Coinbase Global, Inc. (COIN) Earnings Call Transcript & Summary

All right. So we're going to get started now. Very excited to have Alesia from Coinbase joining us for what is the third year in a row?

Yes.

So very excited to have you again. Before I kick it off, I was going to go ahead and read a quick disclosure. So during today's discussion, Coinbase may make forward-looking statements. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in Coinbase's SEC filings. The discussion today will also include references to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are provided in the shareholder letter on the company's Investor Relations website. Non-GAAP financial measures should be considered in addition to, but not as a substitute for GAAP measures. Okay.

All right.

Alesia, thank you for being here. Obviously, it's an exciting time. Maybe I thought we'd start big picture today. There's been a lot of moving pieces in the digital asset industry recently. How are you thinking about 2025 from a strategic perspective? And are there any things that might change in terms of priorities next year relative to 2024?

All right. Well, I mean, today is a day that we have thought long and hard for to give us the opportunity to really focus on growth. And our priorities haven't changed materially. We have been a company that has tried to be consistent now through the sine curve of crypto. And this year, we set with the goal of driving revenue, driving utility and regulatory clarity. An we feel like we made a lot of progress against all 3 initiatives. And we're continuing those themes as we go into 2025, that we want to continue to drive revenue, diversification, adoption of our products. Hopefully, we can do it at a speed where we're not getting the [ onslaught ] of litigation as we go through that environment. And we want to drive legislation now. We have the most favorable pro-crypto Congress that we have had. And now the opportunity is for us to get the legislation that we've long desired enacted and driven. And we want to drive utility, probably the most important road map that we have within crypto. We want to drive products that are weekly, daily use cases. We want to drive and open up the opportunity for developers to come back into the U.S. and build the innovative products that we see, developing in other markets here in the U.S., whether that's payments, whether it's decentralized, whether that is prediction markets, those opportunities we think will now flourish in our environment, and we can hopefully build those on base on USDC, and drive that revenue diversification and growth, but also the utility cases.

Got it. So I guess it's -- and I want to come back to the product road map a little bit in a second, but maybe we'll just stick on some of the recent events in the market. It's difficult to ignore the strength in the crypto markets recently following the election. It would be great to hear maybe if you could compare and contrast this recent bull market that we've been in to some of the prior cycles that the company has seen?

We have seen cycles. Yes. So I think everyone probably reads the news, and we've hit a new all-time high for Bitcoin crossing $100,000. Overall crypto market cap has been up meaningfully. And that drives our volume, higher volatility, the headlines we've long seen when crypto was in the news that drives broader adoption. And we've seen that across the board, more retail behavior, more institutional behavior. We are definitely now leaning to the high end of the outlook that we had provided to you all in the third quarter. We may also see ourselves at the high end of sales and marketing, as we're seeing unique opportunities to put money to work to drive more adoption, more growth of customers on our platform. And what we're seeing though is broader participation. So in past cycles, they were heavily retail-driven cycles, oftentimes product-driven. So when you think about 2021, there was a big NFT boom that drove a lot of differentiated retail interest in crypto. Now we're just seeing crypto become mainstream. We saw that with the Bitcoin ETFs. We're now seeing that with the hope for regulatory clarity. We're seeing more institutional capital, more market participation from all corners. But the mix is largely similar, a big nice mix shift between retail institutions this time.

Yes, makes sense. And just to clarify on the comments on the outlook there being at the high end. So I guess, you have guidance on subscription services revenue, high end of that, you don't guide to trading, high end of sales and marketing. Any other commentary on the expenses and maybe we'll get into the reaction function on investment spending a little bit later. But...

The only thing I would comment on is the opportunity for sales and marketing, and that's a variable expense for us. One of the ways that we've been thinking about managing our expenses more recently is we're being really diligent on our fixed expenses and being prudent on how we think about deploying sticky fixed expenses. But we want our variable expenses, our sales and marketing, our customer support costs or our infrastructure costs that scale with volume to move up and down with the volume environment that we see. So those variable ones with the strong volumes that we're seeing will lean towards the highs. And we don't want to, and I hope that you would support us in this. We don't want to squander the opportunity to say if there's a great opportunity to bring customers on the platform or to give incentives to drive USCC adoption, we don't want to be like, okay, we're going to stick within that exact guidance just to be able to. We're going to meet the market as we see it.

That makes sense. Okay. And we'll come back to the investment spending. But just before we move on, I wanted to touch on the regulatory backdrop a little bit more. You could probably spend the entire session on this. We'll try to compact it to 3 minutes. But if we start broadly, how do you see the regulatory environment evolving from here? And how do you think this will shape the growth of the ecosystem, particularly in the U.S.?

Let's start with Congress. What we saw is net new members of both the Senate and Congress who are pro-crypto. So we have the most pro-crypto Congress and Senate that we've ever seen, and they are motivated to try and drive legislation through Congress. In addition, we're starting to see the new appointees coming out for key positions, whether it's the SEC. We don't have a CFTC chair yet, but Treasury. And if you note comments by each of these individuals that we've seen so far is they also are pro-crypto. And we have the White House putting out statements that they will have a pro-tech, pro-crypto agenda. And now we have David Sacks as the crypto and AI czar. So all signs point to, we are going to have an environment within D.C. that will lead to regulations being brought forth, administration that wants to foster this technology and drive America's innovation here and be a country that is going to encourage developers to build innovative tools and be a leader in this space. We may want to go into dollar dominance here and crypto maybe we'll do that later. But I do think that people see this as a unique opportunity, and it's Americas to lose, and that is what I think we will be going into that type of environment. That could not be more different than what we're coming from. And so what we think that means is more developers, more institutions. You saw that with ETFs that when ETFs were approved, that was regulatory clarity for ETFs and just that broad capital that flowed into the ETF space. When that capital came into ETFs, you saw prices go up, you saw volumes on our platform go up. So you just -- with broad growth of the industry, and we think that we'll continue to see those trends emerge with this clarity.

Got it. Makes sense. Maybe on the institutional business, specifically, I know the incidental community is one area where the regulatory uncertainty has been kind of tougher to get your arms around than maybe in the retail space. Do you see that changing? And do you think that could bring another influx of capital on the institutional side with regulatory clarity?

I do. I absolutely do. And I think it's important to think about with lack of regulatory clarity, with an SEC that was sending out Wells notices, they also kind of provide thought pressure because the SEC regulates many asset managers, many banks to say, are you sure, you really want to work with that crypto company? Is that really something that you should be doing? Even there's no rule that you can't do it. And if you don't want to get into a discussion with your regulator, if it's not that material to your business, it's not commercial to you, it's easier to sit on the sidelines. It's easier to just not have that conversation with a regulator. So when there's a playing field where you can make decisions that are right for your business and not worry about regulatory pressure or the risk of having a conversation, I do think it opens up the appetite. And again, I'll go back to the ETF example, just those small steps into regulatory clarity, you can see capital flow into the space. You can see the number of corporates that are now talking about their crypto strategy or just the number of fintechs that have now gotten into the space, whether it's in stablecoins, the number of new stablecoin partnerships that have come to market in the last 3 months or news about them coming, everybody is now leaning into their crypto road map and discussing how does that impact their business. It's very reminiscent to me of the '90s when it was like what is my Internet strategy? Like how am I going to offer my products, my bricks and mortar online. And so we're now, what is the on-chain strategy? What is my crypto strategy? And those are the conversations that I think bring more institutions, more corporates into this technology into this market.

Yes, makes sense. So maybe we can talk about the product road map and how that might change under the new administration. I imagine that there's some activities that have actually been actively curtailed over the last 4 years and then maybe there's other products that you've held off on releasing because of the regulatory backdrop. I was wondering if you can maybe speak to each of those and talk about what we could see coming out of Coinbase over the next couple of years?

The first thing I want to say I'm really proud of us that we've continued to innovate and push forward new products and grow existing products absent regulatory clarity. So we've been adding new assets to our platform. We've been growing customers adopting trading products. Even staking, which is subject to the SEC litigation that we have ongoing and that had further state litigation, we've grown native stakes units on our platform even with the one arm hand behind our back, where states said, you cannot add new stake assets for customers in 10 states or the SEC is like I think that's security, which then leads to people going, well, do I really want to tussle with this conversation. So I've been proud of our ability to grow despite. But I think having the clarity where people are not worried about a litigious environment gives us the ability to grow staking. I think we'll also, hopefully, be able to get market structure rules with the SEC to offer tokenized crypto securities. That isn't something that we've long hoped for, tokenization or taking other types of financial assets and making a security environment, making a true currency environment, stablecoins as much as they've grown and USCC is now at $40 billion market cap, I mean Tether multiples hire. Those aren't currencies under current legislation. So getting the taxonomy right, understanding how this technology is going to underpin all types of assets and then having the taxonomy right about what assets to be on top of it, what regulatory regime does it fall in? And then does the technology change the inherent risk that the rules were built to protect against. And so in the case of securities, we have various requirements because of settlement risk, because of conflicts of interest between custodians and exchanges. That was all built because of the way that transactions were affected in the traditional securities market. When you're settling on chain in a prefunded market, those same risks don't exist on chain. And so do those same market structure rules need to exist within securities, tokens that they do in traditional securities. We need to have meaningful conversations and rule-making with broad market participation from all participants in the market to affect the right rules that we can then build and grow these markets. And I'm optimistic that we can start to have those conversations with the next administration.

Yes. That would be great. You think we could see a tokenized Coinbase stock in the future.

From your lips to God's ears, I've been wishing for this since we went public. So I sure hope so, but who knows.

Great. You mentioned stablecoins briefly. The new administration has newly recommitted to supporting the U.S. dollars reserve currency status internationally. I'm wondering if you can talk about the role that crypto plays in that conversation and the intersection between stablecoins, crypto and monetary policy?

Great. My personal view is that the U.S. is huge opportunity to affect global monetary U.S. reserve dominance for crypto. So a couple of thoughts here. One is, if you look in all markets where crypto is traded, Bitcoin is quoted as a U.S. dollar price. So when you think about the crypto markets, they are U.S. quoted markets in any market. You don't see those emerging in many ways. So people think of these as U.S. dollars payers, one. The U.S. liquidity markets are the deepest in crypto in any trading pools. Tether, which is broadly adopted outside of the U.S., which is largely a Southeast Asia and Africa adopted token is U.S. dollar in all of those markets, and you see people craving access to holding U.S. dollars as savings. They can't open a U.S. bank account. They can't get U.S. dollars. They can get Tether, they can get USDC. And so stablecoins are proliferating around countries where there's high inflation, they don't have access to the same payment rails, the same financial services that we have in the U.S. via crypto market. So making the U.S. a technology center, making this a place that we innovate and grow these technologies and adoptions, I do think it's the opportunity then to engage globally with these products and services that have much lower barriers to access than the traditional financial services products.

Yes. That makes sense. I also wanted to hit on ventures. So I think one of the things that Coinbase has been vocal about for the past few years is how the regulatory environment has stifled innovation for the start-up community. I think as Brian has said numerous times, it's hard to graduate college, create a start-up and then immediately get sued by the SEC and have to explain to your family. Could you talk about Coinbase's venture portfolio and maybe the outlook for potentially leaning in more on the venture side under a new administration?

Sure. So for those who don't know, we are active investors in the crypto ecosystem via our venture arm, where we're making passive investments into all sorts of applications, whether it's the application layer, the infrastructure layer, various token projects. And as Will said, Brian has made this example many times that when VCs are making the seed investment or the Series A, you don't really want your seed investment to be eaten up with legal fees. You were hoping those seed investments go to product development. And how do we get product market fit, how do we grow user adoption, not just paying for our friends on Wall Street to then fight against the SEC. So we do hope that, one, more developers will want to develop crypto apps in the U.S.; two, there'll be more VC funding because it will actually go to product development and the opportunity to engage customers in this technology. So I think that they will all be net additive to the overall environment. And then that has this flywheel effect of -- oftentimes these apps are using our tools on our developer platform, oftentimes that they want to engage with our customers, and so they will build on base where they can get distribution through our retail behavior. So all of this is just a continued flywheel in our product portfolio and our investment decisions.

Right. I mean I always think about USDC as being the best example of that. It's like such a differentiated partnership. It would be difficult for anyone else to replicate it and it kind of stems from your place in the ecosystem. Okay. On the competitive front, I think the company has been fairly consistent over the years, having a welcoming stance towards more competition, more new entrants in the space. How do you think the regulatory environment will influence competition and the potential for more people getting into the space?

I absolutely hope that it makes every single company, fintech bank corporate out there, say, okay, crypto is now here. Like how are we including it within our strategy and our product strategy? How does it underpin our payments? How do we want to offer these products to our customers? So we do think that we will see more competition in a positive way. But I go back to the Internet days like in the early Internet, we saw everyone think, oh, okay, there's that Internet company over there, like pets.com, like, okay, am I going to buy my dog food online? Maybe I will. Maybe I won't. And then over time, now we can buy our dog food on Target and Walmart and everyone else, but it took time. We believe that we have unique ability to facilitate the growth of this environment and unique ability then to enable our competitors to help get them into crypto by our developer tools. We are unique in our number of crypto engineers, number of people who deeply understand how to build on chain. We have multiple protocols that we support, and each protocol is different. So Bitcoin is a protocol, Ethereum is protocol, Solana is a protocol. They all have ecosystems and on top of them. These are all different technical implementations. And so there is, as you saw, new competitors come into the space, the first step is for people to say, I'm going to offer you the ability to get access to Bitcoin as an investment passively, not go let you send and receive Bitcoin on chain, but you can just own the Bitcoin passively. And then they can buy Bitcoin from any market maker, maybe they custody it Coinbase, maybe they custody it themselves. One asset is easy. The building on chain, the transaction monitoring on chain, the understanding how to know your transaction and know when it's a suspicious transaction on chain is different than any other tool. So this is the skill set that we've built and that we can offer that in a B2C, which we do today or eventually we'll offer that through our developer platform as B2B and enable all these customers. And that will then give us a differentiated revenue stream. It will be like how financial services has grown up where you have hundreds of banks around the U.S., not to mention around the world. But you have folks that have unique differentiation in various products and liquidity wins. And so we focus on -- we want to be the deepest liquidity markets. We want to have the best tooling. We want to be the place where you can do the most in crypto, and that's how we're going to compete and differentiate ourselves in this space.

Yes. I mean I want to spend a little time on that because the -- I get the question a lot, and we started to hear some of those 2021 questions about crypto is here, how do we think about this company doing what Coinbase is doing something that analogously does what you do in Fiat markets. So maybe you can talk about maybe we have the necessary but not quite sufficient conditions for incumbents to enter this space. Talk about the technical hurdles and implementing kind of crypto-native technology? How much different is a crypto exchange from an equities exchange, for instance?

Sure. So let me start with custody because I think that's the bedrock of how do you hold the assets. So obviously, these are bearer instruments versus non-bearer instruments. So if you lose the keys, you've lost the asset. It's nonrecoverable. So safely, securely custodying the keys is sort of the foundational element. How do you do that in a way that you always have enough on chain, so you can offer liquidity on chain but also protect at all from cyber risk. So security is then a starting point. Nobody is doing that today. They feel really good at physical security. They custody golds, they custody jewelry. They have physical vault custody. That's similar to crypto, but they don't have to bring that on chain every hour and constantly balance global liquidity in that. You obviously also custody trillions of assets, but when those assets get hacked, they don't really get hacked in a way that you can't recover them. So how do you investigate on chain and get that back. These are difficult questions that people have to grapple with. And then you've got to learn to do it chain by chain, by chain, asset by asset. What is unique about each construction of the asset in their underlying white paper. So this is what we think is unique and what we have 12 years of experience doing. We have been safely custodying roughly 11% to 12% of global assets. We've been selected by the majority of the ETF holders to be their custodian of choice. There's rigorous due diligence that we had to go through for that. You can imagine many of you who do operational due diligence on any of your own custodians, like we've gone through that multiple, multiple times by the world's largest asset managers. So we feel really proud about the controls and the platform that we've built. And that's a differentiator, we believe.

Great. That's a great example. You mentioned ETFs. I think as of the third quarter, the company served a custodian for, I think, 17 of the 20 crypto ETFs, that includes an additional 9 Ethereum ETFs. So it'd be great to hear the role that you expect ETFs to play going forward. And we also heard some announcements around the planned XRP ETF. We'll probably see more, I would gather. So it would be great to hear on the role that you expect this to play in the maturation of the ecosystem.

I think about ETFs in a very simplistic way, I guess, which is that different funds have different structures about what they can and cannot invest in. What we learned is that many funds didn't have the ability to buy crypto spot assets directly. And so when we offer ETFs, then it brought more capital into the space. We're also seeing -- I don't know if they're you or they are others buying MicroStrategy as a way to get access to Bitcoin because it's a different wrapper. And so I do think that ETFs provide a wrapper that enable more and more market participants access to the underlying asset class. I do wonder and this is a curiosity because this is not my expertise, around when there's regulatory clarity and if there was CFTC spot authority for commodity trading, which there's a hole in the regulatory structure today. There's no rules for spot trading of commodities, whether funds would adapt their accessible assets because it's a regulated asset. I don't know. But I do think in the world today, as regulations exist, providing more and more structures for people to get access to underlying crypto is important, and these ETFs are providing a wrapper to enable more capital into the space.

Great. This may feel a bit like Groundhog's Day, but I'm going to ask the fee rate question. So it's a longer-term one, but also a bit of a tactical one. I think in the third quarter, the consumer fee rate was about 142 basis points. I think the implied take rate from earnings in October was roughly flat, and that was before the significant increase in volumes that we saw in the aftermath of the election. So I was wondering if there's anything you can share about the mix of volumes and how that's evolved as we've seen volume scale more recently? And then just maybe how you think about fee rates longer term?

Sure. So let me just start with -- we gave you in the update what we saw in October. I'll give you the November, I'll kind of bring it forward a month. Quarter-to-date, we've seen very consistent behavior in mix that we saw in Q3. So we've seen growth, but the mix hasn't materially moved quarter-to-date. Now, crypto is a constantly evolving atmosphere. We still have December. I can't give any outlook on what I think will happen in December, but relatively consistent for quarter-to-date, that's near term. Longer term, consistent with what we've said before, we have yet to see fee compression on our platform. We have not changed our fees in any material way. We do experiments. So we haven't had any material changes to either our retail or institutional fees to speak of. We raised fees in 2023 on the retail platform, and we saw market share growth. So while we are growing market share and while we feel like we are seeing healthy customers coming on to the platform, new users, dormant users reengaging and market share, fee compression is not something that we are focused on or worried about in the near term. Longer term, as things become commoditized as we see every platform offer trading, naturally, we believe that people will start competing on price. We've been competing on product differentiated experience, trust, safely custodying your assets, ease of use, that has been our competitive landscape. Price I think will become more important with the growth of the ecosystem and commoditization.

Right. From the competitive conversation we just had, it seems like we're so far a bit away off from the commoditization part. Just quick follow-up on that. I think on the most recent call, you called out the impact of some changes on stablecoin pricing pairs and that impacting the retail fee rate. Could you expand a bit on some of the dynamics there?

Sure. So the way that I think about our pricing is that we have different pair types. So most of our trading is fiat-to-crypto. I'm buying Bitcoin, my base is U.S. dollar or my base is euro. That's the majority of our trading. And fiat-to-crypto is where we earn the majority of our revenue. It has the same pricing for every pair. So if I'm U.S. dollar to Bitcoin, U.S. dollar to Solana, U.S. dollar to DOGE, whatever that crypto pair is, same fee rate. If I'm going U.S. dollar to USDC, if I'm going USDC to Tether, those don't have the same fee rates. And so those stable pairs, we don't monetize and really think of those as this is the pinning of payments, and this is a different monetization. We earn money via the reserves underpinning the U.S., the reserves underneath the stablecoins in other ways, we're not monetizing through trading fees. So as volume in stablecoin pairs picks up, that volume as a percent of total volume, it can change the weighted average fee rate that is the result of the mix on the platform. So that's the phenomenon that we see when we see the growth of stable. Just to give you a little bit more color on sables is why are we seeing stable pairs. Why are people trading USDC to Tether like what's in that. What we're seeing is market maker sophisticated users are looking for arbitrage opportunities across the global exchanges. And so perhaps on an exchange, they're seeing Tether trading at 0.99 and perhaps seeing USDC at 101, they are helping stabilize to get everything back to $1 and taking advantage of those market arbitrage opportunities and using the stable trading on our platform to get liquidity and getting into the assets they're looking for.

Makes sense. You continue to call out some of the international opportunities, which I think included traction with both Coinbase One and USDC Rewards. Maybe you could talk a little bit about what you're seeing internationally and the broader opportunity beyond the U.S. borders?

Yes. So we believe crypto is a global phenomenon, as we've talked about, even with base, it's the first global payment rail. I mean, it's not unique to any country. I can send you money no matter where you are. You're sitting next to me, you're sitting in Australia, you're sitting in Brazil. And so we think that we need to be in as many countries as we can as well. We are doing this in bite-size cohorts. And so the countries that we launched last year, Canada, Brazil, Singapore, Australia, we've seen them not really cover their fixed costs as we shared on the third quarter earned call. We've seen good adoption of Coinbase One of the non-trading products. That was one of the key initiatives we had in 2024 is to bring our international markets into product parity with the U.S. market. They started this trading only and now we're trying to bring the full suite of our subscription and services products to each country in which we are going deep. So our go-deep strategy is to bring those countries equivalent to the U.S. We also have a go-broad strategy where we're just offering Coinbase wallet in a number of incremental markets, but those are unique wallet markets versus our full custody product stack. So we will now focus deeply on the user experience. That's one of the areas that we continue to invest in localization, making sure that we improve the fiat onboarding and offboarding in more currency types, so we can continue to broaden around the world. And that we haven't announced yet. But as we go into 2025, we'll explore whether we want to go into like new markets now that we've kind of matured the first batch of international growth at the stage they're at.

Got it. Okay. I wanted to touch on derivatives a little bit. Over the past few years, the company is focused on standing up both the U.S. and international-based derivatives platform. I think most recently the company added margin futures for DOGE and SHIB, and a number of additional assets becoming the first U.S. exchange to expand beyond Ethereum and Bitcoin. So how are you thinking about the longer-term opportunities that derivatives present? And how do you see that evolving as part of the business?

So broadly, I want to talk about globally. Globally, derivatives are the majority of crypto asset trading. And we've shared before that it's roughly 75% of global trading happens on derivatives. These are largely perpetual features in non-U.S. markets. Our vision for derivatives is that we can get to Coinbase being a significant participant in the global derivatives market, both in the U.S. and abroad. We wanted to bring that to the U.S. We're really proud of being able to procure those licenses and to start to build that in the U.S. But also, we have an international exchange, where we're trying to grow that international volume. To do so, derivatives are regulated financial services products in the majority of markets. And so we acquired a MiFID license in Q3, so that we can go to market and market derivative products in Europe. We are in the process of getting that license integrated and live on our platform. And so hopefully, in 2025, we'll be able to see some traction there. We also are continuing to invest in the product to bring it up to the global competitor set product parity. So the same number of pairs to have broad liquidity coverage, the same leverage levels that people are seeing the majority of those trading. We are differentiated in this way by trying to do it in a compliant way, more transparent way and obtaining the licenses that we think we need to be able to provide those platforms.

Great. So we're at a point where USDC balances are now nearing about $40 billion. I believe most investors are aware of the close relationship that Coinbase has with Circle. Maybe you could just touch on some of the puts and takes and how you think about the interest income line over the next year?

Sure. So just to restate what you said. So yes, USDC, which is our stablecoin backed by U.S. dollars, Circle as the issuer, and we are a key commercial partner in which we resell USDC to our customers and participate in the economics. The drivers here are total market cap, how much USDC is in circulation, how much is on our platform and then what is the overall interest rate environment. So what are we earning on money market funds in participation. This has been a wonderful growing asset for us. But what we've also shared is, obviously, as we see interest rate headwinds, our goal is to grow market cap. We've seen nice market cap growth this year, hitting $40 billion is a new all-time high in the recent years since the financial crisis of 2023 when we had a [indiscernible] event with USDC. But we are continuing to focus on utility, how do we build payments on USDC, how do we build broader adoption? We're pushing it within our own products. Circle is building partnerships and growing it, too. And the opportunity here is just to continue to build that as a larger and larger used asset in many financial transactions around the world.

Got it. Wanted to hit on investment spending. In an environment where daily volumes are averaging roughly 2x what they were for most of this year. How do you expect that to impact the pace of investment spending? You touched on the sales and marketing point earlier.

So we have had an approach that we want to ensure that we are making prudent investments to support growth, and that's what we've done this year. As you saw, we had higher volumes in Q1 around the ETFs, we didn't materially increase our spend this year. So we are evaluating. We're not giving guidance for 2025 yet, but you'll see us continuing to be disciplined in how we approach our fixed expense allocation, but yet wanting to meet the market where it is and invest in key growth areas, whether it's international, whether it's space, like we did this year. And we'll give guidance in Q1, but we are committed to offering to continuing to drive positive adjusted EBITDA in any market we can. We're continuing to be defensive in our spend so we can encounter any bumps that we may hit along the road, and investing in growth and leaning into the revenue opportunities that we see ahead.

And I guess that brings us to capital allocation. The business has been very cash generative since you guys made that pivot to consistent profitability through the cycle. How are you thinking about the kind of build versus buy versus more capital return, weighing that against the $1 billion share repurchase you recently received board approval for?

Great question. So M&A has been an important part of our strategy. And we look at M&A as additive to our road maps where whenever we want to go into a new market, a new license like we acquired with MiFID license a new product category, can we build organically? Can we buy? Can we partner? What is the right path? So we seek to be acquisitive. We believe that there's an opportunity to use our strong stock price, use the cash we've accumulated. We have nothing to announce today, but we are absolutely looking to see how we can grow at an accelerated pace through acquisitions. If we can't put it to work through acquisitions, we are authorized to buy back stock. We were opportunistic in buying back [ that ] last year. And so we look to opportunistically and strategically return capital to the stock.

Got it. Just in the last minute here, I think one thing Coinbase has done really well in the past is taking advantage of the funding environment during bull market. With the business being so much more consistently cash generative through the cycle, has anything changed about the thought process around defensive capital raises relative to 2021 when I think Coinbase raised a couple of converts and debt offerings?

Yes. The key word you use there is we are opportunistic. So we look to see where we can deploy capital. I've long been a believer of raise capital before you need it, not when you need it. So you can take advantage of unique market opportunities, and we will continue to do so. We've been really pleased that our balance sheet has been able to support the growth in our prime financing business. And so we've been actively putting money to work to support institutional trading, which then leads to financing. We were able to do that through the ETF launches where people needed to buy, but they needed financing in order to be able to buy. So we're going to use our balance sheet strategically and opportunistically as we go through various market opportunities.

Very good. Well, I think that takes us to time. But Alesia, thank you so much for joining us today.

Thank you.