Coinbase Global Inc. It turned into a loss in its most recent quarter and posted lower-than-expected revenue as 2.2 million crypto traders lost its platform, citing the effects of lower volatility and crypto asset prices.
Coinbase COIN stakes,
It fell 16% in after-hours trading on Tuesday, after falling about 13% in the regular session. They were trading at lower prices than they had been in any normal trading session since the company went public just over a year ago.
Coinbase’s net revenue for the first quarter fell to $1.17 billion from $1.60 billion a year earlier, while analysts were modeling at $1.50 billion.
The decline in revenue came as volume slowed. Coinbase reported trading volume of $309 billion for the March quarter, compared to $547 billion in the December quarter and $335 billion in the March quarter of the previous year. Retail volume was $74 billion, compared to $177 billion in the December quarter and $120 billion a year earlier.
The company had 9.2 million users transacting per month, compared to 11.4 million in the December quarter.
“We believe these market conditions are not permanent and we remain focused on the long term. In fact, our investment in our business now is particularly critical – these periods of low volatility can provide the opportunity to focus more on product development (as opposed to peak periods, when we are more focused on meeting high demand),” the company said in a shareholder letter.
The company also reported a first-quarter net loss of $430 million, or $1.98 per share, compared to net income of $388 million, or $3.05 per share, in the first quarter of the previous year. Analysts tracked by FactSet expected a loss of 1 cent per share on a GAAP basis.
Coinbase previously set out to make 2022 an “investment year,” and the company continues to prioritize investment spending amid a more challenging business climate.
“We are very confident that we can choose profitability over reinvestment in the business,” CFO Alicia Haas said on a Coinbase earnings call, but the company sees investment opportunities in areas such as non-fungible tokens (NFTs) and international growth.
“We could have done more of that sequentially, we could have moved more slowly and focus on profitability, but we have the resources,” she continued. “We have a disciplined approach to running our business through peak periods and valleys.”
Coinbase revealed that 24% of its total volume in the last quarter was concentrated in Bitcoin (BTCUSD),
Besides 21% in ethereum ETHUSD,
The rest is in other assets. That compares to 16% concentrations in both Bitcoin and Ethereum in the December quarter.
While Coinbase acknowledged the “softness of the market,” it said it was seeing encouraging trends, such as increased adoption of non-investment products. About 5 million users transacting with Coinbase per month participated in a non-investment product during the quarter, with staking being the most popular option.
“Our thesis on moving away from just a trading platform to empowering the entire cryptocurrency economy and people’s primary financial account is already starting to work,” CEO Brian Armstrong said in the call.
The report follows a rough slide for Coinbase shares, which are down 55% over the past month as the S&P 500 SPX,
It lost 11%. The company revealed that it witnessed a continuous decrease in both the volatility of crypto assets and the price of crypto assets during the month of April.
For the second quarter, Coinbase expects monthly transacting users and total trading volume to be lower than seen in the first quarter. Coinbase also expects subscription and service revenue to be similar to or slightly lower than what the company saw in the first quarter.