Coinbase’s third-quarter loss narrowed as sales beat analyst expectations, with a lift from the crypto exchange’s new agreement with stablecoin issuer Circle.

Coinbase recorded $674 million in sales during the quarter, according to the company’s financial reports, beating analysts expectations compiled by FactSet of $651 million and a 14% increase from last year. Net loss was narrower than analysts’ forecasts, $2 million for the quarter instead of the $130 million expected and much narrower than 2022’s $544.6 million.

The bottom-line improvement was driven by an $82 million debt repurchase and a $50 million gain in “strategic investments,” according to Alesia Haas, chief financial officer at Coinbase.

The company suffered the most in the decline of quarterly trading volume, which fell to $76.1 billion, missing analysts expectations of $80.1 billion and a 52% decrease from last year.

Transaction revenue declined 21% to $289 million, largely impacted by a decline in crypto asset volatility, driven by materially different market conditions this year.

Subscription revenue and other services, however, aided the company’s top line at $334 million in the quarter, a 59% increase from last year. Stablecoins and premium subscription models drove the category.

Stablecoin revenue, previously included in interest income and which more than doubled since last year to $172.4 million, pushed up the top line. The bulk of this revenue comes from interest income earned on USDC
USDC
 reserves; In August, Coinbase announced it had acquired an interest in Circle, the issuer of USDC, in exchange for a 50% stake in a joint venture between the two companies that previously controlled the stablecoin. Coinbase said in a blog post at the time that revenue would be shared based on the amount of USDC held in each company, and the two businesses would “share interest income generated in the broader distribution and usage” of USDC. Coinbase would not reveal the terms of the stake transfer at the time, but the quarterly report stated that the exchange received “3.5% of the fully diluted equity of Circle Internet Financial Limited at an estimated fair value of $51.1 million.”

Other subscription and services revenue, including Coinbase One memberships and its institutional financing arm came in at $32 million for the quarter, up 3% from last year.

The bottom line was also aided by a decrease in quarterly expenses, which fell 34% year over year to $754 million, as marketing and legal costs were moved to Q4, says Haas.

The company remains locked in litigation with the U.S. Securities and Exchange Commission, which sued Coinbase in June, claiming it was acting as an unlicensed exchange and selling cryptocurrencies that the agency deemed unregistered securities. The suit has garnered wide attention in the crypto industry, amassing 13 friend-of-the-court briefs from investors, policymakers, research institutes and professors to which the SEC has until tomorrow to respond. Oral arguments are set to begin on January 17.

Coinbase shares were changing hands at about $81.20 in after-hours trading, 4% below its closing price of $84.60.

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