Coinbase (COIN) earnings Q2 2022

Coinbase CEO and co-founder Brian Armstrong speaks during the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.

Patrick T Fallon | AFP | Getty Images

Coinbase shares fell in extended trading on Tuesday after the crypto exchange reported a loss of over $1 billion in the second quarter and missed analysts’ revenue estimates.

Here’s how the company did it:

  • Merits: Loss of $4.98 per share versus a loss of $2.65 per share that analysts were expecting, according to Refinitiv.
  • Revenue: $808.3 million versus $832.2 million expected by analysts, according to Refinitiv.

Coinbase’s revenue fell nearly 64% as investors exited the crypto market after last year’s dramatic run. Revenue from retail transactions came in at $616.2 million, down 66% and below the consensus of $667.1 million among analysts polled by StreetAccount.

According to a letter to shareholders, Coinbase reported a net loss of $1.1 billion compared to a net income of $1.59 billion in the same quarter last year. One factor was a $377 million non-cash impairment charge related to cryptocurrencies. Coinbase’s own cryptocurrency assets were worth $428 million at the end of June, up from about $1 billion at the end of March.

“Q2 was an endurance test for crypto companies and a complex quarter overall,” the company said in the letter. “Dramatic market moves altered user behavior and trading volume, impacting transaction revenue but also underscoring the strength of our risk management program.”

The company said it had 9 million users with monthly transactions during that period, up from 9.2 million in the first quarter but more than the StreetAccount consensus of 8.7 million. Macroeconomic and cryptocurrency lending led to lower trading volume during the quarter, the company said.

From an operational standpoint, it was a challenging quarter for Coinbase.

Cryptocurrency controversies helped push prices down in a so-called “crypto winter.” Coinbase shares plunged 75% in the second quarter, while Bitcoin’s price plummeted about 59%. Coinbase said it is extending its hiring freeze for the foreseeable future, cutting 18% of its workforce.

Coinbase has updated its full-year outlook. It now expects 7 to 9 million monthly users to transact, up from a range of 5 to 15 million three months ago. Management said it expects average transaction revenue per user to be in the low $20 range and not at pre-2021 levels.

The company said it has established a marketing spend plan for the second half that is in line with its spend management efforts, including “optimizing paid media.” And it trimmed its guidance for technology, development, and general and administrative expenses to $4.0-$4.25 billion from $4.25-$5.25 billion a quarter earlier.

Coinbase shares fell nearly 11% during Tuesday’s regular trading session.

Executives will discuss the results in a conference call starting at 5:30 p.m. ET.

This story evolves. Please check back for updates.

CLOCK: As Coinbase matures, its volatility will decrease, says Oppenheimer’s Owen Lau Coinbase (COIN) earnings Q2 2022

Drew Weisholtz

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