Coinbase posts $1.1 billion loss as crypto trading volumes fall
Cryptocurrency exchange Coinbase said revenue had fallen 61 percent in the latest quarter as crypto prices fall and trading volumes fall.
The San Francisco-based company on Tuesday reported an after-tax loss of $1.1 billion, compared with the $1.6 billion net profit it recorded amid the crypto boom a year ago. It said $446 million of the loss reflected a write-down on its crypto and venture investments.
Coinbase shares fell 4 percent in after-market trading, after losing nearly 11 percent earlier in the day.
The collapse in bitcoin and other crypto prices sent the company into the red in the first quarter, causing it to lay off 18 percent of its employees in June. With trading volume down a further 30 per cent compared to the weak first quarter, it suffered an operating loss of US$620 million before the write-down, and net cash fell by around US$400 million to US$2.8 billion.
In an effort to ease Wall Street concerns about its financial condition amid what it called a crypto “winter,” Coinbase released additional information about the cash burn and said it had not experienced credit losses, despite the financial strain that hit some second. crypto companies.
CFO Alesia Haas said that along with long-term debt taken on when interest rates were lower, Coinbase believed its $6.2 billion in available capital would enable it to continue investing through the downturn. She added that Coinbase still believed it could stick to its previous plan to keep its loss on earnings before interest, taxes, depreciation and amortization for the year to no more than $500 million.
However, the company also faced questions from analysts about its widening non-cash losses, with a net loss of $1.52 billion in the first six months equivalent to 77 percent of revenue in the quarter.
Share-based awards to employees represented 48 percent of revenue in the most recent quarter, and Coinbase projected that they would continue at the same level in the current quarter before dropping next year.
Haas said the company understood investors’ concerns about stock-based pay and was “aligned” with shareholders on the issue. But she also said Coinbase was taking a long-term view of costs due to the volatility of crypto markets.
At $46 billion, trading volume on behalf of retail customers was down more than two-thirds compared to the previous year. Despite the setback, it argued that the decline was part of a typical cycle in the crypto markets and said that the analysis “suggests [retail] customers do not leave the Coinbase platform”.
Coinbase reported net income of $803 million in the quarter and a loss per share of $4.98. Wall Street had expected a loss of $2.65 per share on revenue of $832 million.
Shares have been volatile in recent days, jumping more than 30 percent last week on an alliance with BlackRock. They had already given up two-thirds of their gains before Tuesday’s earnings announcement.