Cryptocurrency exchange Coinbase said its revenue fell 61% in the last quarter as crypto prices fell and trading volumes crashed.
The San Francisco-based company reported an after-tax loss of $1.1 billion on Tuesday compared to the $1.6 billion net profit it posted amid the crypto boom a year ago. He said $446 million of the loss reflected an impairment charge on his crypto and venture capital investments.
Coinbase shares fell 4% in aftermarket trading, after losing nearly 11% earlier in the day.
The crash in bitcoin and other crypto prices plunged the company into the red in the first quarter, leading it to lay off 18% of its staff in June. With trading volume still down 30% from the weak first quarter, it suffered an operating loss of $620 million before the impairment charge and its net cash position fell by about $400 million. dollars, to $2.8 billion.
In an attempt to allay Wall Street concerns about its financial situation amid what it called a crypto “winter,” Coinbase released additional information about its cash burn and said it had no suffered no credit loss, despite financial strains hitting other crypto companies.
Chief Financial Officer Alesia Haas said that alongside the long-term debt incurred when interest rates were lower, Coinbase believed its $6.2 billion in available capital would allow it to continue investing during the recession. She added that Coinbase still believes it can stick to its earlier plan of keeping this year’s loss on earnings before interest, taxes, depreciation and amortization to a maximum of $500 million.
However, the company has also faced questions from analysts over its mounting non-cash losses, with a net loss of $1.52 billion in the first six months, equivalent to 77% of its revenue from the trimester.
Stock-based employee rewards accounted for 48% of revenue last quarter, and Coinbase expected it to continue at the same level in the current quarter before falling next year.
Haas said the company understands investors’ concerns about stock compensation and is “aligned” with shareholders on the issue. But she also said Coinbase takes a longer-term view of the costs due to volatility in the cryto markets.
At $46 billion, trading volume on behalf of retail clients was down more than two-thirds from a year earlier. Despite the setback, he maintained that the downturn was part of a typical cycle in crypto markets and said his analysis “suggests [retail] customers do not leave the Coinbase platform”.
Coinbase posted net income of $803 million in the quarter and a loss per share of $4.98. Wall Street expected a loss of $2.65 per share on revenue of $832 million.
Shares have been volatile in recent days, jumping more than 30% in the past week thanks to an alliance with BlackRock. They had already given up two-thirds of the gain before Tuesday’s results announcement.