Coinbase Sees 66% Decline in Revenue, Remains Resilient

• Coinbase reported a 66% decline in transaction revenue for 2022 and a 50% decrease in total trading volume.
• The company attributed the decrease to two high-profile collapses, Luna and Terra in May 2022 and FTX in November 2022.
• Despite these losses, Coinbase saw an increase in quarterly revenue and said its operating expenses were reduced by over 30%.

Coinbase Reports 2021 Earnings

Coinbase has released its end-of-year shareholder letter, detailing its financial standing for the previous quarter and for the entirety of 2021. The company reported a 66% decline in transaction revenue for 2022 compared to 2021, while total trading volume decreased by 50%.

Causes of Decline

Coinbase attributed this decrease to two major market collapses that occurred during the year: Luna and Terra in May 2022, as well as FTX in November 2022. These events caused the crypto market to lose 64% of its value, leading to an overall drop in Coinbase’s revenue.

Quarterly Revenue Increases

Despite these losses, Coinbase reported that it had diversified its revenues into subscriptions and services which led to increased quarterly revenues. The fourth quarter net revenue was $605 million – down from $2.49 billion the previous year – but up 5% from $576 million from Q3.

Operating Expenses Reduced

The company’s operating expenses were reported at $1.2 billion – up 3% quarter-over-quarter – however due to layoffs during market crises they have reduced expenses by over 30%, leading into 2023’s first quarter.

Financial Position at Year End

Coinbase ended Q4 with $5.5 billion of US dollar resources – down 3% or $148 million from Q3 – yet stated that it remained resilient despite major shocks throughout the year and believed it was still positioned for success going forward despite potential regulation changes affecting the crypto industry