Coinbase Global Inc. posted a narrower loss and a smaller-than-estimated revenue decline, as the biggest US digital-asset trading platform saw first-quarter results stabilize somewhat during a rebound in cryptocurrency prices.
The loss narrowed to about $79 million, from $430 million, in the year-earlier period. It was the fifth consecutive quarterly loss. Revenue fell by about 34% to $772.5 million, though it increased from the fourth quarter, when token prices tumbled amid a series of industry scandals and bankruptcies. The average of estimates compiled by Bloomberg for revenue was about $654 million.
Looking ahead, the crypto industry “continues to be volatile, as evidenced most recently by the disruptions in the banking sector and ongoing regulatory uncertainty,” Coinbase said in an investor letter. “We continue to focus on our cost reduction efforts.”
Brian Armstrong, chief executive officer of Coinbase, said the company has taken a “scrappier approach” by cutting jobs and vendor costs. Chief Financial Officer Alesia Haas noted that the firm reached the lowest level of expense in awhile.
In the current quarter, Coinbase expects lower subscription and service revenue from the first quarter, because a drop in the amount of the USD Coin in circulation. Interest income from USD Coin was $199 million, according to the letter. Despite recent increase in crypto prices, volatility is still at multiyear lows, and Coinbase is engaging with customers in new ways, such as through staking and new products, Haas said.
Coinbase has been navigating a market downturn and a difficult US regulatory environment. The company, which cut staff by 20% in January, faces more uncertainty after receiving a notice from the US Securities and Exchange Commission in March threatening to sue it over several business lines. The company provided an updated headcount of 3,535 full-time employees, a 29% decline from the same quarter last year.
Despite Coinbase “operating in a very challenging regulatory and business environment in the first quarter,” the company still turned into positive adjusted Ebitda, said Owen Lau, an analyst of Oppenheimer & Co. “I think that’s a substantial turnaround that the market has not given them enough credit for.”
Armstrong said the company remains “100% committed to the US,” while Chief Legal Officer Paul Grewal said Coinbase expects to be “fully operational” during whatever time period is required to resolve the potential litigation with the SEC.
Shares of Coinbase rose about 8% in after-hours trading. The stock, which is down almost 90% since its April 2021 debut, has jumped around 40% this year.
By Olga Kharif and Yueqi Yang / Bloomberg