- Coinbase's quarterly trading volume came in below analyst predictions.
- Trading volume is a prime driver of revenue for the company through transaction fees. It also signals the overall strength of the cryptocurrency market.
- The company's loss per share was significantly wider than analysts had predicted.
|Coinbase Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|Earnings Per Share||Miss||-$4.98||-$2.39|
|Total Trading Volume||Miss||$217.0B||$219.6B|
Source: Predictions based on analysts' consensus from Visible Alpha
Coinbase Financial Results: Analysis
Coinbase Global Inc. (COIN) reported mixed results in its Q2 FY 2022 report. Earnings per share (EPS) missed analyst estimates. Coinbase reported losses per share of -$4.98, significantly wider than analysts had predicted. On a somewhat brighter note, the company's revenue matched analyst expectations. Still, total revenue slid by 63.7% year-over-year (YOY). This performance was heavily affected by a decline of about $1.3 trillion in market capitalization across the cryptocurrency space, or roughly 60% of total value, in Q2. Coinbase's total trading volume also missed analyst estimates.
Coinbase Total Trading Volume
Coinbase's total trading volume in the latest quarter was $217.0 billion, down 53.0% YOY and also failing to meet analyst predictions. Coinbase defines trading volume as the total U.S. dollar-equivalent value of matched trades which take place between a buyer and a seller through the Coinbase platform. The amount of trading activity directly impacts Coinbase's revenue, which is largely derived from transaction fees. Trading activity also reflects Coinbase's liquidity, overall trading health, and the broader performance of the cryptocurrency economy.
Coinbase said it posted 44% YOY growth in subscription and services revenue for the quarter. It is also taking steps to reduce expenses, including initiating an 18% employee reduction in June.
Coinbase Outlook and Stock Performance
Coinbase expects that total trading volume for Q3 2022 will be lower than Q2 2022 if last quarter's market trends continue. It did not provide specific guidance for earnings and revenue in its shareholder letter.
Coinbase shares dropped by about 1.4% in extended hours trading immediately following the earnings release. The company's stock has provided a 1-year trailing total return of -68.7%, well behind the -7.0% total return of the S&P 500, as of Aug. 9, 2022.
Coinbase Earnings Call Recap
In a conference call with analysts after results were announced, Chief Executive Officer (CEO) Brian Armstrong said Coinbase management would look past the weak quarterly results and focus, instead, on executing for the long term. “Of course, we don’t control the macroeconomic factors or downturn,” he said. “We don’t really even control the crypto market more broadly, right? So what do we control? Well, obviously we can focus on building great products for our customers. We can focus on staying on the forefront of crypto technology to make sure that we’re creating compelling use cases and making those available to our customers. We can focus on our expense management in down markets, and, frankly, we can ensure that we just don’t get distracted or disillusioned by short-term thinking.”
Coinbase's next earnings report (for Q3 FY 2022) is expected to be released on Nov. 8, 2022.
Coinbase Global Inc. "Second Quarter 2022 Shareholder Letter," Pages 1-2, 26.
Visible Alpha. "Financial Data."
Coinbase Global Inc. "Second Quarter 2022 Shareholder Letter," Page 1.
Coinbase Global Inc. "Form 10-K for the Fiscal Year Ended Dec. 31, 2021," Page 93.
Coinbase Global Inc. "Second Quarter 2022 Shareholder Letter," Page 21.
TradingView. "Price Chart: COIN and S&P 500."
CNBC. "Coinbase shares drop on billion-dollar loss in second quarter and revenue miss."
MarketScreener. "COINBASE GLOBAL, INC. (COIN)."