Coinbase’s revenue mix is improving, thanks to growing institutional adoption of cryptocurrencies. Derivatives offer a new growth avenue for the company. In Q3, Coinbase generated $1.9 billion in revenue, with $801 million in EBITDA and $433 million in net income. Subscription and services revenue accounted for nearly 40% of total revenue. Management expects Q4 subscription and services revenue to be between $710 million to $790 million, indicating a shift towards higher-quality, recurring streams. Coinbase Institutional serves as custodian for U.S. spot Bitcoin and Ethereum ETFs, translating into higher fees for the company. The Ethereum Layer-2 network, Base, is a new revenue source for Coinbase. Derivatives represent another growth opportunity, with the acquisition of Deribit contributing $52 million to Q3 revenue. Coinbase trades at 36.1 times forward earnings, justified by its diversified revenue sources. Long-term investors confident in continued cryptocurrency adoption can consider investing in Coinbase ahead of its earnings report. The Motley Fool Stock Advisor team recommends 10 other stocks over Coinbase for potential high returns.

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