Cryptocurrency exchange Coinbase said that as prices of crypto dropped and trading volumes slumped, its revenue had declined by 61% in the last quarter.
On Tuesday, Coinbase, a San Francisco-based company, reported a loss of US$1.1 billion after-tax, as compared to the net profit of US$1.6 billion it reported in the middle of the crypto boom a year ago. It further said that a loss of US$446 million reflected an impairment charge on its crypto and venture funds.
In the after-trading market, shares of the company dropped by over 5%, in addition to the loss of around 11% earlier in the day. In Q1 of this year, a drop in prices of bitcoin, along with other cryptocurrencies, led the company into the red, which was then proceeded by the laying-off of 18% of its employees in June.
As trading volumes declined, the company reported another loss of 30%. Coinbase reported a loss in operating costs of US$647 million before its impairment charges, and its net cash position dropped by around US$400 million to US$2.8 billion.
In order to ease Wall Street’s concerns about its financial condition in the middle of a crypto “winter,” the company published extra details related to its cash burn and said that it had not recorded any credit losses, even though other cryptocurrencies were going through financial turmoil at the time.
Alesia Haas, chief financial officer at Coinbase, said that the company took long-term loans when interest rates were at their lowest levels, as the company knew that the available capital of US$6.2 billion would not be enough to keep investing through the economic downturn.
She further added that the company believed that it might continue with its plan of keeping the loss of this year’s earnings before taxes, interest, depreciation, and amortization to no more than US$500 million. On the other hand, Coinbase additionally continues to face questions from analysts related to its ongoing increasing losses of non-cash, as the company lost US$1.52 billion in the initial six months of this year, which is equivalent to 77% of its annual revenue.
In the latest quarter, stock-based awards to its staff are equivalent to 49% of its revenue, while the company projected that before dropping off next year, the company would continue at the same level in the current quarter.
According to Haas, the company is aware of shareholder concerns related to the stock-based pay and coordinates with its investors over the issue. On the contrary, she also mentioned that the company took a longer-term view of the costs on account of the unpredictability of crypto markets.
Compared with a year ago, trading volumes in the name of retail customers were lower at US$46 billion, which almost declined by more than two-thirds. Regardless of this setback, Coinbase maintained that the economic slowdown was an aspect of the crypto market and said that, according to its analysis, retail customers are not leaving the crypto platform.
The company reported US$803 million of net revenue and a loss of US$4.98 a share in this quarter.
According to Wall Street’s estimations, it expected a loss of US$2.65 per share on its annual revenue of US$832 million. In recent days, company stocks have been unpredictable, as last week it increased by more than 30% due to an alliance with BlackRock. It had already lost two-thirds of its profit before Tuesday’s earnings were released.