictions, or changes to its product offerings.
Tax regulation is evolving. U.S. and international tax rules related to crypto assets (including income tax, information reporting, and digital services tax) are still developing. New legislation or interpretations could increase tax liabilities or compliance costs.
2️⃣ Custody and Security Obligations
The company is responsible for safeguarding customer crypto assets and stablecoins held on its platform.
- As of December 31, 2025, the company held approximately $376.1 billion of customer crypto assets and stablecoins.
- These assets are not recorded on the company’s balance sheet, but the company has a corresponding obligation to safeguard them.
- If the company fails to secure customer assets from theft or loss, it could be liable to users.
The company states that the risk of loss is remote and that no losses have been incurred to date. However, cybersecurity breaches, hacking incidents, or operational failures could materially impact the company’s financial condition and reputation.
3️⃣ Crypto Asset Market Dependence
The company’s ability to generate revenue and cash flow depends heavily on:
- Market acceptance of crypto assets and blockchain technology.
- Customer activity levels and trading volumes.
- Growth in adoption of staking, lending, and stablecoin-related services.
Because the business model is closely tied to the broader crypto ecosystem, prolonged declines in crypto asset prices, reduced market participation, or negative industry sentiment could materially affect results of operations.
4️⃣ Liquidity and Capital Structure Risks
The company disclosed that if its cash flows (cash generated from operations) become insufficient to fund debt and other obligations, it may need to:
- Reduce or delay capital expenditures (spending on long-term investments).
- Limit working capital (funds used for day-to-day operations).
- Sell assets or operations.
- Refinance or restructure debt.
The company cannot assure that such alternatives would be available on commercially reasonable terms. If implemented, these measures could adversely affect business operations and financial condition.
5️⃣ Accounting and Stablecoin Classification Changes
The company reclassified USDC (a U.S. dollar-backed stablecoin) to cash and cash equivalents, applying the change retrospectively.
- This accounting change did not affect total assets, liabilities, equity, net income, or earnings per share.
- However, changes in accounting standards (such as new Financial Accounting Standards Board updates) may impact presentation, expense disclosure, or software capitalization going forward.
Accounting for crypto lending, borrowing, derivatives, and collateral arrangements involves complex judgments and fair value (market-based) measurements, which may introduce volatility in reported earnings.
6️⃣ Legal and Government Investigations
The company may be subject to:
- Employment-related claims.
- Consumer protection lawsuits.
- Securities law claims.
- Government enforcement actions in U.S. and foreign jurisdictions.
The outcome of these matters remains uncertain. While management does not currently believe existing matters will materially impact financial condition overall, an adverse resolution in a specific period could materially affect results of operations.
7️⃣ Indemnification and Contingent Exposure
The company has indemnification agreements (legal agreements to compensate others for losses) with:
- Shareholders under registration agreements.
- Officers and directors.
- Standard commercial counterparties.
The maximum potential exposure under these agreements cannot be estimated because it depends on future events and claims.
Plain English Summary
Coinbase’s biggest risks are regulatory, legal, and industry-related.
- If U.S. or international regulators restrict crypto products like staking or certain token listings, revenue could be affected.
- If customer crypto assets were compromised, the company could face financial liability and reputational damage.
- If crypto adoption slows or trading activity declines, results could weaken.
- If legal or tax outcomes are unfavorable, financial performance could be materially impacted in certain periods.
These risks are specific to Coinbase’s role as a regulated crypto platform and are closely tied to the evolving legal and regulatory environment of the digital asset industry.
5. MD&A (Management’s Discussion and Analysis) 📊
This section summarizes management’s discussion in the Form 10-K. It focuses only on what management emphasized regarding performance, liquidity, capital allocation, and operating trends. No additional interpretation or analysis is included.
1️⃣ Business Performance and Profitability Trends
Management evaluates performance primarily using Net Income (profit after all expenses and taxes) and Operating Income (Loss) (profit from core operations before interest and taxes).
- For the year ended December 31, 2025, net income was $1.26 billion.
- Diluted earnings per share (EPS), which measures profit per share including potential dilution, was $4.45.
- Income before income taxes was $1.52 billion.
Management noted that results were influenced by transaction activity, changes in crypto asset prices, and fair value adjustments related to derivatives and investments.
Fair value (market-based pricing) changes in derivatives and investments impacted operating results. For 2025, total gains on derivatives recognized in the income statement were $317.4 million.
2️⃣ Revenue and Expense Structure
Management highlighted expense growth in several key operating areas:
- Technology and development: $1.67 billion (includes employee compensation, infrastructure, and amortization).
- Sales and marketing: $1.06 billion (includes USDC rewards and marketing programs).
- General and administrative: $1.62 billion (includes employee-related costs, professional services, and customer support).
Stock-based compensation (equity-based employee pay) totaled $839.4 million in 2025.
Management also discussed increased USDC rewards expense and marketing investments as part of product and ecosystem growth initiatives.
3️⃣ Liquidity and Capital Resources
Liquidity refers to the company’s ability to meet short-term and long-term financial obligations.
- Cash and cash equivalents as of December 31, 2025 totaled $11.3 billion.
- Total cash, cash equivalents, and restricted cash including custodial balances totaled $16.9 billion.
Management stated that existing cash, cash equivalents, and marketable investments are expected to be sufficient to meet:
- Working capital needs (day-to-day operational funding).
- Capital expenditures (long-term investments in technology and infrastructure).
- Debt obligations.
Management also acknowledged that the ability to meet future cash requirements depends on market acceptance of crypto assets and overall business growth.
4️⃣ Capital Allocation and Share Repurchases
Management discussed capital return to shareholders through share repurchases.
- In January 2026, the Board increased the authorized repurchase program from $2.0 billion to $4.0 billion.
- Subsequent to year-end, the company repurchased 5.19 million shares for $954.7 million.
- $2.3 billion remained available under the repurchase program as of February 10, 2026.
This reflects management’s approach to capital allocation while maintaining strong liquidity reserves.
5️⃣ Income Taxes and Effective Tax Rate
The effective tax rate (actual tax rate paid relative to pre-tax income) was:
- 17.20% for 2025.
- 12.36% for 2024.
Management stated that the 2025 effective rate was primarily influenced by:
- Tax benefits related to stock-based compensation.
- State income taxes and certain non-deductible expenses.
- Foreign tax impacts.
Deferred tax assets (future tax benefits) totaled $570.8 million net at year-end 2025.
6️⃣ Cash Flow and Non-Cash Activity
Management disclosed significant non-cash activity related to crypto asset lending and collateral movements.
- Crypto assets borrowed: $4.29 billion.
- Crypto asset loan receivables originated: $2.37 billion.
- Customer crypto collateral received: $3.12 billion.
These amounts reflect the scale of lending and collateral activity on the platform.
7️⃣ Internal Controls and Financial Reporting
Management concluded that:
- Disclosure controls and procedures were effective as of December 31, 2025.
- Internal control over financial reporting was effective.
- The company’s financial statements were audited by Deloitte & Touche LLP.
Management noted inherent limitations in internal controls, meaning no system can provide absolute assurance.
Plain English Summary
Management emphasized three main themes:
- The company returned to strong profitability in 2025 with over $1.26 billion in net income.
- Liquidity remains strong with more than $11 billion in cash and equivalents.
- Regulatory developments, crypto market conditions, and customer activity continue to influence financial performance.
Overall, management presented 2025 as a year of profitability, strong liquidity, and active capital allocation while operating in a highly regulated and evolving crypto environment.
6. Summary
Coinbase ended FY2025 with $1.26 billion in net income and $11.3 billion in cash and cash equivalents, showing strong profitability and liquidity compared to earlier crypto downturn periods.
Revenue growth over the past two years reflects higher crypto market activity, but results remain closely tied to trading volumes, crypto prices, and customer participation levels.
Operating margins stayed positive in 2025, even after the unusually strong 2024 cycle, indicating that the business remained profitable despite normalizing market conditions.
The company maintained significant financial flexibility, supported by a large cash position and expanded share repurchase authorization.
At the same time, regulatory investigations, evolving tax rules, and legal proceedings remain central industry-specific risks, as emphasized in the 10-K.
In plain English: Coinbase is financially stronger than during the previous crypto downturn, but its performance still depends heavily on crypto market conditions and regulatory developments.
📝 Disclaimer
This article is intended for educational purposes only. It does not constitute financial, investment, or legal advice. All investment decisions involve risks, and readers should conduct their own research or consult with a licensed financial advisor.
👉 Coinbase (COIN) FY 2025 10-K Key Highlights (Filed 2026) | Explained for Beginners