Coinbase, a crypto exchange listed on Nasdaq, has presented its latest results which depict a company deeply impacted by the crypto storm of the past year.
The figures paint an unappealing picture as the exchange suffered a staggering loss of $2.6 billion (€2.5 billion) in 2022, after recording net earnings of $3.6 billion (€3.4 billion) in the previous year when risky asset appetites were higher and the markets were performing well.
The exchange’s fourth-quarter EBITDA loss before interest, tax, deductions and amortization amounted to $124 million (€117.6 million), while its full-year EBITDA loss, which came in at $371 million (€352 million), was within the $500 million loss guardrail it had established last February.
Although some of these results exceeded Wall Street’s expectations, they also bring to light one of the exchange’s significant challenges, namely, dwindling trading volumes and growing public scepticism of the volatile asset class
In Q4 2022, as fallout from FTX’s collapse and the arrest of its founder Sam Bankman-Fried on numerous fraud charges hit the industry, Coinbase saw a 9% drop in trading volumes. Despite capturing a larger market share, the exchange’s overall transaction revenue, which includes fees charged to both retail and institutional customers for buying and trading cryptocurrencies, saw a steep 63% decline, falling from $6.8 billion (€6.5 billion) in 2021 to $2.4 billion (€2.3 billion) in 2022.
Although Coinbase is likely better positioned than many other players in the industry to weather the ongoing crypto winter, the company’s leadership struck a cautious tone in their earnings call. Despite a sharp rebound in crypto markets in the early months of the year that boosted the company’s transaction revenues, Alesia Haas, the chief financial officer, warned investors against extrapolating these results. “I cannot underscore this enough,” Haas said. “We caution investors to not extrapolate these results forward.”
Taking these developments into account, Coinbase, which has reduced its staff by over 100 in the past year and currently employs approximately 130 people, is not anticipating a significant increase in its global headcount this year, according to Haas. She suggested that the company may even make additional job cuts in the future. This indicates that the anticipated “uplift” in staffing, as mentioned by the new Irish lead Cormac Dinan, maybe a distant possibility.
