Coinbase Net Loss Shrinks in Q1, Company Calls it a ‘Turning Point’

Coinbase posted a net loss of $79 million during the year’s first quarter, the company reported Thursday, as its streak of consecutive quarters with negative net income extended to five.

But the net loss last quarter was significantly smaller than quarterly losses endured throughout 2022.

After posting a net income gain of roughly $3.6 billion in 2021, Coinbase lost money in each quarter last year — totaling a net loss for 2022 of about $2.6 billion.

The company’s net revenues grew by 22% quarter over quarter during the first three months of 2023, and total operating expenses declined by 24% over that span, the exchange reported Thursday.

“This quarter represented a turning point in our drive towards building a company that is more efficient and financially disciplined,” Coinbase said in a shareholder letter.

Coinbase trading volumes were $145 billion — flat from the prior quarter but less than half of the $309 billion the exchange saw in the first quarter of 2022.

The crypto exchange’s stock price closed at $49.22 on Thursday — up 1.5% on the day. The stock is up about 46% year to date, but has sunk 19% from a month ago.

Shares were up about 3% in after-hours trading, as of about 4:20 pm ET.

The financials come as regulatory uncertainty swirls around the company.

The SEC served Coinbase with a Wells notice in March for alleged securities violations. Coinbase Chief Legal Officer Paul Grewal said in a blog last week the company believes it has never listed securities and is set to “vigorously defend ourselves.”

“We see this as an opportunity to continue pushing for a clear rule book in the US for crypto regulations,” Coinbase said of the Wells notice in the Thursday letter. “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.”

Also last week, Coinbase filed a petition in the US Court of Appeals’ Third Circuit to get the SEC “to act on Coinbase’s pending rulemaking petition to provide clarity for the crypto industry.”

The company’s results also come after Citigroup analyst Peter Christiansen downgraded the stock earlier this week.

Other industry watchers told Blockworks that while unclear crypto regulation in the US is a concern for Coinbase, its efforts to stand its ground against the securities regulator could prove a positive for the exchange — and the industry — over time.

Owen Lau, executive director for Oppenheimer Co., said earlier this week that Coinbase’s stock price could see a jump if the company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) could go positive — a reversal from an adjusted EBITDA loss of $371 million in 2022.

Adjusted EBITDA returned to a positive number in the first quarter, totaling $284 million.

“We maintain our goal to improve full-year 2023 adjusted EBITDA in absolute dollar terms versus full-year 2022,” the company said in Thursday’s letter.

This is a developing story.

Get the news in your inbox. Explore Blockworks newsletters:

Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
Empire: Start your morning with the top news and analysis to inform your day in crypto.
Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
The Drop: For crypto collectors and traders, covering apps, games, memes and more.
Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.