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Coinbase saw 66% decline in transaction revenue in 2022 but remained “resilient”

Coinbase published its end-of-year shareholder letter today, Feb. 21, in which it described its financial standing for the previous quarter and for the entirety of 2022.

Coinbase publishes revenue, shareholder data

Coinbase said that it saw its total trading volume for 2022 decline by 50% year-over-year. It also saw its transaction revenue for 2022 fall by 66% by the same metric.

The company said that it nevertheless remained “resilient … despite major shocks to the system.” Coinbase attributed its decline in performance to two high-profile collapses: that of Luna and Terra in May 2022 and that of FTX in November 2022. These events caused the crypto market to lose 64% of its value, in turn affecting Coinbase’s own revenue.

The company’s net full-year revenue (which includes more than just its transaction revenue) fell from $7.4 billion in 2021 to $3.1 billion in 2022.

Coinbase also noted that it has diversified its revenues into subscriptions and services, allowing it to experience increased quarterly revenue. The company’s fourth-quarter net revenue in 2022 was $605 million. Though that number is down significantly from $2.49 billion in Q4 2021, it is up 5% from $576 million in the third quarter.

The firm’s net loss per share was $2.46 for the fourth quarter of 2022 and $11.81 for the entire year of 2022.

Other data points of interest

Coinbase noted that its operating expenses were $1.2 billion and up 3% quarter-over-quarter, as it expected. The company said that, during 2022’s market crises, it “became clear that [Coinbase] had hired too many people too quickly.” It alluded to two layoffs in mid-2022 and early 2023 and said these and other efforts should reduce expenses by over 30%.

The company said that it ended the fourth quarter of 2022 with $5.5 billion of U.S. dollar resources, a decline of 3% or $148 million from the previous quarter.

Coinbase closed the shareholder letter by asserting that it believes it is in a strong position to perform well even as regulation affects the crypto industry. It noted its past engagements and settlements with the New York Department of Financial Service (NYDFS) and the U.S. Securities and Exchange Commission (SEC).

It also noted that early 2023 has seen an improvement in the crypto market, with a total market capitalization up 40% year to date. The firm saw $120 million of transaction revenue in January 2023 but warned investors “not to extrapolate these results forward.”

Coinbase is one of the largest cryptocurrency exchanges. It saw $1.7 billion of trading volume today. Its stock (COIN) is valued at $62.07, down 4.8% today.

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