Coinbase posts massive Q2 net losses as downturn bites
Coinbase – one of the world’s most popular cryptocurrency exchanges – has revealed it suffered a massive $1.1 billion net loss in Q2 2022.
The crypto behemoth – believed to be used by around 60 per cent of UK cryptocurrency investors – says it is pointing the finger at a ‘fast and furious’ downturn in digital assets which has seen a huge fall in transactions.
Its announcement marks not only the exchange’s second consecutive quarterly loss, but also the biggest loss since Coinbase listed on the Nasdaq 15 months ago.
“The current downturn came fast and furious, and we are seeing customer behaviour mirror that of past down markets,” the bulletin noted.
“Q2 was a tough quarter, with trading volume and transaction revenue each down by 30% and 35% sequentially, respectively. Both metrics were influenced by a shift in customer and market activity, driven by macroeconomic and crypto credit factors alike.”
In the face of enormous revenue drops, Coinbase stressed to its shareholders that it was taking positive steps during tough market conditions.
“During these down markets, we remain focused on building great products, while we typically see more casual competitors step back,” the missive reassured.
“We are encouraged by the 44 per cent year-over-year growth in subscription and services revenues, and pleased to see our MTUs decline only two per cent compared to Q1.”
The quarterly report also said the company would focus on five key areas during the downturn – Coinbase Retail App, Coinbase Prime, Staking, Developer Products – Coinbase Cloud, and Web3.
The exchange posted $802.6 million in revenue – a fall of 45 per cent on Q1, and an eye-watering 153 per cent year-on-year drop.
Speaking to Reuters, Morningstar Research equity analyst Michael Miller suggested Coinbase’s customers seem to have made their peace with market volatility and were sticking with the exchange. He also noted Coinbase had lowered its annual expenses forecast for technology, development and administration to between $4 billion and $4.25 billion, from $4.25 billion to $5.25 billion.
“The reduction is unlikely to restore profitability at current revenue generation levels.”