Crypto Exchange Coinbase Beats on Revenue and Earnings But Continues Seeing Dwindling Userbase

Coinbase Even though fourth-quarter earnings and revenue were higher than expected, reported user numbers fell short of analysts’ estimates. The stock rose more than 2% in extended trading after dropping 4.8% during the day.

Here’s what the company did.

• Earnings: According to Refinitiv, analysts expected a loss of $2.46 per shares, but the actual loss was $2.55 per shared.
• Revenue: According to Refinitiv, $629 million is more than the $590 million analysts expected,

Revenue fell nearly 75% compared to a year ago as the so-called “crypto winter” continued to impact the price of crypto currencies. In addition, the company reported a non-adjusted loss of $557 million. This was a year after Coinbase earned net income of $840million during the peak of crypto adoption.

Coinbase’s userbase continues to shrink. According to Coinbase, it reported that 8.3 million monthly transactions users (MTUs), were using the platform during the fourth quarter. This was down from 8.5 millions in the previous period. StreetAccount reports that analysts had expected 8.22 million. StreetAccount reports that trading volume dropped 9% to $145billion in the last quarter.

Transaction revenue dropped 12% to $322 Million from the prior quarter. This was below the consensus of StreetAccount analysts polled about $327,000,000.

The company forecasts that subscription and services revenue will range from $300 million to $325million in Q1 2023. Restructuring expenses are estimated at about $150 million. The company has made diversifying its revenue streams from trading fees a priority, with subscriptions and services at the center of their efforts. Over $200 million was generated in fourth quarter from traction in products like Staking, Earn and Custody.

Coinbase went through two major rounds since June 2022 to cut down on spending in order to keep cash. The exchange It has cut 20% of its staff in the last monthFollowing a 18% decrease in its workforce in 2022, it has been sold.

The stock had been up 75% in 2023 before Tuesday’s after-hours moves. This was despite the plunge in crypto prices and a retreat from riskiest equities in 2022.. This year BitcoinThe most well-known cryptocurrency has seen an increase of more than 48%.

Alesia, Coinbase Chief Financial Officer, stated to CNBC that the markets have seen a rebound in the current quarter as compared with Q4 2022 and that this is a good sign. “market conditions have really evolved, even in a single month.” Haas pointed out that Coinbase’s January transaction fee revenue was $120 Million. This is in addition to the fact that retail has returned.

“We’re seeing what we’ve seen always in crypto,” Haas spoke in a conference call with CNBC. “It’s overall volatility and market conditions that drive trading activity and…these idiosyncratic events have changed that longer-term dynamic that we’ve seen.”

Coinbase could be affected by SEC actions regarding certain crypto tokens or crypto services that are securities. According to Paul Grewal, Chief Legal Officer and CEO of Coinbase, tweets suggested that the company will fight any such legal action in court.

Kraken, a crypto exchange, has recently stopped offering staking services. Part of a settlement reached with the SEC There were allegations that the platform sold unregistered security.

Customers can stake their tokens on many centralized exchanges, such as Kraken or Gemini, to get a return on digital assets that otherwise would be sitting idle. Crypto staking allows investors to vault their crypto assets using a blockchain validator. This verifies that transactions are accurate on the blockchain. Additional crypto tokens are available for investors who lock away these assets.

Haas maintained that Coinbase’s staking products were legitimate, but he called CNBC to confirm this. “not a security.” Haas added that staking was less than 3% of net revenue, so it was not a material source of net revenue at this time — but an “important part of the ecosystem” The platform has plans to expand.

The conference call will be held at 5:30 p.m. ET and executive participants will discuss the results. ET.