Coinbase Global (NASDAQ: COIN) this evening reported one of its worst quarterly earnings report since going public. The company has seen its revenue effectively fall of a cliff amid a rout in the crypto market.
Earnings for the first quarter of 2022 amounted to just $1,165 million, a 27% decline from the $1,597 million in revenue recognized in the first quarter of last year, and down 53% from the $2,490 million the company recognized in the fourth quarter of 2021. Transaction revenue for the quarter amounted to $1,013 million, while subscription and services revenue accounted for $151.9 million of the revenue generated.
The decline follows the company seeing monthly transacting users fall from 11.4 million to 9.2 million on a quarter over quarter basis.
Trading on the platform meanwhile declined 43.5% on a quarter over quarter basis, falling from $547 billion to $309 billion, the lowest figure in at least five quarters. Assets under management fell too, although not as dramatically, falling from $278 billion in the fourth quarter to $256 billion in the current quarter.
As a means of bracing the investors for the poor results, the company referenced a prospectus filing from last year, wherein they stated that “you can expect volatility in our financials.” To be fair, the firm had previously guided to monthly transacting users, total trading volume, and subscription & services revenue all falling during the first quarter.
In terms of profitability.. there was no semblance of such a thing. Operating expenses for the quarter amounted to $1,720.9 million. The largest expense here was technology and development at $570.7 million, following by general and administrative expenses of $413.6 million. Transaction expenses meanwhile hit $277.8 million, and sales and marketing expenses were $200.2 million. The company also indicated that they added over 1,200 staff members during the three month period, with employee headcount jumping from 3,730 to 4,948, despite the declining fundamental position of Coinbase.
Lastly, the company reported a net loss of $430 million, versus a net income of $840 million in the fourth quarter and $771 million in the year ago period. Adjusted EBITDA totaled just $20 million, a 98.3% decline from the $1,205 million in adjusted EBITDA recorded in the fourth quarter.
In terms of cash, the company reported cash and cash equivalents of $6.1 billion as of March 31, versus $7.1 billion at the end of the fourth quarter. The decline is said to be due to investments in crypto assets, with the firms USDC holdings amounting to $180 million, while the fair market value of all crypto assets sat at $1.0 billion.
And going forward, things evidently are not to get any better.
The month of April saw the firms total trading volume fall to just $74 billion, while monthly transacting users fell to 8.9 million.
Monthly transacting users and total trading volume are expected to decline further in the second quarter, while subscription and services revenue is expected to be flat to “modestly lower.” Transaction expenses and sales and marketing expenses meanwhile are estimated to take up a similar portion of net revenues.
The kicker here is that the company expects technology & development, along with general and administrative expenses on a combined basis to climb to $1.1 billion to $1.3 billion. Comparatively, those figures on a combined basis in the first quarter amounted to just under $1.0 billion, indicating that despite deteriorating market conditions the company is continuing to ramp its expenditures.
On a full year year basis, the company is expecting adjusted EBITDA losses to hit roughly $500 million, while other metrics are to remain relatively unchanged.
Coinbase Global last traded at $72.99 on the Nasdaq, and is currently sitting at $64.50 in after hours markets, down 11.6%.
Information for this briefing was found via Coinbase. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.