Shares of Coinbase Global Inc. fell 5% in after-hours trading Tuesday after the cryptocurrency exchange said volumes and monthly user counts could be lower in the current quarter than what was seen in the last one, as “soft” crypto market activity continues.
The company posted a net loss of $1.09 billion, or $4.98 a share, whereas it recorded net income of $1.61 billion, or $6.42 a share, in the year-before quarter. Analysts tracked by FactSet were expecting a $2.47 loss on a per-share basis.
posted a loss on the basis of adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) of $151 million, while the company posted positive adjusted Ebitda of $1.15 billion in the year-before quarter. The FactSet consensus was for a $158 million loss on the metric.
Coinbase’s revenue fell to $803 million from $2.03 billion, while analysts were expecting $874 million.
The company reported 9.0 million monthly transacting users, down from 9.2 million in the March quarter. Coinbase saw $217 billion in total trading volume, down from $309 billion in the March period.
Analysts tracked by FactSet were projecting 8.7 million monthly transacting users along with $216 billion in trading volume.
Retail trading volumes dipped to $46 billion from $74 billion in the first quarter, with Mizuho analyst Dan Dolev calling the latest performance “very weak.” Institutional volumes declined to $171 billion from $235 billion.
Dolev said that while Coinbase’s retail take rates ticked up by 3 basis points, that change “may simply be a reflection of share losses in the ‘pro-sumer’ high-roller pro-space to platforms like FTX.”
“Dramatic market movements shifted user behavior and trading volume, which impacted transaction revenues, but also highlighted the strength of our risk-management program,” executives said in a shareholder letter. “We are focusing on our top business priorities and more tightly managing expenses.”
The company disclosed that “soft crypto-market conditions” from the second quarter have continued into the third quarter. Coinbase executives anticipate that monthly transacting users and trading volume in the third quarter will be lower than what was seen in the second quarter.
“We are working hard to operate within the $500 million adjusted Ebitda loss guardrail that we communicated for 2022,” Coinbase’s management team said in the investor letter. “Clearly, we are operating through stressed market conditions, but based on the expense management initiatives taken in Q2, we are cautiously optimistic about our ability to operate within this guardrail.”
Dolev noted a change in language relative to the first quarter, when Coinbase executives said that “during a prolonged and stressful scenario for our business, we will aim to manage our 2022 potential adjusted Ebitda losses to approximately $500 million on a full-year basis.”
Coinbase has experienced a tumultuous run in recent months as the prices of digital assets have fallen and interest in cryptocurrency trading has waned. Chief People Officer L.J Brock said in an early June blog post that the company planned to extend its hiring pause for both new and backfill roles “for the foreseeable future” while rescinding some accepted offers.
Executives remain upbeat about the company’s long-term vision, saying in the shareholder letter than despite “macroeconomic conditions and shocks to the crypto credit environment,” they are “as bullish as ever on the future of this technology.”
“Coinbase is an all-weather company with experience in navigating through crypto-asset price cycles,” they said. “We continue to take a long-term view and remain focused on building for the future.”
Shares of Coinbase have lost roughly two-thirds of their value thus far this year, though they’re up about 45% over the past month. They fell 10.6% in Tuesday’s regular session leading up to the report.