Coinbase burns $546M of USD resources as it reports another quarter in the red with a 55% revenue decline

Coinbase reported third-quarter earnings after the November 3 bell, with third-quarter earnings of $590.3 million, down from $1.31 billion in the third quarter of 2021, down from $1.31 billion in the same period last year. revealed a 55% decrease in revenue compared to

The company also posted a net loss of $540.6 million ($2.43 per share) compared to net income of $402.3 million ($1.62 per share) in the third quarter of last year. .

Assets on platforms totaled $101 billion at the end of Q3, down $154 billion from Q3 2021. The company’s market share of the total cryptocurrency market capitalization also fell from 9.9% at the end of Q2 to 9.6% at the end of Q3.

Coinbase noted that US monthly trading volume has fallen by more than 50% at the end of September compared to January, so trading volume has drifted away from the US.

“We believe this change in volume is due to some digital asset issuers perceiving uncertainty about the development of a regulatory framework to address the industry by Congress or regulators.”

head wind

In a letter to investors, Coinbase says it faces “three headwinds” related to declining trading volumes and revenue. Macroeconomic conditions, declining US cryptocurrency trading volumes, and competitive market maker conditions contributed to the exchange’s decline. As a result, Coinbase currently relies on “non-investment products” to retain users.

As we move forward, Coinbase is “cautiously optimistic” about achieving an “adjusted EBIDTA loss guardrail” of $500 million in 2022.

Personal and institutional wealth on the platform increased $4 billion and $2 billion, respectively, in the third quarter. The share of assets held as Ethereum rose 4% to January levels. Conversely, the share of Bitcoin assets decreased to 39%, down 5%.

As a result of the turbulent sea, Coinbase slashed its USD resources by $546 million. Total capital held by the exchange was reported at $5.61 billion, including surplus funds in USDC, corporate cash, money market funds and custodial accounts.

How to use cash on hand

Coinbase said it spent $387 million of its USD resources on operating activities, hedging activities, working capital for vendor payments, and restructuring costs. In addition, he spent $20 million on investment opportunities such as new software, cryptocurrency inventories, and financial instruments. In addition, he spent $42 million on financial activities related to employee stock options. Finally, Coinbase recorded a further $97 million loss in resources due to the “foreign exchange rate impact” on corporate cash.

At the end of the third quarter, Coinbase also revealed that it had $483 million worth of crypto assets as investments.

Coinbase’s share price has steadily fallen by as much as 12% since the market opened on November 3rd. However, in after-hours trading, the stock is up 8.5% from its daily low.