Coinbase Revenue Dips 64% in Q2, Reports $1.1B in Net Loss

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  • Coinbase has posted a 64% decline in revenue during the second quarter of 2022.
  • The cryptocurrency exchange tallied a loss of $4.98 per share.
  • FTX CEO Sam Bankman-Fried shared his thoughts on Coinbase’s earnings.

Coinbase has posted a 64% decline in revenue during the second quarter of 2022, as shared in its letter to shareholders.

According to a report by Refinitiv, the cryptocurrency exchange tallied a loss of $4.98 per share, failing to meet the revenue estimates of analysts at a $2.65 loss per share. Furthermore, the company also shared that it only had $808.3 million in revenue, missing also the $832.2 million predicted by experts.

Following the exodus of investors from the crypto market amid the crypto winter, Coinbase reported a net loss of about $1.1 billion. This is in comparison to the $1.59 billion in net income it had in the second quarter of last year.

In the shareholder letter, Coinbase factored in the $377 million non-cash cryptocurrency-related impairment charges related to lower crypto asset prices in Q2. Coinbase also saw its own cryptocurrency assets at the end of June go down from $1 billion to just $428 million. Notably, more than 40% of its cryptocurrency assets were bitcoin.

It is important to note that during the second quarter of 2022, the cryptocurrency market was chilled by the effects of the recent crypto winter.

While we did see net outflows in Q2, we observed that the majority of this behavior was institutional clients de-risking and selling crypto for fiat as opposed to withdrawing their crypto to another platform.

“As a result, our market share of the total crypto market capitalization declined to 9.9% from 11.2% in Q1, ” Coinbase added in the shareholder letter.

Meanwhile, Sam Bankman-Fried, the CEO of FTX, shared this same sentiment on Coinbase’s 2022 Q2 earnings. He said that since the market is down, so does Coinbase’s earnings. “Nothing surprising there, and nothing Coinbase specific,” Bankman-Fried tweeted.

Over the series of tweets, the FTX CEO claimed that Coinbase’s “real revenue was probably closer to the $650m Transaction,” followed by a breakdown of the company’s expenses.

He then concluded that looking at the numbers annualized, “Q2 would imply $2.5b of real net revenue (~90% mobile app trading fees); $4.4b of employee comp; and $1b of other expenses.

Speaking about the net worth, Bankman-Fried said Coinbase lost probably $3 billion a year, including stock-based compensation.

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