UPDATED 19:13 EST / NOVEMBER 03 2022

BLOCKCHAIN

Higher-than-expected user numbers elevate Coinbase shares

Shares in Coinbase Global Inc. rose slightly in late trading after the cryptocurrency exchange reported better-than-expected user numbers amid misses on its latest quarterly earnings and revenue.

For its fiscal third quarter that ended Sept. 30, Coinbase reported a loss before costs such as stock compensation of $2.43 a share on revenue of $590 million. Analysts had expected an adjusted loss of $2.40 a share on revenue of $654 million.

Monthly transacting users in the quarter came in at 8.5 million, down from 9 million in the previous quarter but up from 7.3 million in the third quarter of last year. Analysts had been expecting 7.84 million. Trading volume in the quarter was $150 billion, down from $217 billion in the second quarter and $327 billion a year ago.

In a surprising turnaround amid the ongoing crypto winter, Coinbase saw a rise in assets on its platform, ending the quarter at $101 billion, up from $96 billion in the second quarter. The figure is still down by more than half from the $256 billion assets on the platform as of a year ago. Total trading volume in the quarter came in at $159 billion, down from $217 billion in the previous quarter.

Expenses were down across the board and below the company’s previous outlook. Transaction expenses as a percentage of net revenue came in at 18%, down from 21%; sales and marketing, including stock-based compensation of $76 million, down from $141 million and a predicted $100 million. Technology, developer, general and administrative expenses, including stock-based compensation, totaled $895 million, down from $1.1 billion and below the predicted $1 billion.

“Transaction revenue was significantly impacted by stronger macroeconomic and crypto market headwinds, as well as trading volume moving offshore,” Coinbase said in its letter to shareholders. “Meanwhile, we saw strong growth in our subscription and services revenue, driven by our participation in the USDC ecosystem and higher staking activity.”

For its outlook, Coinbase said that its October trading volume was $47 billion and MTUs through October are roughly in line with the third-quarter results. The company expects lower trading volume and a similar number of MTUs than in the third quarter. Because of “expense actions,” Coinbase added, it’s “cautiously optimistic” about operating within a guardrail of a $500 million adjusted loss before interest, taxes and depreciation, presuming the crypto market does not deteriorate below October levels.

In the words of Coinbase, the third quarter was “mixed” for the company, but despite the earnings and revenue miss, the higher-than-expected user numbers and lower expenses pleased some investors. The company’s share price was up almost 4% in late trading.

Photo: Coinbase

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