No one was expecting it to be pleasant. But Coinbase’s latest set of results paints a pretty ugly portrait of a company smack bang in the eye of last year’s crypto storm.
To start with, the Nasdaq-listed crypto exchange lost an eye-watering $2.6 billion (€2.5 billion) in 2022, down from net earnings of $3.6 billion (€3.4 billion) in 2021 when markets were riding high and appetites for risky assets were stronger. Coinbase’s fourth-quarter adjusted loss before interest, tax, deductions and amortisation (Ebitda) was $124 million (€117.6 million) although its full-year Ebitda loss, at $371 million (€352 million), was “well within the $500 million loss guardrail”, it set out last February, the company said. While some of these figures were ahead of Wall Street’s expectations, the results also highlight one of the biggest issues that the crypto exchange is facing: declining trading volumes in the face of heightened public wariness about the volatile asset class.
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In the final three months of 2022, amid the fallout from the collapse of FTX and the arrest of its founder Sam Bankman-Fried on a litany of fraud charges, trading volumes at Coinbase declined 9 per cent. Although the company said it captured a bigger share of the market during this time, its overall transaction revenue — fees it charges to customers, both retail and institutional, for buying and trading crypto assets on its platform — declined by a staggering 63 per cent from $6.8 billion (€6.5 billion) in 2021 to $2.4 billion (€2.3 billion) last year.
While it bears repeating that Coinbase is likely in a better position than many other players in the space to weather this particular crypto winter, the company’s top brass sang a decidedly cautious tune on an earnings call after the release. Crypto markets may have rebounded sharply in the early months of the year, said the company’s chief financial officer Alesia Haas, boosting the company’s transaction revenues in the early going. But do not kid yourself, she warned. “I cannot underscore this enough,” said Haas. “We caution investors to not extrapolate these results forward.”
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With all this in mind, Coinbase, which employs about 130 people after shedding in excess of 100 jobs here in the past 12 months, is not expecting to “meaningfully” increase its global headcount this year, said Haas. She even hinted that more job cuts could be coming down the tracks. The potential “uplift” in staffing that the company’s new Irish lead, Cormac Dinan, anticipated recently seems like it could be a long way off.
