Coinbase revenue drops by nearly 50% amid crypto winter
The crypto market continues to express more decline in the value of most assets, especially Coinbase. Moreover, the intense bearish trend creates tighter conditions for almost all firms. The overall effect results in unwanted reports on the companies’ results.
Recently, Coinbase, the most prominent US crypto exchange, released its report for the third quarter of 2022. However, the revenue data is not impressive. In addition, the stock exchange published its 3Q report recently, which did not meet most analysts’ expectations.
According to the data, Coinbase’s revenue fell by 50% from last year’s value due to fluctuations in trading activity. Therefore, the firm lost about $545 million compared to the gain of $406 million for the third quarter of 2021.
Unfavorable macroeconomic conditions contribute to a decline in income
Coinbase wrote to its shareholders about the decline in income. It pointed out that the unfavorable macroeconomic conditions and the declining crypto market created a negative attitude for the firm. Therefore, the company’s trading volume fell drastically, leading to a drop in revenue.
Typically, the exchange gets about 90% of its profits from transaction fees, which is higher than the industry average. But the bearish crypto market is not helping the activity.
The details in the company’s report show third quarter transaction revenue of $366 million. This indicates a drop of around 44% from the second quarter. But it noted a 43% increase in subscription and service revenue as its value reaches $211 million. As a result, overall revenue for the third quarter fell 28% from Q2 2021.
The company recorded a loss of $116 million for its earnings before interest, taxes, depreciation and amortization (EBITDA). The value fell from the $618 million it received in the same quarter in 2021.
Trading volume fell 27% to $159 billion from $217 billion in the last quarter. Ethereum showed higher performance than Bitcoin. It contributes 33% of the firm’s total trading volume for the period, while Bitcoin accounts for 31%.
The firm also mentioned that trading volume shifted significantly from the US due to more regulatory concerns and some uncertainty. Coinbase explained that the macroeconomic conditions caused retail investors to go holding, which led to reduced trading volume.
Coinbase experienced declines in users and inventory
In addition, Coinbase’s user base is declining. During the quarter, the firm recorded about 8.5 million monthly transaction users (MTUs) versus 9 million and 9.2 in Q2 and Q1, respectively.
The firm said 2023 could bring more uncertainty. It stated that their preparations for next year are conservatively biased with the assumption of more extreme macroeconomic conditions.
This year has been a down year, even for Coinbase stock. Due to the persistent bear market and the firm’s shift away from risk-based assets, the stock has lost three-quarters of its value since January 2022.
Featured Image From Pixabay, Charts From Tradingview
