Coinbase MTUs beat estimates, trading volumes miss

Quick Take

  • Monthly transacting users (MTU’s) fell to 8.5 million during the quarter, down from 9 million in the second quarter.
  • Coinbase EBITDA was negative $116 million, better than estimates of negative $208 million. 

Coinbase's third quarter sales missed estimates while its Monthly Transacting Users (MTUs) topped expectations. Shares whipsawed in after-market trading.

The cryptocurrency exchange said revenue for the third quarter was $590 million, coming in shy of the $641 million estimate of analysts surveyed by FactSet. MTUs came in at 8.5 million, above the 7.7 million estimate.

Subscription and services revenue is now expected to keep growing and total $700 million for the year, compared to more than $500 million in 2021, based on FactSet estimates.

Coinbase also said next year would be difficult, noting that it was preparing "with a conservative bias and assuming that the current macroeconomic headwinds will persist and possibly intensify."

Shares in the exchange fluctuated after hours, first trading down around $53.40 before briefly trading above $60. Coinbase shares were trading at $57.50 after the market close, up from $55.80 at the close. 

The exchange had warned of underperformance in the third quarter during its second-quarter earnings as exchange volumes have dwindled to almost two-year lows. MTUs were 9 million during the second quarter versus 9.2 million in the first quarter.

MTUs are defined as any retail user who actively or passively transacts one or more products on the platform, at least once during a 28-day rolling period. The MTUs presented are an average of each month during the quarter. 

Trading volume came in at $159 billion for the quarter, below estimates of $191 billion. Retail investors made up just $26 billion of this, while institutional investors accounted for $133 billion. The decline in exchange volumes is seen below on The Block's data dashboard. October volumes fell to their lowest levels since December 2020.

Assets on the platform rose to $101 billion, up from $96 billion in the previous period. Prices have generally stagnated over the past three months. On June 30 bitcoin was trading above $19,000, by Sept. 30 it was higher but still below $20,000. 

Coinbase had around $5 billion cash and equivalents as of Sept. 30, compared to $5.7 billion in the second quarter. Meanwhile, total expenses fell to $1.1 billion from $1.8 billion in the previous quarter. 

Following the release estimates for average transaction revenue per user are now $20 for the full year compared to $24 in the third quarter, according to FactSet. Sales and marketing expense estimates dropped from $500 million to $550 million, and a maximum of $600 million for the year.

Yesterday Coinbase revealed it was restructuring its entire product team following the departure of Chief Product Officer Surojit Chatterjee. The reorganization will split Coinbase’s product talent into four divisions, according to a filing with the Securities and Exchange Commission. CEO Brian Armstrong will take a more hands-on approach in relation to product, with product directors now reporting directly to him. 

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