A lower trading volume of $ 217 billion-after $ 309 billion in the first quarter-was a main reason for a drop in sales of 31 % in the last quarter, since the net loss of Coinbase is $ 1.1 billion.
In this quarter, the financial service company Piper Sandler estimates that Coinbase revenues will decrease by 21 % to around $ 640 million, which is partly due to lower transactions. The company expects the net loss of the stock exchange to be $ 540 million-about half of the decline in the second quarter-however, Coinbase has shortened its expenses by about 30 % in the course of the quarter.
The company said in June that about 18 % of its workforce will reduce and thus join a number of prominent industry players.
"It is a balance in which you have to be aware of your development and cash flow, and you have reduced many expenses," Piper Sandler, Senior Research Analyst Richard Repetto, told Blockworks. "On the other hand, you are a growth company, so you want the foundation to grow when the market and crypto trade come back more and increase the crypto acceptance."
diversification of business
Mark Palmer, Managing Director and FinTech analyst at BTIG, said that the missing crypto volatility in the third quarter compared to the previous quarter means that Coinbase will probably report fewer monthly transaction users.
"Volatility is the friend of Börsen when it comes to volume," Palmer told Blockworks. "We have seen that general volatility, which is associated with crypto, generally correlated with risk systems, but we have not seen that ... whole protocols collapse and centralized trading platforms, which is reflected in fear and thus in volatility."
owen Lau, Executive Director at Oppenheimer, said that he expects the sales percentage from the subscription and service segment of Coinbase- which represents non-transaction-related revenue- to increase from quarter to quarter to 28 %. This increase will sometimes compensate for around 30 % of the lower transaction proceeds due to a decline in the transaction volume.
The combination of low crypto prices and less volatility during the three -month period becomes a “harsh quarter” for Coinbase, said Palmer - although he is also looking for details on the newer business areas of the stock exchange.
"[Coinbase] cannot control the wind, but it can set its sails," he said. "The market will be the market ... but that does not mean that the company does not have to make many strategic decisions that can influence its position not only in the quarter, but also in the long term."
derivatives will be an important business segment for coinbase, since the institutional market for digital assets continues to grow, said Palmer.
Coinbase took over Fairx at the beginning of this year to get into the derivative markets. Bitcoin nano futures were introduced in June and Nano ether-Futures in August. The company is waiting for its license to be able to offer customers Futures directly.
Palmer said that he was also looking for a comment on Coinbases call to the traction that the company had on the Staking front, especially after changing Ethereum from Proof-of-Work to Proof-of-Stake.
About two thirds or 6 million of the active monthly dealers from Coinbase acted with non-system products in the second quarter. The trend progresses: The market maker began to support Staking for Cardano and in June for Solana, he added.
"Coinbase is very well positioned to benefit from the increasing introduction of staking, especially from institutions," said Palmer. "Now these offers are available, so the question arises: 'What kind of attraction do you win? And where do you see that in the future?"
on the pursuit of profitability
The Coinbase share price has fallen by about 74 % in the course of the year since Tuesday afternoon. The number is a little worse than the decline in asset prices for Bitcoin and Ether since they reached an all -time high last November.
Although many crypto companies have shown a high correlation with the Bitcoin prices, some investors still use profitability as the key index.
"The most important thing is if you become profitable - or come back - I think the market will recognize this and pay you recognition," he said.
Lau added that he would expect the adjusted EBITDA (profit before interest, taxes and depreciation) from Coinbase to achieve a loss of $ 228 million in the third quarter, compared to a decrease of $ 151 million in the previous quarter. Lau said he would expect lower losses from the first quarter of 2023.
Richard Repetto, Senior Research Analyst at Piper Sandler, said that he would also see whether Coinbase could reach the prize threshold with the adjusted EBITDA by the end of the year.
"And then everything that says that we have somehow reached the crypto retreat, what they see in relation to the commitment and where we are in the crypto winter," said Repetto.
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The article Coinbase Earnings: Analysts Seek Details on New Revenue Streams is not a financial advice.
