Coinbase posts US$557 million loss with eyes on expenses amid fluctuating crypto prices
- Revenue for the cryptocurrency trading platform was higher than estimates but just a quarter of what it pulled in a year earlier
- Coinbase has not ruled out more lay-offs as it grapples with a challenging market and regulatory scrutiny that has treated some crypto products as securities
Coinbase Global, the biggest US cryptocurrency exchange, posted a US$557 million loss and saw revenue tumble 75 per cent in the fourth quarter as trading volumes plunged amid a series of prominent industry bankruptcies and scandals.
While the US$629 million in revenue for the three-months ended in December was higher than the average analyst estimate of US$581 million, it was about a quarter of the US$2.5 billion registered in the year-earlier period. The loss, which was equal to US$2.46 a share, was compared with net income of US$840 million, or US$3.32, in the 2022 quarter, the company said in a statement Tuesday. Trading volume missed estimates. The company expects first-quarter subscription and services revenue between US$300 million and US$325 million.
The loss was the fourth consecutive one for Coinbase, which has suffered from the wild fluctuations of crypto prices. The firm cut 20 per cent of its staff in January, after laying off 18 per cent of its staff last June. Coinbase noted in an investor letter Tuesday that 2023 will be a “year of regulatory focus and we believe our strong foundation will make us a net beneficiary of this new environment”. Coinbase said it was operating toward the goal of improving adjusted Ebitda, a measure of profitability before some costs.
Brian Armstrong, chief executive officer of Coinbase, said on earnings call that the company has evolved to aim for generating “adjusted Ebitda in all market conditions”, rather than operating with a goal of roughly breaking even across cycles.
In an interview, chief financial officer Alesia Haas did not rule out more lay-offs to improve financial results. The company doesn’t expect to meaningfully increase its headcount, which is anticipated to be about 3,650 people.
While Coinbase has seen a pickup in trading volume – closely tied to its bread-and-butter trading fees – in recent weeks, as crypto prices rallied, it’s facing mounting uncertainty. Several of its newer businesses, such as stablecoin revenue and staking, in which users earn yields on coin deposits, may face regulatory scrutiny, after recent regulatory actions against rivals.
Coinbase suggested that it might consider legal action if regulators determine that a cryptocurrency on its platform is a security, according its annual report, which was released Tuesday.