Coinbase, the second-largest cryptocurrency exchange by trading volume, announced its fourth quarter 2022 earnings on Tuesday, providing both shareholders and market participants with an update on its financial situation. Shares of the company fell slightly in after-hours trading following the news.
In the fourth quarter of 2022, Coinbase’s total revenue was $605, down significantly from $2.49 billion in the same period last year. Coinbase’s top line was not enough to cover its expenses. In his three months, the company said he lost $557 million (equivalent to -$2.46 per share on a GAAP (net income) basis) and his adjusted EBITDA loss was $124 million. I was.
According to data provided by Yahoo Finance, Wall Street expects Coinbase to have revenues of $581.2 million, earnings per share of -$2.44 and adjusted EBITDA of -$201.8 million, which is With 8.4 million monthly trading users (MTU).
Coinbase shares were up 86% year-to-date before the company’s fourth-quarter earnings were announced. Even with that rally, Coinbase’s value when measured per share is still down significantly from its 52-week high of $206.79.
Coinbase’s outperforming revenue expectations is notable in that it comes with lower trading volumes. Coinbase has historically generated the majority of its revenue from transaction fees, making Q4 2022 a notable one. Consumer trading volume fell from $26 billion in the third quarter of last year to $20 billion in the fourth quarter, while institutional trading volume fell from $133 billion to $125 billion in the same period. reduced to dollars.
Overall cryptocurrency market capitalization will drop by about 64%, or $1.5 trillion, in 2022, resulting in Coinbase’s total trading volume and transaction revenue dropping by 50% and 66% year-on-year, respectively, according to the company. is reporting.
As expected by the drop in trading volume, Coinbase’s trading revenue declined in the fourth quarter compared to the third quarter last year, dropping from $365.9 million to $322.1 million. (TechCrunch compares Coinbase’s Q4 2022 results to Q3 2022 rather than Q4 2021, as the latter comparison is not very helpful given the changes in the crypto market over the past year. We all know that overall crypto activity has been declining since the end of March 2021).
Coinbase’s report had some good news. Coinbase’s trading revenue has been less than buoyant, but the company’s other revenues have increased. What Coinbase calls “subscription and services revenue” grew from $210.5 million in Q3 2022 to $282.8 million in Q4 2022, up just over 34% in one quarter is.
And while the crypto industry has faced many devastating events, such as the collapse of Terra/LUNA and FTX, to name a few, other areas still saw growth. The cryptocurrency monthly active developer has more than doubled since 2020, while major brands such as Starbucks, Nike and Adidas are entering the space along with social media platforms such as Instagram and Reddit. Over 20,000.
As big players enter cryptocurrencies, industry players hope the move will bring more adoption in both product use cases and transaction volumes. Despite a lot of movement, Coinbase’s trading volume for both consumer and institutional users has declined quarter by quarter.
In the future, we will see if these pieces recover and interest in trading rises again in 2023, or if users continue to shy away from the market, platforms like Coinbase will look elsewhere (subscription It would be interesting to see if we should keep looking for application services, etc.). .
