Coinbase Posts Surprise Q1 Loss, Revenue Misses Expectations, Shares Fall

Total revenue came in at $1.41bn, down from $2.03bn a year earlier, and below analyst estimates of about $1.48bn. 

The company swung from a net profit of $65.6mn, or 24c per diluted share, in the prior-year period to a net loss of $394.1m, or $1.48 per share, and an adjusted loss of $45.6 million, which works out to a per-share loss of about 12 cents a share.  Analyst estimates ranged from a per-share profit of a few cents to more than $1.00.

Adjusted EBITDA, a measure of operating performance that excludes items like interest and taxes, came in at $303.3mn. 

In the slide deck announcing the results, the company said that macro headwinds outpaced the company's growth, noting that both total crypto market capitalization and total crypto trading volumes were down more than 20% year over year. 

Coinbase also said results were hurt by low volatility with suppressed trading activity, "particularly in longer-tail assets driven by broader risk-off sentiment."

The company noted its trading market share rose to a record 8.6%, while derivatives trading volume grew 169% year over year. The company said it holds about 12% of global crypto assets on its platform. 

The results underscore a shift in business activity as more of Coinbase's revenue came from subscriptions and services. 

Coinbase also pointed to growth in stablecoins and its Base blockchain as key drivers. Stablecoin balances held in Coinbase products rose 55% year over year, while stablecoin transaction volume on Base increased more than tenfold.

Market reaction

Shares of Coinbase (COIN) fell 2.5% to $192.96 during regular trading on 7 May and dropped as much as 4.9% in after-hours trading following the earnings release.

Meanwhile, Bitcoin traded around $80,100, down nearly 2% over the past 24 hours. However, the broader crypto market cap is also down 1.8% on the day, currently hovering at $2.74tn. 

Recent developments 

The earnings come after Coinbase recently announced it was cutting jobs as part of efforts to reduce costs amid a slower market environment.

On 6 May, Coinbase said it will cut about 14% of its global workforce as it restructures around artificial intelligence (AI). Chief executive Brian Armstrong said the cuts are a result of both weaker crypto market conditions and changes in how work is done as AI tools become more popular. 

The move comes as other crypto firms take similar steps, with Block cutting more than 4,000 jobs earlier this year, and Crypto.com announcing in March that it was cutting its workforce by about 12%.