Coinbase, the largest U.S. cryptocurrency exchange, weathered a widespread recession in the cryptocurrency market, reporting a 63% drop in revenue on Tuesday.
The company said second-quarter revenue was $808 million, down from $2.2 billion in the same period last year. Monthly customer numbers rose from 8.8 million last year to 9 million, down from 9.2 million last quarter. Coinbase also posted a net loss of $1.1 billion compared to his $1.6 billion profit a year ago.
It was the second quarter in a row that Coinbase saw revenue and user numbers decline compared to the previous quarter.
The results highlight the tough challenges facing Coinbase during a turbulent time in the crypto industry. Prices of major cryptocurrencies crashed in May and June as a series of experimental cryptocurrency ventures collapsed and investors went bankrupt. The crash led to job cuts and cost cuts across the industry, cooling the excitement that was building last fall when the price of bitcoin hit a record high.
As part of the industry meltdown, Coinbase’s share price has fallen about 75% since November. The company’s success has a lot to do with the volatility of the broader crypto market. Approximately 90% of Q1 revenue came from transaction fees charged to customers for buying and selling cryptocurrencies such as Bitcoin and Ether.
In June, Coinbase laid off 18% of its workforce, or about 1,100 employees. Chief Executive Brian Armstrong said the company had “overhired.”
Coinbase’s recent struggles have raised concerns that it may be wasting its early industry lead as competitors such as Binance and FTX continue to expand during the recession.
Despite its early start, Coinbase has never established a strong foothold in international markets and has recently failed to expand in India. The most hyped product launch of the year — a marketplace for digital collectibles known as non-fungible tokens (NFTs) — is widely considered a dud. Last year’s mass hiring led to overspending and bloating.
The company is also under regulatory scrutiny. Last month, the Justice Department sued a former Coinbase employee for insider trading. In a related lawsuit, the Securities and Exchange Commission said it believed some of the digital coins traded on Coinbase’s exchange were securities and therefore subject to regulation such as stocks and bonds. .
Coinbase’s competitors seem to be doing well. According to Sam Bankman-Fried, CEO of another cryptocurrency exchange, FTX, it posted financial results that were “roughly similar” to last year. Binance, the world’s largest exchange announced In June, it aimed to fill 2,000 positions.
Still, Coinbase remains one of the most trusted and recognized cryptocurrency brands in the United States and is known for its memorable Super Bowl commercial featuring a bouncing QR code. The company last week announced a partnership with BlackRock, the world’s largest asset manager, to help institutional investors trade bitcoin.
