“Transaction revenue was significantly impacted by stronger macroeconomic and crypto market headwinds, as well as trading volume moving offshore,” Coinbase said.

Crypto exchange Coinbase (NASDAQ: COIN) has reported disappointing numbers for the September quarter, with its perfomance impacted by the bearish conditions prevailing in the digital assets market, and the consequential impact on transaction revenues. (Coinbase)

In its letter to shareholders, Coinbase said the third quarter presented a mixed picture.

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

Third quarter results

· Transaction revenue was $366 million, down 44% compared to Q2, driven by lower trading volume. (Due to deteriorating macro conditions; trading volume exiting the US; and higher competition amidst a pullback in retail volumes)

· Subscription and services revenue increased 43% sequentially to $211 million, driven by higher interest income. (Primarily due to interest income benefiting from the rising interest rate environment)

· Net revenue was $576 million, down 28% compared to Q2.

· Total operating expenses were $1.1 billion, down 38% compared to Q2. (Due to headcount reduction, recalibrating future hiring plans, optimizing infrastructure and vendor spend, and increased discipline in marketing spend)

· Absent non-cash impairment charges incurred, total operating expenses would have declined 22% sequentially in Q3.

· While revenues declined sequentially, net loss and Adjusted EBITDA both improved sequentially to negative $545 million and negative $116 million, respectively.

· The company ended Q3 with $5.6 billion in total $USD resources, in addition to $483 million in crypto assets (”…which we believe puts us in a strong position to manage through the crypto winter”)

Coinbase: 2022 Outlook and 2023 Preview

For 2022 – “We remain cautiously optimistic that we will operate within the $500 million Adjusted EBITDA loss guardrail that we previously communicated.”

For 2023 – “We’re preparing with a conservative bias and assuming that the current macroeconomic headwinds will persist and possibly intensify.”

Stock performance

 On Thursday, Coinbase closed at $55.80, down over 8% for the day. The stock has lost nearly 84% over the past one year.

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