Coinbase shares plunge on big earnings and revenue miss

Higher-than-expected user numbers see Coinbase shares rise in late trading

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Shares in Coinbase Global Inc. were up slightly in late trading after the cryptocurrency exchange reported better-that-expected user numbers amid misses on earnings and revenue in its latest earnings report.

For the fiscal third quarter that ended Sept. 30, Coinbase reported an adjusted earnings per share loss of $2.43 on revenue of $590 million. Analysts had expected an EPS loss of $2.40 on revenue of $654 million.

Monthly transacting users in the quarter came in at 8.5 million, down from nine million in the previous quarter but up from 7.3 million in the third quarter of last year. Analysts had been expecting a figure of 7.84 million. Trading volume in the quarter was $150 billion, down from $217 billion in the second quarter and $327 billion in the same Q3 2021.

In a surprising turnaround amid the ongoing crypto winter, Coinbase saw a rise in assets on its platform, ending the quarter at $101 billion, up from $96 billion in the second quarter. The figure is still down by more than half compared to the $256 billion assets on the platform as of the end of the third quarter of last year. Total trading volume in the quarter came in at $159 billion, down from $217 billion in the previous quarter.

Expenses were down across the board and below the company’s previous outlook. Transaction expenses as a percent of net revenue came in at 18%, down from 21%; sales and marketing – including stock-based compensation totaled $76 million, down from $141 million and a predicted figure of $100 million. Technology, developer, general and administrative expenses – including stock-based compensation totaled $895 million, down from $1.1 billion and below the predicted figure of $1 billion.

“Transaction revenue was significantly impacted by stronger macroeconomic and crypto market headwinds, as well as trading volume moving offshore,” Coinbase said in its letter to shareholders. “Meanwhile, we saw strong growth in our subscription and services revenue, driven by our
participation in the USDC ecosystem and higher staking activity.”

For its outlook, Coinbase said that its October trading volume was $47 billion and MTUs through October are roughly in line with the third-quarter results. The company expects lower trading volume and a similar number of MTUs compared to the third quarter. Due to “expense actions,” Coinbase also added that it is “cautiously optimistic” about operating within a $500 million adjusted before earnings, interest, taxes and depreciation loss guardrail, presuming the crypto market does not deteriorate below October levels.

In the words of Coinbase, the third quarter was “mixed” for the company, but despite the earnings and revenue miss, the higher-than-expected user numbers and Coinbase successfully bringing down expenses were looked at favorably by some investors. The company’s share price was up 3.94% in late trading.

Photo: Coinbase

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