Coinbase, the biggest centralized cryptocurrency exchange in the US, disclosed its earnings for the year’s fourth quarter. Although the company surpassed analysts’ projections, it still faces some challenges.
In a letter to shareholders published on February 21st, Coinbase announced that it had generated net revenue of $605 million, surpassing the expected $589 million.
Coinbase 2022 Revenue 51% Lower Than 2021
Unfortunately, the company reported a net loss of $557 million, leading to an adjusted EBITDA loss of $124 million. Moreover, 2022’s full-year revenue decreased by 57% to $3.1 billion compared to the $7.3 billion earned in 2021.
Similarly, the adjusted EBITDA for 2022 was -$371 million, a significant decrease from 2021’s $4.09 billion. The company commented:
“We are striving to increase our full-year 2023 Adjusted EBITDA in terms of absolute dollars as compared to 2022. We believe our recent cost-cutting measures have positioned us well to achieve this objective.”
Coinbase’s CFO, Alesia Haas, commented on the company’s cost-cutting initiatives. The CFO did not dismiss the possibility of additional job cuts to enhance the company’s financials. Haas further stated:
“We aim to enhance our year-over-year EBIDTA and will make necessary expense adjustments if we fail to do so. As an agile company, we will take the required measures.”
Having already reduced its workforce by 18% in June and a further 20% in January, Coinbase may continue to cut more jobs. Last month, Brian Armstrong, the CEO of Coinbase, announced staff cuts to reduce quarter-on-quarter expenses by 25%.
As a result, the company has eliminated over 2,000 jobs within the past eight months.
Coinbase’s Diverse Income Stream
Moreover, transaction fees accounted for approximately 53% of Coinbase’s Q4 revenue, some of the industry’s highest. In 2022, Coinbase generated $2.35 billion in transaction fees.
Once heavily reliant on transaction fees, Coinbase has expanded its revenue streams by incorporating subscriptions, custodial fees, blockchain rewards, and interest income. These new income streams account for 34% of the company’s total revenue.
If the US SEC were to declare the company’s staking service as selling securities, Armstrong stated last week that it would challenge the decision in court. Meanwhile, the company stock (COIN) is doing well in 2023.
COIN has demonstrated impressive growth of 82.4% since the start of the year, thanks to the resurgence of the crypto markets. However, it’s worth noting that the company’s stock price is still more than 85% below its all-time high of $430 during its NASDAQ premiere.
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