Coinbase misses estimates, sees Q3 underperforming Q2

Quick Take

  • Coinbase missed revenue estimate and cut its top end of its MTU forecast.
  • Trading volume totaled $217 billion

The tough quarter for cryptocurrencies took a bite out of Coinbase.

The company reported a net loss of $1.1 billion, including impairment charges, in the second quarter, double the $546 million loss expected by analysts surveyed by Factset. For the year, it narrowed the range for its annual forecast for MTUs to 7 to 9 million from between 5 million and 15 million. Analysts surveyed by Factset were expecting 8.74 million. MTUs were 9 million for the second quarter, versus 9.2 million in the first quarter.

Assets on platform plunged to $96 billion from $256 billion in the previous period.

Despite the red ink,  the company expects to take advantage of the crypto winter to engage in dealmaking.

“It’s often the best time for us to be greedy when others are fearful,” Chief Operating Officer Emilie Choi told analysts on the company's second-quarter earnings call. “You can expect that we’ll continue to do targeted M&A.”

“On the venture side, we typically like seed stage investments during this time because again it’s a builders market, you tend to see a lot of innovation happening at the ground level,” Choi said.

Trading volume totaled $217 billion versus the average estimate of $216 billion. That was down from $309 billion in the first quarter. Retail trading volume, a metric closely watched by analysts, accounted for $46 billion of the total, down from the $74 billion in the previous period. That was worse than the $58 billion estimate.

Coinbase reported revenue of $803 million, versus an $874 million estimate. Transaction revenue accounted for $655.2 million, while subscriptions and services accounted for $147 million, compared to $1.01 billion and $152 million, respectively, for the first quarter. Analysts were expecting $715 million from transactions and $139 million from subscriptions and services.

“As a result of our core retail customer trading less, our MTU mix has trended more towards non-investing activities – notably staking,” the company said in a release. “In Q2, 67% or 6.0 million MTUs transacted with noninvesting products.”

Net loss totaled $1.1 billion and was heavily impacted by non-cash impairment charges, the company said. Absent non-cash impairment charges, net loss would have been $647 million. Adjusted EBITDA was negative $151 million.

Coinbase ended the quarter with about $5.7 billion in cash and equivalents, compared to $6.1 billion in the first quarter.

This story has been updated with comments from Coinbase's second-quarter earnings call. 

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