Net loss Coinbase in the first quarter of 2023 was $78.9 million or $0.34 per share, which turned out to be significantly better than analysts’ expectations ($0.87). In the post-trading session, securities rose by 7%.
— Coinbase 🛡️ (@coinbase) May 4, 2023
For the same period in 2022, Coinbase recorded a net loss of $429.7 million, in the fourth quarter of 2022 — $557 million.
Since the beginning of the year, Coinbase shares have risen in price by 39.1%. Losses since the IPO are 87%.
Measures to reduce costs contributed to the reduction of the negative financial result – total operating expenses decreased by 24% compared to October-December (from $1.18 billion to $884.3 million) due to investment optimization and staff layoffs.
The company warned that operating expenses are likely to increase going forward due to higher legal costs.
Net revenue in January-March decreased from last year’s $1.16 billion to $736.4 million, while the forecast was $658 million, but grew by 16% compared to the previous three months ($604.9 million).
The category of subscriptions and services remained the driver. Collections amounted to $361.7 million against expectations of $316 million compared to $282.8 million a quarter earlier and $151.9 million a year ago.
The main increase was due to interest income ($240 million), of which $199 million is associated with USDC. For comparison: in October-December these figures were $182 million and $146 million, respectively. The company expects a decrease in the indicator in April-June against the backdrop of a reduction in the stablecoin market supply in recent months.
Staking brought $73.7 million to Coinbase (forecast – $71 million). A year ago, the figure was $81.9 million, following the results of the previous three months – $62.4 million.
Trading commissions broke the negative quarterly trend, increasing by 16% from $322.1 million to $374.7 million. In the first quarter of 2022, they were 2.7 times higher ($1.01 billion).
The volume of trading has not changed, while the volatility and capitalization of digital assets has increased.
The company’s income increased after the elimination of discounts for certain categories of institutional clients and the increase in the spread on standard transactions for retail investors. Interest in trading has shifted to altcoins.
The exchange mentioned the acquisition of One River Digital Asset Management, as well as the launch of an international exchange, Base and Wallet services, as drivers for future business growth.
The latter is positioned by Coinbase as “a decentralized safe haven for countries with unstable governments and currencies.” The wallet acts as a tool for “updating the financial system”. This also corresponds to the upholding of the position in Washington through various initiatives.
The platform management disclosed details regarding the conflict with SEC.
“Despite our ongoing engagement with the Commission, its staff has not provided any clarity […]. While we hope to avoid litigation, we are fully prepared to defend ourselves and speak on behalf of the entire crypto industry if necessary.” the letter to shareholders says.
Top management noted that the best option would be for Congress to adopt a clear set of rules for industry players. Coinbase expects progress on this issue in the second quarter of 2023.
Earlier, the SEC sent a notice to the exchange of an investigation regarding the listing procedure on the platform and its products – Coinbase Prime, Coinbase Wallet and the staking service Coinbase Earn.
Recall that in April the company responded to the claims of the regulator, declaring its readiness to “resolutely defend itself.” Representatives of the platform also noted that due to the proceedings, the Commission may suffer reputational damage.
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