Coinbase reports $557 million loss in Q4

Net loss Coinbase in Q4 2022 amounted to $557 million or $2.46 per share, which was above market expectations ($2.52). In after-hours trading, the shares demonstrated high volatility.

Our Q4 and FY’22 financial results are in.

Our letter to shareholders can be found on the Investor Relations website at https://t.co/8ovHEtPRgf

— Coinbase (@coinbase) February 21, 2023

Net revenue stood at $604.9 million. The 5% increase versus July–September was driven by a 34% rise in revenues consolidated in the subscriptions and services category.

In the latest quarter, about 22% of receipts came from the service staking ($62.4 million). For the year, the company earned $275.5 million from this.

Trading commissions in Q4 declined 12% — from $365.9 million to $322.1 million. For 2022 the metric fell by a factor of 2.9, to $2.36 billion.

At an analysts’ conference, the company’s vice president of investor relations Anil Gupta attributed the deterioration to retail investors’ HODLing and a decline in volatility.

As of the end of December, the value of digital assets on the platform stood at $80 billion (vs $101 billion in the prior quarter).

In its shareholder letter, Coinbase said it met its adjusted guidance for 2022 across all metrics, including the year’s average monthly active users (8.8 million).

We are entering 2023 with a focus on improving efficiency […]. We have limited ability to forecast transaction revenues, which correlate with market capitalization and volatility of digital assets,

the document said.

The company urged not to extrapolate January’s $120 million in trading commissions to February–March due to the unpredictability of market conditions.

Management expects revenue in the subscriptions and services category to rise—from $282.8 million to $300–350 million.

In terms of staffing, Coinbase plans not to significantly increase the workforce from the current 3,650 employees.

On regulatory regime, the company noted favourable positions to capitalise on the transitional period.

Earlier, Coinbase CEO Brian Armstrong said that staking services offered by the trading platform cannot be considered securities. In his words, the company is prepared to defend this assertion in court. The warning relates to charges by the SEC, brought against Kraken on February 10.

In January, JPMorgan noted that the Shanghai hard fork and the FTX collapse are positives for Coinbase.

Shares of the exchange closed February 21 down 4.8%. Since the start of the year, the company’s market capitalisation has jumped 75.4%, but over the past year it has fallen 67.7%.

Ark Invest added to its Coinbase stake in February by about $6.7 million and$9.27 million.

In October 2022, the asset-management firm bought Coinbase securities for the first time since June. In November, Ark Invest structures spent another $21.4 million, in December — $3 million and$5 million.