Coinbase Q2 2023 Results Explained

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The Exchange’s Results Come Amid Historically Low Volatility In Crypto

Coinbase highlights financial discipline and sustainable growth: In Q2, Coinbase saw a USD 97M Net Loss and USD 194M in Adjusted EBITDA. Total revenue decreased to USD 708M, down 8% quarter-over-quarter, and net revenue declined to USD 663M, a 10% reduction compared to the previous quarter. The performance was attributed to multi-year lows in crypto volatility. However, operating expenses have decreased by 12% from the previous quarter to USD 781.M. In Q2, 2022, operating expenses stood at USD 1.85B. Coinbase also highlights that one year ago the exchange began reducing its expense base, including a 30% reduction in staff.

Share of revenue from subscription and services in net revenue at all-time high: Total transaction revenue was USD 327.1M in Q2, down 85% from a record high of USD 2.49B in Q4 2021. Revenue from subscriptions and services, on the other hand, was recorded as USD 335.4M, just shy of the previous quarter’s record high of USD 361.7M. subscriptions and services in Q2 was at an all-time high as a share of net revenue, 51%, compared to just 5% in Q2 2021. In Coinbase’s S1, the firm indicated that up to December 2020, transaction revenue represented 96% of its net revenue. The S1 stressed that the growing subscription and services revenue will lessen the dependence on volatility-driven trading, resulting in ‘less fluctuation in our results…’ The shareholder letter explains that this line of revenue exceeded ‘our outlook from higher interest income driven primarily by higher interest rates, as well as from blockchain rewards revenue…’

Coinbase reports derivatives results: In May, due to regulatory headwinds faced in the US, the exchange launched the Bermuda-based Coinbase International Exchange, a derivatives venue for non-US traders. According to Coinbase, the venue has traded USD 5.5B in notional value in the first 7 weeks since its launch.

Coinbase points out ‘progress for crypto regulation, both in the US and globally’ while pushing back against SEC: Coinbase expressed optimism over ‘historic bipartisan momentum’ and ‘progress on crypto legislation’ and points to two pieces of legislation in Congress. At the same time, Coinbase intends to file an order in court today seeking dismissal of the SEC’s lawsuit ‘in its entirety.’ Yesterday, chief legal officer Paul Grewal said Coinbase expects to successfully stave off the regulator’s litigation and work with it to obtain regulatory clarity for the industry.