Coinbase Beats Revenue and Earnings Expectations, But CFO Doesn't Rule Out More Job Cuts
TL;DR Coinbase reported its Q4 earnings this week, posting revenue of $605 million and an adjusted EBITDA loss of $124 million. The full-year 2022 revenue was 57% lower than that of 2021. CFO Alesia Haas said the firm is looking to improve its financials and may need to take “necessary steps” including additional layoffs to achieve this. COIN stock fell 4.8% in after-hours trading, but is up 82.
America’s largest centralized crypto exchange, Coinbase, reported its fourth-quarter earnings this week. The firm has beat analyst expectations but is not out of the woods yet.
On Feb. 21, Coinbase released a letter to shareholders detailing its Q4 revenue and earnings figures. The company posted net revenue of $605 million, which beat analysts’ estimates of $589 million.
However, the net income was a loss of $557 million resulting in an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss of $124 million.
Furthermore, the full-year revenue for 2022 came in 57% lower than that from 2021, with $3.1 billion compared to $7.3 billion. The adjusted EBITDA for the year was negative $371 million compared to $4.09 billion for 2021. The company said:
“We are operating toward a goal of improving full-year 2023 Adjusted EBITDA in absolute dollar terms versus full year 2022 and believe our recent cost reduction efforts help position us to do so.”
Our Q4 and FY'22 financial results are in.
Our letter to shareholders can be found on the Investor Relations website at https://t.co/8ovHEtPRgf — Coinbase (@coinbase) February 21, 2023
Coinbase CFO: More Cuts Possible
With regard to those reductions, Coinbase Chief Financial Officer Alesia Haas didn’t rule out further layoffs to improve those financials. According to Bloomberg, Haas said:
“We are looking to improve EBIDTA year over year. If we find we are not able to do so, we will right size our expenses. We are nimble, we will take necessary steps.”
Coinbase slashed 20% of its staff in January after laying off 18% last June, and more could follow.
In January, CEO Brain Armstrong said the cuts were necessary to reduce quarter-on-quarter expenses by 25%. The firm has axed more than 2,000 jobs over the past eight months.
Furthermore, around 53% of its Q4 revenue was transaction fees, some of the industry’s highest. Coinbase made $2.35 billion in transaction fees in 2022.
The firm has diversified its revenue stream, which was once dominated by those steep transaction charges. Subscriptions, custodial fees, interest income, and blockchain rewards made up 34% of the total revenue.
Armstrong said he would be willing to go to court to fight the SEC if it deemed the firm was selling securities via its staking service.
COIN Price Reaction
Company stock fell 4.8% on the day to settle at $61.30 in after-hours trading, according to Market Watch.
However, COIN has made an impressive 82.4% since the beginning of this year as crypto markets have rebounded.
Its stock price still remains down more than 85% from its all-time high NASDAQ premiere at $430.
Coinbase Stock COIN Price Chart by TradingView