Coinbase Reports Net Quarterly Loss of $79M, but Revenue Grew 22% QoQ

Coinbase (NASDAQ:COIN) notes that it’s time to update the system. They also pointed out that the majority of financial systems were built over 100 years ago.

According to the firm, the rules are “outdated, the technology has been slow to catch up, and all over the world people are paying the price with their time, money, and opportunities.”

Their goal is “to build infrastructure and products that bring over 1 billion people into crypto.”

The firm acknowledges that this journey will “take time and their quarterly results may be volatile, given this industry is still in its early days, however they find these conditions motivating.”

The firm reveals that this quarter “represented a turning point in their drive towards building a company that is more efficient and financially disciplined; a company that is able to do more for less.” They claim to have “reduced costs, doubled down on operational excellence and risk management, and continue to drive product innovation and regulatory clarity.”

Their efforts are “showing meaningful progress,” the Coinbase team claims.

In Q1, net revenue “grew 22% Q/Q and total operating expenses declined 24% Q/Q, resulting in a net loss of $79 million but a return to positive Adjusted EBITDA of $284 million.”

Coinbase also mentioned that their teams “are smaller, but more nimble than ever and they are pleased with the pace of innovation and the results they are seeing.” Coinbase have “continued to build the trusted products and infrastructure that will ultimately help crypto to continue moving forward to realize its potential through new use cases and enhanced technologies.”

According to the firm, there is no doubt Coinbase is in “a stronger business position as a result of these efforts.”

They say this “irrespective of the Wells Notice they recently received from the SEC.”

They see this as “an opportunity to continue pushing for a clear rule book in the US for crypto regulations.”

The company added that the US can’t afford “to fall behind on this important technology that can update the financial system and keep 1 million jobs in America.”

They are heartened “to see the continuation of broad bi-partisan support for crypto legislation and will continue to advocate for rules for our industry.”

The firm reveals that their efforts “to improve financial performance paid off in Q1 as they generated positive Adjusted EBITDA.”

Q1 Net revenue “grew 22% Q/Q to $736 million, recurring operating expenses (technology & development, sales & marketing, and general & administrative) collectively declined 37% Q/Q.”

Net loss “was $79 million, including a $144 million restructuring expense and they generated $284 million in Adjusted EBITDA.”

Meanwhile, they maintained their longstanding commitment “to operational and risk excellence throughout market turbulence in the traditional banking sector in Q1.”

They claim to have “experienced no loss of corporate or customer funds and maintained business as usual operations.”

Despite losing two bank partners in Q1, they have “onboarded new partners, rebuilt redundancy layers, and replaced the 24/7 instant settlement capabilities.”

The firm added:

“We remain focused on delivering the most trusted crypto products and services to bring crypto to 1 billion people; encouraged by progress in international markets. Recent industry events have validated our long-term commitment to being the most trusted and secure platform. In addition to inflows across retail and elevated institutional onboarding, our quarterly brand survey found that Coinbase brand sentiment reached its highest point ever in 2023. Further, we’ve made international expansion progress with the initial launch of our international exchange and are making good progress in new markets like Canada, Brazil, and Singapore.”

In Q1, they had reportedly “launched foundational infrastructure like Base and Wallet as a Service that will enable crypto developers to more efficiently build applications, and created the foundation of our Coinbase Asset Management (CBAM) product offering through the acquisition of One River Digital Asset Management.”

The company also mentioned:

“We maintain our goal to improve full-year 2023 Adjusted EBITDA in absolute dollar terms versus full-year 2022. In Q2, we expect lower subscription and services revenue Q/Q driven by lower USDC market capitalization. We anticipate expenses to modestly increase driven by higher legal expenses, higher rent expense due to our lease termination, and higher sales and marketing expenses in Q2 due to seasonal spending associated with our NBA partnership.”

They further noted:

“Overall, Q1 was a strong quarter for our business. Total revenue grew 23% Q/Q to $773 million and net revenue grew 22% Q/Q to $736 million. Recurring operating expenses (technology & development, sales & marketing, and general & administrative) collectively declined 37% Q/Q to $671 million. Net loss was $79 million and Adjusted EBITDA was $284 million. Our balance sheet remains strong with $5.3 billion in $USD resources.”

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