Coinbase Tops Revenue Projections in Q4 Earnings Report

While the crypto exchange beat revenue projections, it fell short in other areas of its business. Boardroom breaks down Coinbase’s Q4 earnings report.

Coinbase shares were up a bit on Tuesday after the crypto exchange reported stronger-than-expected fourth-quarter earnings.

In the final quarter of 2022, Coinbase generated $605 million in total revenue, with $322.1 million coming from transaction revenue and $282.8 million being subscription and services revenue. Analysts expected the crypto exchange to generate roughly $581 million in revenue, but Coinbase beat that projection.

Despite beating revenue projections, Coinbase’s total trading volumes and transaction revenues declined by 50% and 66%, respectively, in 2022. This is due in large part to the downturn in the crypto industry. Coinbase reported in its shareholder letter that the crypto market cap declined 64% or approximately $1.5 trillion throughout 2022. Like many other crypto companies, Coinbase named Terra’s troubles and the FTX collapse as significant events that shaped activity on its exchange last year. Still, Coinbase proved resilient during an uncertain time across the industry.

While Coinbase’s trading revenue decreased in Q4, the crypto exchange posted gains in other categories quarter-over-quarter. One major win was Coinbase’s uptick in subscription and services revenue in Q4 which grew by 34% compared to Q3.

More high-level takeaways from Coinbase’s Q4 2022 earnings report:

Total revenue in Q4 was down 24% year-over-year since the crypto exchange generated $2.4 billion in revenue in Q4 of 2021.
Coinbase generated $3.1 billion in total revenue in 2022, down nearly 43% from the $7.3 billion in revenue the crypto exchange saw in 2021.
Yahoo reported that the crypto exchange attracted 8.4 million monthly transaction users in Q4, slightly down from 8.5 million in Q3 of 2022.
Bitcoin (41%) and Ethereum (26%) account for the largest portions of assets on Coinbase’s platform.
Customer assets fell to $80 billion compared to $101 billion in Q3.
Total operating expenses were $1.2 billion.
Net loss was $577 million in Q4 and $2.6 billion total in 2022.

Following two rounds of layoffs in 2022, Coinbase reported having 4,510 full-time staffers at the end of the year. The company also expects a 30% reduction in operating expenses following recent layoffs this past January. Despite Coinbase continuously cutting down its workforce, the company reported 780 more employees at the end of 2022 than it did at the end of 2021 (3,730). Coinbase’s workforce was at its highest in Q2 of 2022 when it reported 4,977 employees on its staff.

Coinbase didn’t share a full expected revenue projection for Q1 2023, but the company expects subscription and services revenue to hit $300 to $325 million in the new quarter.