Coinbase reports growth in Q4 earnings despite decline in users
Coinbase Global Inc., the largest U.S.-based cryptocurrency exchange, reported an increase in its fourth quarter 2022 earnings on Tuesday, even as overall users declined throughout the period.
See related article: Coinbase CEO says he will “happily defend” crypto staking service against claim it’s a securities product
Fast facts
Coinbase, the second largest crypto exchange in the world, reported US$605 million in net revenue for the quarter, beating analysts’ predictions of US$588 million.
The exchange’s Q4 net revenue was 75% lower than the US$2.5 billion reported in the same period the previous year, when many major cryptocurrencies were trading near their all-time highs. Coinbase earned US$2.6 billion in net income for the year 2022, down from US$3.6 billion in 2021.
Transaction volume on the platform fell 12% quarter-over-quarter to US$322 million. However, subscription and service revenues grew 34% to US$283 million, accounting for almost 50% of overall revenue for the quarter, mainly from interest income of US$182.2 million.
Coinbase earns income through charging fees on transactions, but also through providing custody of digital assets, staking and other services.
Part of this revenue stream could possibly be in jeopardy as the U.S. Securities and Exchange Commission recently signaled a possible crackdown on staking services by fining crypto exchange Kraken US$30 million for offering such services.
Coinbase chief executive Brian Armstrong has said that he believes staking to be an essential component of the crypto industry.
Coinbase announced in early January that it would be letting go of around 950 employees, or roughly 20% of its workforce, by the second quarter of 2023.
The company’s shares on the Nasdaq dropped 1.2% during after-hours trading after closing Tuesday down 4.8% at US$61.30.
See related article: Coinbase to cut 20% of its remaining workforce
