Coinbase Global (NASDAQ:COIN) announced a loss of $4.95 per share for the second quarter of 2022, larger than the Zacks Consensus Estimate of a loss of $3.04. In addition, the results did not compare well to the $6.42 per share earnings from the prior year.
Coinbase’s Revenue Drops on Lower Trading Volumes
As the trend of lower crypto asset prices and volatility, which started in late 2021 and extended into the second quarter of 2022, persisted throughout the quarter, Coinbase observed reduced trading volumes in both retail and institutional markets.
With $803.3 billion in total revenues, the company fell 7.9% short of the Zacks Consensus Estimate. The top line decreased by 63.8% from the prior year as a result of lower transaction revenues, subscription and service fees, and other revenues.
The number of Monthly Transacting Users (MTUs) was 9 million, up 2.3% from the previous year due to increased institutional and retail volume.
Due to decreasing trading volume in both institutional and retail markets, the $217 billion in trading volume fell 53% year over year. Beyond Bitcoin, the total trade volume continued to expand into Ethereum and other crypto assets.
Due to a rise in research and development, general and administrative, restructuring expenses, and other operating expenses, total operating costs rose by 36.9% over the previous year to $1.9 billion.
The $1.1 billion net loss included $446 million in total non-cash impairment charges for the company’s venture investments and cryptocurrency assets. Net loss would have been $647 million if these non-cash impairment charges hadn’t been made.
In contrast to the $1.2 billion earned in the same quarter last year, adjusted EBITDA in the reported quarter was a loss of $151 million.
Cash and cash equivalents were $5.7 billion as of June 30, 2022, a decrease of 20.2% from the amount at year’s end in 2021. The total value of the assets increased by approximately five times from the end of 2021 to $105.5 billion.
The company’s long-term debt was $3.4 billion at the end of the second quarter of 2022, an increase of 0.1% from the previous year’s end.
At the end of the reported quarter, the total shareholders’ equity was $5.8 billion, which was 8.9% less than it had been on December 31, 2021.
In comparison to the same period last year, when cash from operations totaled $7.4 million, cash utilized in operations in the first half of 2022 was $3.8 billion.
According to Coinbase, the retail MTU and total trading volume would be lower in the third quarter of 2022 compared to the second.
As a percentage of net revenues, transaction costs are anticipated to be in the lower twenties. The anticipated cost of sales and marketing is $100 million.
2022 Outlook
Between 7 and 9 million retail MTUs are anticipated this year. Per-user transaction income is estimated to come in the low $20s.
Estimated revenues from subscriptions and services exceed $600 million.
The estimated level of transaction expenses as a percentage of revenues is in the low 20%. Coinbase anticipates spending between $500 million and $600 million on sales and marketing. The estimated amount for technology and development and general & administrative costs is $4 to $4.25 billion.
The company said they are making a lot of effort to stay inside the $500 million guardrail for Adjusted EBITDA loss that they indicated for 2022. Despite the fact that they are working in a challenging market, they are cautiously confident about our ability to stay inside this guardrail based on the expense management actions they took in Q2.
Coinbase shares are down 65% year-to-date.
Featured Image: DepositPhotos @Selagin
