01—Abstract
Summary
Summary of the 10-Q filed November 3, 2022. Cited figures are marked; the original filing is the authoritative source.
Coinbase's third quarter of 2022 was marked by significant macroeconomic and crypto market headwinds, leading to a substantial decrease in transaction revenue.
Total revenue for the quarter was $590.3 milliona, down 55% year-over-year, primarily driven by a 66% decline in transaction revenue, reflecting lower trading volumes and crypto asset prices. Despite the challenging trading environment, Coinbase demonstrated resilience through strong growth in its subscription and services revenue, which increased by 45% year-over-year to $210.5 million. This growth was bolstered by increased interest income from customer custodial funds due to higher interest rates and Coinbase's participation in the USDC ecosystem.
The company reported a net loss of $544.6 millionb for the quarter, a reversal from the net income of $406.1 million in the prior year's quarter, largely due to a significant increase in technology and development expenses, general and administrative costs, and other operating expenses, alongside the decline in transaction revenue. Adjusted EBITDA also swung to a loss of $115.9 million from a positive $618.2 million in Q3 2021, reflecting the challenging market conditions.
02—Key points
Key Highlights
- Total revenue declined 55% year-over-year to $590.3 million in Q3 2022, primarily due to a 66% decrease in transaction revenue.
- Subscription and services revenue grew 45% year-over-year to $210.5 million, driven by higher interest income and growth in other services.
- The company reported a net loss of $544.6 million, a significant shift from the net income of $406.1 million in Q3 2021.
- Technology and development expenses increased by 56% year-over-year to $556.3 million, reflecting continued investment in products and platform.
- General and administrative expenses increased by 40% year-over-year to $339.2 million, driven by customer support and personnel-related costs.
- Verified Users grew 48% year-over-year to 108 million, indicating continued user acquisition.
- Monthly Transacting Users (MTUs) saw a modest increase of 16% year-over-year to 8.5 million (average for the quarter), but trading volume declined significantly, down 51% year-over-year.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed November 3, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $590.34M$1.31B | −55.0% |
| R&D Expenses | $556.34M$356.26M | +56.2% |
| Operating Expenses | $1.15B$1.02B | +12.4% |
| Operating Income | -$556.48M$291.81M | −290.7% |
| Interest Expense | $21.51M$6.97M | +208.5% |
| Net Income | -$544.63M$406.10M | −234.1% |
| EPS (Basic) | $-2.43$1.92 | −226.6% |
| EPS (Diluted) | $-2.43$1.62 | −250.0% |
| Shares Outstanding (Basic) | 223.92M209.60M | +6.8% |
| Shares Outstanding (Diluted) | 223.92M250.54M | −10.6% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue decline in Q3 2022?
The primary driver of the revenue decline was a significant drop in transaction revenue, down 66% year-over-year to $365.9 million. This was attributed to macroeconomic headwinds, a decrease in crypto asset prices, and lower trading volumes on the platform.
How did subscription and services revenue perform?
Subscription and services revenue showed strong growth, increasing by 45% year-over-year to $210.5 million. This increase was primarily driven by higher interest income from customer custodial funds due to rising interest rates and revenue sharing arrangements with USDC issuers.
What led to the net loss in Q3 2022?
Coinbase reported a net loss of $544.6 million, a reversal from the net income in the prior year. This was due to a substantial decrease in transaction revenue coupled with significant increases in operating expenses, particularly in technology and development, general and administrative, and other operating expenses.
How did the company's key business metrics perform?
Verified Users grew by 48% year-over-year to 108 million, indicating continued user acquisition. However, Monthly Transacting Users (MTUs), a key indicator of revenue-driving activity, increased by a more modest 16% year-over-year to 8.5 million (quarterly average). Trading Volume saw a significant 51% decline year-over-year.
06—Continue