Coinbase CEO Expects 2022 Revenue To Be “Roughly Half Or Less”

Coinbase Global (Nasdaq: COIN) CEO Brian Armstrong said the cryptocurrency exchange’s revenue will be slashed in half or more this year due to falling prices and the collapse of rival FTX.

“Last year in 2021, we did about $7 billion of revenue and about $4 billion of positive EBITDA, and this year with everything coming down, it’s looking, you know, about roughly half that or less,” Armstrong said in a Bloomberg interview.

The comment comes on the heels of a dismal Q3 2022 financials toplined by a quarterly net revenue of $576.4 million. This is a decline from Q2 2022’s $802.6 million and Q3 2021’s $1.23 billion, as well as misses the consensus estimate of $649.2 million.

READ: Coinbase Points To Users, Headwinds As Firm Reports Dismal Declines In Q3 2022 Fundamentals

When it reported its third quarter results, the firm said it continues to “expect lower trading volume and a similar number of MTUs” in Q4 2022. Full-year, the firm expects annual average MTUs be “slightly below 9.0 million,” with average transaction revenue per user at $20–down from Q3’s $24 per user.

Coinbase has previously stated that it expects a loss of no more than $500 million in 2022 based on adjusted EBITDA, a measure of earnings that omits costs such as interest and depreciation.

Bitcoin hasn’t rebounded from the so-called crypto winter, currently priced at a two-year low. Coinbase also lost 84% of its share price year-to-date, currently trading at an all-time low.

In Q2 2022, Coinbase sustained a massive $1.09 billion net loss, mainly due to operating expenses surging to $1.85 billion–larger than the firm’s revenue for the three-month period.

Armstrong stated that the demise of Sam Bankman-FTX Fried’s looks to have been caused by “massive fraud,” rather than mismanagement or accounting errors, as Bankman-Fried has stated in interviews following the bankruptcy.

“It appears that they took customer funds from their exchange and actually commingled them or moved them into their hedge fund and then ended up in a very underwater position,” Armstrong said. “And that was, I believe, against their terms of service and against the law.” 

Despite the impact from FTX, Armstrong stated that he intends to continue working for the industry on Capitol Hill and believes that crypto-specific legislation will be implemented within the next year. Regulations governing stablecoins, centralized exchanges, and custodians, as well as clarity on the definition of commodities and securities, he believes, should be prioritized.

Coinbase revenues might also be affected by the firm’s decision to halt all NFT transfers for customers using its iOS wallet, citing Apple’s (NASDAQ: AAPL) in-app purchase policy on gas fees.

The exchange also recently stopped supporting a number of digital tokens in its Coinbase Wallet, including Bitcoin Cash (BCH), Ethereum Classic (ETC), Ripple XRP and Stellar (XLM), as the firm looks to phase them out over subdued usage.

Coinbase Global last traded at $41.26 on the Nasdaq.

Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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