Coinbase (COIN) Earnings for Q1 2022

Screens display Coinbase banners during the company’s initial public offering (IPO) at the Nasdaq market site in New York, US, on Wednesday, April 14, 2021.

Michael Nagel | Bloomberg | Getty Images

Coinbase reported first-quarter results that missed analyst revenue estimates after the bell on Tuesday. Shares fell more than 15% in the after-hours trading period, based on a 12.6% drop during regular trading hours before results plummeted.

Here are the key numbers:

  • Loss per share (EPS): $1.98
  • Revenues: $1.17 billion, versus the $1.48 billion forecast, according to Refinitiv

The stock has lost more than 70% of its value since late March, as a broader slide in tech stocks and the value of cryptocurrencies hit Coinbase in particular. Bitcoin, the most popular cryptocurrency, briefly dropped below the token price threshold of $30,000 on Monday, and is down more than 30% this year.

Overall, usage on Coinbase has declined from the fourth quarter. Retail monthly transaction users (MTUs) decreased to 9.2 million, down from 11.4 million in the fourth quarter, while total volume decreased from $547 billion in the fourth quarter to $309 billion.

Revenue was down 27% from a year ago, and it also posted a net loss of $430 million in the first quarter.

But Coinbase does not appear to be concerned about its long-term prospects. The company doubled down on an argument it made before, reminding shareholders that its shares should be considered a long-term investment due to the volatile nature of cryptocurrency price movements.

“We believe these market conditions are not permanent, and we remain focused on the long term,” the company wrote in a letter to shareholders accompanying its earnings announcement. She also said that she is focusing on the next generation of crypto opportunities other than trading.

“As we continue to invest and enhance our core investment platform, the era of cryptocurrency implementation is upon us, led by NFDs and decentralized finance, and we work to further focus our efforts on these market opportunities.”

The increased spending also helped reduce the company’s net profit. Total operating expenses came to $1.72 billion, exceeding revenue for the first time since the company began publicly reporting its financials.

General and administrative expenses were $414 million, an increase of 39% over the previous quarter. Coinbase attributed the rise to higher full-time related expenses and the number of employees associated with the contractor. The purpose of this spending, according to the company, was to “invest to strengthen and expand our customer support, legal, compliance and business support functions.”

Emilie Choi, President and Chief Operating Officer of Coinbase, added to the company’s earnings call that the company is investing heavily in compliance.

“This is important to us, because it helps us solidify our relationship with our customers and regulators, so this is another important part,” Choi said.

While Coinbase has previously revealed plans to increase the number of employees, operating expenses that have jumped nearly 70% in six months indicates that the company is still spending as it is in its hyper-growth phase, despite the decline in users and the volume of transactions between seasons..

Alicia Haas, Coinbase’s chief financial officer, said on the company’s call with analysts that it could have grown more slowly to focus on profits, but chose to spend on growth and diversification of product lines instead.

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