Coinbase misses with Q2 revenue down 64% YoY to $808.3M, vs. $832.2M est., a $1.1B net loss, trading volume down 53% YoY to $217B, and 9M MTUs
- Coinbase's revenue declined almost 64% in the quarter as cryptocurrency prices fell. — The exchange operator lowered its full-year forecast for transacting users. Source: Coinbase - Investor Relations .
CNBCJordan Novet
Context & Ripple Effects
Coinbase had already reported a weaker first quarter, with net revenue falling from the prior year even as monthly transacting users rose to 9.2M; the new quarter shows that the pullback had extended into trading activity and revenue. The earlier Q1 decline provides the immediate baseline for the reduced user outlook.
Later coverage records a prolonged reset rather than a one-quarter reversal: Coinbase reported lower revenue and losses in late 2022, before its Q1 2023 loss narrowed sharply alongside a revenue beat. That narrower Q1 2023 loss makes this Q2 2022 result an early marker of the company’s subsequent cost-and-volume adjustment.
First-order effects
Coinbase falls short of the revenue estimate while reporting a $1.1B net loss, leaving the exchange with materially less revenue generated from a $217B trading-volume base.
Coinbase’s lower full-year forecast for transacting users resets expectations after Q2 monthly transacting users reached 9M.
Second-order effects
A lower user forecast and sharply lower trading volume put Coinbase’s transaction-dependent revenue model under pressure, making future quarterly performance more sensitive to changes in customer activity.
Investors receive a clearer benchmark for the recovery path: later results still showed transaction revenue falling 50% year over year in Q2 2023, even as Coinbase’s total loss had narrowed. The later Q2 2023 results underline the persistence of the volume challenge.
Third-order effects
The sequence points to a crypto-exchange model in which revenue and profitability move closely with trading participation, rather than a revenue base insulated from market-activity swings.
If Coinbase continues to report improving losses while transaction revenue remains weak, the company’s long-run performance will increasingly be judged on whether it can reduce that dependence on trading volume.
The trend: Crypto exchanges are being tested on their ability to withstand sharp contractions in trading activity and transacting users without matching collapses in revenue and profitability.
In the last quarter, retail made up about half of the assets on Coinbase, but it generated nearly 95% of the trading fees https://s27.q4cdn.com/... https://twitter.com/...
“I think it was a rough quarter for most companies in the crypto space.” Coinbase President and COO Emilie Choi speaks with @emilychangtv about its 2Q earnings miss https://www.bloomberg.com/... https://twitter.com/...
Overall the story of Coinbase's quarter seems to be that they overhired which made them swing to a loss quarter and declining crypto on their balance sheet was a drag on profits, just like MicroStrategy. Unclear why institutions will want crypto on balance sheets in the future
A few things not addressed during @coinbase $COIN Q2 call. Unfortunately, yet unsurprisingly, analysts failed to bring these up as well. No worries, we will. Our forecasts (annual) https://boombustblog.com/... Q2 results https://s27.q4cdn.com/... Full report https://boombustblog.…
8) It'll be interesting to see the impact of their recent headcount changes on upcoming earnings! FWIW I highly recommend Brian's well-written post on it: https://blog.coinbase.com/... And macro. Remember: Coinbase is more sentiment-dependent than FTX! Large upside in a recovery.
We need more CEO's analysing competitor's earnings releases in detail like this. It's the future. Decentralised research. DeRe. https://twitter.com/...
Coinbase earnings has one bright spot: interest income jumped 211% from 1Q. With the Fed raising rates, it gets higher interests on customers' fiat custodial funds. Its USDC activity also helped. https://www.bloomberg.com/... via @crypto https://twitter.com/...
$SHAK Sales come in a little light. Co expected more urban recovery. Shares off by <5% pre-market, up 33% in 1/mo and -25% YTD. It's been a bouncy year for companies selling “food” or “things” to consumers. I love a fancy shareholder letter: https://s27.q4cdn.com/...
An expected bad quarter for Coinbase with misses everywhere • Revenue -64% year over year • Lost $1.1 billion • Monthly users expected to be 7M to 9M going forward versus 5M to 15M initially projected. Losses driven by R&D and stock based compensation https://www.cnbc.com/...
This is pretty much normal for Coinbase, even when crypto markets were more buoyant. In fiscal 2020 and 2021, retail accounted for 94.89% and 94.94% of trading fees — despite assets being roughly 50-50. https://twitter.com/...