Coinbase announced that its second-quarter results fell short of market expectations. Amid a decline in the crypto market and reduced spot trading activity in the second quarter, both trading revenue and subscription service revenue missed analyst estimates, causing the company's stock price to drop by approximately 5% after the announcement.

Total revenue fell to $1.22 billion.

The company's total revenue for the second quarter was $1.22 billion, lower than the market expectation of $1.29 billion and also lower than the $1.5 billion in the same period last year.

Of this, transaction revenue was $599 million, lower than the market expectation of $628 million. Subscription and service revenue was $555 million, also lower than the expected $599 million.

Trading activity was dragged down by the market downturn.

The crypto market weakened overall in the second quarter, suppressing spot trading volume and volatility. The report noted that Bitcoin fell by approximately 14% in the second quarter, while Ethereum fell by about 25%. Market activity slowed significantly in April and May, only showing a slight improvement in June.

Against this backdrop, many companies in the industry are facing pressure on their trading businesses. Robinhood previously disclosed that its crypto trading revenue fell 38% year-on-year to $100 million.

Markets are focused on progress in non-trading revenue.

Investors are currently more focused on Coinbase's progress in reducing its reliance on transaction fees. Subscription and service revenue has become a key indicator of a company's revenue stability; this segment includes USDC interest income, staking, custody, Coinbase One membership services, and institutional services.

In addition to its existing businesses, the market is also awaiting updates from management on further developments in new businesses, including derivatives, prediction markets, and Base. Base is a key area for Coinbase to drive ecosystem expansion and is part of its search for growth sources beyond trading.

Several Wall Street firms lowered their forecasts and cut EBITDA estimates ahead of earnings releases, citing reasons including lower crypto asset prices, slower institutional trading, reduced blockchain rewards, and decreased retail transaction activity.

Additional information:Coinbase plans to hold an investor call at 5 p.m. ET, and the market will continue to focus on the company's explanation of derivatives, prediction markets, Base, and its future revenue structure.