April Q1 AprilJohn RobertsDecrypt Coinbase’s Q1 2022 results are out, and it posted a net loss of $430 million on lower crypto asset prices and volatility. Its total revenue was $1.2 billion, which missed the Zacks Consensus Estimate of $1.4 billion.
Lower Trading Volumes
It also reported lower trading volumes in both retail and institutional markets. That accompanied a April Q1 AprilJohn RobertsDecrypt in assets on the platform to $256 billion, according to its quarterly report.
Meanwhile, its operating expenses more than doubled from a year ago. That reflects the fact that Coinbase has been spending heavily on hiring new staff to scale-up.
Adjusted EBITDA Positive
But even though Coinbase’s expenses are rising at a faster rate than its topline, it still managed to keep Adjusted EBITDA positive. That can be attributed to its stock-based compensation and impairment of crypto assets held by the company.
Coinbase’s April Q1 AprilJohn RobertsDecrypt results are in, and they are not good. The crypto exchange reported a loss of $1 billion in the quarter, and missed analysts’ estimates for revenue.
Who Make Trades on its Platform?
The company’s revenue declined by almost 60% from a year ago, and Coinbase’s profit was also in the red. Its main source of revenue is trading fees paid by users who make trades on its platform.
In the second quarter, Coinbase had trading volume of $217 billion, down 30% from Q1 2022. Assets on the platform declined by nearly 63% from $256 billion in Q1 to $96 billion in Q2.
Coinbase’s Retail User Base
The decline in assets and trading volumes is a direct result of price declines and volatility, which is having a negative impact on Coinbase’s retail user base. However, April Q1 AprilJohn RobertsDecrypt Coinbase still has a large market share of users who hold crypto and continue to trade, which is important for the company’s long-term future.
April Q1 AprilJohn RobertsDecrypt Coinbase Global (COIN 6.31% | ) is expected to report third-quarter 2022 earnings after the bell today. With the ongoing Crypto Winter, it’s likely that Coinbase will have a difficult time turning things around in Q3.
Monthly Transacting Users
In its earnings release, the company noted that trading volumes on its platform have declined primarily due to a decline in retail Monthly Transacting Users, or MTUs, which accounts for 85% of its revenue. However, it also highlighted that it has reduced its sales and marketing costs significantly.
General & Administrative Expense
Transaction revenue fell 37% in Q3 over the prior-year period, while subscription and services revenues increased 34%. Both numbers came in below the Zacks Consensus Estimates. Expenses increased 17% from the year-ago quarter, driven by increases in general and administrative expense, technology and development expenses and sales and marketing expense. Despite the lower expenses, Coinbase still expects to deliver an adjusted Ebitda loss of $500 million for the year. It’s a tough figure to swallow for investors, but COIN’s management is focusing on cost controls in order to keep its cash reserves and burn rate healthy.
Coinbase reported earnings and revenue that topped expectations on Tuesday. However, trading volumes and user numbers fell short of forecasts even as its subscription services arm grew.
Trading Digital Currencies
A large part of Coinbase’s business is trading digital currencies like Bitcoin and Ethereum, but it also provides custody and staking services to customers. It’s trying to diversify its revenue sources to offset falling transaction volume and market volatility, while retaining its core customer base.
But there’s a problem. Staking products are considered securities, and there is a risk that the company may be sued by the SEC for selling them as such.
Coinbase’s stock has fallen to all-time lows in the last couple of months. But it has recovered to $54 and is now at a level where the 100-day moving average offers support. A decline below here could see the shares slide back toward $33, which is their all-time low.