The American cryptocurrency exchange Coinbase published on November 3 its financial results for the third quarter of 2022. In a letter to shareholders, the CEO noted that this period has been very mixed for the company.
Between the beginning of July and the end of September, Coinbase’s revenue also fell 28% from the previous quarter to $576 million. Year-on-year, the decline even exceeds 50%. Analysts attribute part of this underperformance to the crypto winter that has turned traders away from the cryptocurrency market.
« Transaction revenues have been significantly affected by stronger macroeconomic and cryptocurrency market headwinds, as well as the shift in trading volume overseas,” the company explains.
According to the details mentioned in Coinbase’s balance sheet, transaction revenue reached $366 million. This represents a decrease of 44% compared to the second quarter of this year.
To explain this underperformance, the company mentions the decrease in the volume of transactions during these three months.
After a profit of more than $ 400 million a year earlier, Coinbase also saw red on this side, with a net loss of $ 545 million in the third quarter and a negative adjusted EBITDA of $ 116 million.
Some clarifications are nevertheless to be noted, such as subscription revenue, which jumped by 43% from one quarter to another to reach 211 million. Similarly, operating expenses decreased to $1.1 billion, corresponding to a 38% reduction compared to the previous quarter. Finally, the third quarter marked a further decline in Coinbase users, but the bleeding was less than expected.
Coinbase reported that the number of monthly users (MTUs) increased from 9 million in the third quarter of 2021 to 8.5 million during the same period this year.
However, analysts relayed by StreetAccount expected a drop of up to 7.84 million monthly users over the quarter. Over the whole year, however, the number of users will remain below 9 million, according to the CEO.
An improvement to come?
The announcement of Coinbase’s earnings sparked a brief surge in the company’s stock in trading after Wall Street closed, with a unit price above $60, up from $55.80 a few hours earlier.
While it is still too early to provide a correct interpretation of this improvement, the hypothesis of a more positive investor sentiment should not be ruled out.
Still threatened with bankruptcy a few months ago, including staff cuts noticed, the American company now seems more solid and has promising market prospects.
In early October, Coinbase signed a significant partnership with Google to integrate cryptocurrencies into the US tech giant’s cloud services, starting in 2023. This exciting opportunity is coming at a time when US crypto politics looks to evolve.
In addition to the bipartisan DCCPA law passed last August and the end solution of the SEC lawsuit, Ripple has seen several exciting moments. Coinbase is also one of the sectors that supported the payment company behind XRP by filing amici curiae briefs with the judge in charge of the case.