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Revenue is down to $1.165bn compared to $2.49bn in Q4/2021. $430m loss, compared to income of $840m in Q4/2021.

pavlov 4y ago
Massive earnings miss. Yesterday some people were arguing in another HN thread that Coinbase stock is a bargain because of the low P/E. That nice ratio is negative now.
- mdasen 4y ago
  If you're looking at trailing 12-months it isn't negative yet. I can't predict the future so I don't know if they're going to continue losing money or if this is just one negative quarter. I don't know much about what is "hot" in crypto exchanges, but FTX is saturating sports commercials and getting high-profile endorsers like Steph Curry and Tom Brady and sponsoring the Miami Heat arena. Crypto.com has the naming rights for the area that hosts the LA Lakers, LA Clippers, LA Kings, and LA Sparks as well as sponsorships of the Philly 76ers, Montreal Canadiens, UFC, and the 2022 FIFA World Cup. Even if you believe strongly in crypto, Coinbase seems to be losing mindshare to competitors who are spending big. While some marketing spending might be considered foolish by some (I already know that Gillette exists and generally know what razors are available), with crypto they're probably targeting a lot of customer acquisition in a very new market. If FTX and Crypto.com become the faces of crypto to every sports fan looking to buy crypto, that seems like it would be a problem for Coinbase. Coinbase might be better or worse than those other two, but as someone who has been watching sports I can tell you that FTX and Crypto.com are very front-and-center. If crypto is looking to attract lots of new buyers, it seems like FTX and Crypto.com are doing the marketing to make them first in people's heads.
  - fdgsdfogijq 4y ago
    FTX is literally everywhere.
  - rileyphone 4y ago
    Judging by the report, Coinbase is going after more institutional investors with 17% SME, given they are $235/209 B of trading volume. I don't blame them - retail is even more finicky, and I won't be surprised when FTX and Crypto.com have been supplanted with something else in 10 years. Though I would just avoid this industry all together!
    - mdasen 4y ago
      I could definitely see FTX and Crypto.com not having staying power - many companies that spend lavishly on sports sponsorships see it come back to bite them. However, over the next few years it seems likely that FTX and Crypto.com will win a lot of the growth coming from non-techies. That's not great for Coinbase. I'm a bit skeptical of the institutional play. $47M in institutional transaction revenue is a lot lower than the $966M in retail - even after retail took a nose-dive from $2.2B. Plus, institutional revenue also seems to have taken a nose-dive from $91M to $47M. It seems like institutional investors are being just as fickle. Notably, it doesn't seem like retail is souring on Coinbase. They have $123B in retail assets which is down from $141B in Q4'21, but up from $116B/$88B/$101B in Q3/Q2/Q1 2021. Their institutional accounts are pretty steady at $122, $92, $139, $137, $134B for the past 5 quarters, but it's not like their retail assets aren't pretty stable. It does seem like people (retail and institutional) aren't transacting as much. Transactional revenue is down 56% and trading volume is down 44% (which probably accounts for most of the drop in transactional revenue). If their business model is based off transactions and people are buying and holding their crypto, that's not a great position for Coinbase. As I've said in another comment, I'm definitely not an authority on what is hot in crypto exchanges, but I'm skeptical they'll be able to get enough revenue from institutional investors where they're getting $47M in transaction revenue for $235B in transaction volume while they're getting $966M in transaction revenue on $74B in volume from retail. That's 0.02% from institutional and 1.3% from retail. That is a humongous difference in the fees there. If they did $2.3T in transactions for institutional, would they only get $470M in transaction revenue? A 10x increase in transactions while still being half of retail revenue? Similarly, I'm avoiding the industry. There's too much uncertainty for me. Maybe people are just holding their Bitcoin, but will return to transacting in the near future. Maybe we're going to see long-term lower volume. Who knows.
- rvz 4y ago
  Well perhaps they should have listened to my warning that I outlined [0] rather than buying on the direct listing price of >$400 a share on the first day. As I said before, it looks like the real winners were the VCs, founders and the early employees who sold at the peak. Now retail bought in and got dumped on and bag-holding at the top. Just like buying Bitcoin at $69,000 once again. [0] https://news.ycombinator.com/item?id=31322018 https://news.ycombinator.com/item?id=31322018
javert 4y ago
How are they spending so much that they have a $430M loss with $1.165B revenue? I don't mean that as a judgement, I'm just actually wondering.
- deleted 4y ago
  [deleted]
- oerpli 4y ago
  Given their headcount of 4k with the usual engineering salaries and some infrastructure it's not that surprising I would say. edit: misread your question - removed the stupid joke.
- infiniteL0Op 4y ago
- axg11 4y ago
  They are trying to do everything: - Professional trading platform (Coinbase Pro) - On-ramp for the masses (Coinbase) - NFT marketplace (Coinbase NFT) - web3 infrastructure (Coinbase Cloud) - Debit card w/ crypto rewards (Coinbase Card) - Crypto for businesses (Coinbase Institutional / Coinbase Custody) Each of these is a huge undertaking, often across multiple different markets across the globe.
  - jjfoooo5 4y ago
    Is there any evidence any of these bets have traction? I have only heard of their NFT platform performing unbelievably badly: https://decrypt.co/99561/coinbase-nft-marketplace-150-users-first-day-public https://decrypt.co/99561/coinbase-nft-marketplace-150-users-...
- gen220 4y ago
  Coinbase is an atypical "tech" company to analyze because they're kind of like a bank: much of their asset sheet is driven by customer deposits. Apparently $738m of customer funds were withdrawn from Coinbase in the last 3 months. This is in comparison to an inflow of $2.35bn (!) in 21Q1. As for expenses, there is a usual culprit in the $352m of stock-based comp. There's a large impairment expense of $229m, which is caused by their crypto asset holdings. Together, those make up $600m, and don't involve the transfer of money. > Under GAAP, we are required to record impairment charges on our crypto assets held when the price falls below its cost basis. FWIW they went from $17.6bn cash on hand to $16.1bn cash on hand.
bdcravens 4y ago
Transaction fees are typically a percentage, so all things being equal, it makes sense their revenue would be half given crypto being worth half of what it was several months ago.

Massive earnings miss. Yesterday some people were arguing in another HN thread that Coinbase stock is a bargain because of the low P/E. That nice ratio is negative now.

mdasen 4y ago
If you're looking at trailing 12-months it isn't negative yet. I can't predict the future so I don't know if they're going to continue losing money or if this is just one negative quarter. I don't know much about what is "hot" in crypto exchanges, but FTX is saturating sports commercials and getting high-profile endorsers like Steph Curry and Tom Brady and sponsoring the Miami Heat arena. Crypto.com has the naming rights for the area that hosts the LA Lakers, LA Clippers, LA Kings, and LA Sparks as well as sponsorships of the Philly 76ers, Montreal Canadiens, UFC, and the 2022 FIFA World Cup. Even if you believe strongly in crypto, Coinbase seems to be losing mindshare to competitors who are spending big. While some marketing spending might be considered foolish by some (I already know that Gillette exists and generally know what razors are available), with crypto they're probably targeting a lot of customer acquisition in a very new market. If FTX and Crypto.com become the faces of crypto to every sports fan looking to buy crypto, that seems like it would be a problem for Coinbase. Coinbase might be better or worse than those other two, but as someone who has been watching sports I can tell you that FTX and Crypto.com are very front-and-center. If crypto is looking to attract lots of new buyers, it seems like FTX and Crypto.com are doing the marketing to make them first in people's heads.
- fdgsdfogijq 4y ago
  FTX is literally everywhere.
- rileyphone 4y ago
  Judging by the report, Coinbase is going after more institutional investors with 17% SME, given they are $235/209 B of trading volume. I don't blame them - retail is even more finicky, and I won't be surprised when FTX and Crypto.com have been supplanted with something else in 10 years. Though I would just avoid this industry all together!
  - mdasen 4y ago
    I could definitely see FTX and Crypto.com not having staying power - many companies that spend lavishly on sports sponsorships see it come back to bite them. However, over the next few years it seems likely that FTX and Crypto.com will win a lot of the growth coming from non-techies. That's not great for Coinbase. I'm a bit skeptical of the institutional play. $47M in institutional transaction revenue is a lot lower than the $966M in retail - even after retail took a nose-dive from $2.2B. Plus, institutional revenue also seems to have taken a nose-dive from $91M to $47M. It seems like institutional investors are being just as fickle. Notably, it doesn't seem like retail is souring on Coinbase. They have $123B in retail assets which is down from $141B in Q4'21, but up from $116B/$88B/$101B in Q3/Q2/Q1 2021. Their institutional accounts are pretty steady at $122, $92, $139, $137, $134B for the past 5 quarters, but it's not like their retail assets aren't pretty stable. It does seem like people (retail and institutional) aren't transacting as much. Transactional revenue is down 56% and trading volume is down 44% (which probably accounts for most of the drop in transactional revenue). If their business model is based off transactions and people are buying and holding their crypto, that's not a great position for Coinbase. As I've said in another comment, I'm definitely not an authority on what is hot in crypto exchanges, but I'm skeptical they'll be able to get enough revenue from institutional investors where they're getting $47M in transaction revenue for $235B in transaction volume while they're getting $966M in transaction revenue on $74B in volume from retail. That's 0.02% from institutional and 1.3% from retail. That is a humongous difference in the fees there. If they did $2.3T in transactions for institutional, would they only get $470M in transaction revenue? A 10x increase in transactions while still being half of retail revenue? Similarly, I'm avoiding the industry. There's too much uncertainty for me. Maybe people are just holding their Bitcoin, but will return to transacting in the near future. Maybe we're going to see long-term lower volume. Who knows.
rvz 4y ago
Well perhaps they should have listened to my warning that I outlined [0] rather than buying on the direct listing price of >$400 a share on the first day. As I said before, it looks like the real winners were the VCs, founders and the early employees who sold at the peak. Now retail bought in and got dumped on and bag-holding at the top. Just like buying Bitcoin at $69,000 once again. [0] https://news.ycombinator.com/item?id=31322018 https://news.ycombinator.com/item?id=31322018

javert 4y ago

How are they spending so much that they have a $430M loss with $1.165B revenue? I don't mean that as a judgement, I'm just actually wondering.

deleted 4y ago
[deleted]
oerpli 4y ago
Given their headcount of 4k with the usual engineering salaries and some infrastructure it's not that surprising I would say. edit: misread your question - removed the stupid joke.
infiniteL0Op 4y ago
axg11 4y ago
They are trying to do everything: - Professional trading platform (Coinbase Pro) - On-ramp for the masses (Coinbase) - NFT marketplace (Coinbase NFT) - web3 infrastructure (Coinbase Cloud) - Debit card w/ crypto rewards (Coinbase Card) - Crypto for businesses (Coinbase Institutional / Coinbase Custody) Each of these is a huge undertaking, often across multiple different markets across the globe.
- jjfoooo5 4y ago
  Is there any evidence any of these bets have traction? I have only heard of their NFT platform performing unbelievably badly: https://decrypt.co/99561/coinbase-nft-marketplace-150-users-first-day-public https://decrypt.co/99561/coinbase-nft-marketplace-150-users-...
gen220 4y ago
Coinbase is an atypical "tech" company to analyze because they're kind of like a bank: much of their asset sheet is driven by customer deposits. Apparently $738m of customer funds were withdrawn from Coinbase in the last 3 months. This is in comparison to an inflow of $2.35bn (!) in 21Q1. As for expenses, there is a usual culprit in the $352m of stock-based comp. There's a large impairment expense of $229m, which is caused by their crypto asset holdings. Together, those make up $600m, and don't involve the transfer of money. > Under GAAP, we are required to record impairment charges on our crypto assets held when the price falls below its cost basis. FWIW they went from $17.6bn cash on hand to $16.1bn cash on hand.

bdcravens 4y ago

Transaction fees are typically a percentage, so all things being equal, it makes sense their revenue would be half given crypto being worth half of what it was several months ago.