Coinbase Q4 Earnings Highlights: Revenue Beat, January Update And Why Company Says It Wins With Crypto Regulation

Cryptocurrency platform company Coinbase Global COIN announced fourth-quarter financial results after the market close Tuesday. Here are the key highlights.

What Happened: Coinbase reported fourth-quarter revenue of $629.1 million, which came in ahead of a Street estimate of $586.2 million, according to data from Benzinga Pro.

The company reported net revenue of $605 million in the fourth quarter, up 5% quarter-over-quarter. Transaction revenue was $322 million in the fourth quarter, down 12% quarter-over-quarter. Subscription and services revenue was $283 million in the fourth quarter, up 34% quarter-over-quarter.

Coinbase reported a loss of $2.46 per share in the fourth quarter, which missed a Street estimate of a loss of $2.39 per share.

In the fourth quarter, Bitcoin BTC/USD represented 35% of Coinbase's trading volume compared to 31% in the third quarter. Ethereum ETH/USD represented 33% of trading volume in the fourth quarter, unchanged from the third quarter.

Coinbase's Full-Year Results: “To state the obvious, 2022 was a challenging year for crypto markets and our transaction revenues. As macroeconomic indicators like inflation remained high and interest rates rose throughout the year, crypto market cap declined along with broader equity markets,” the company said.

The company acknowledged the bankruptcy and collapse of Three Arrows Capital, Voyager, Celsius and FTX had a major impact on the decline of the market capitalization of cryptocurrency in the fiscal year.

For the full year, Coinbase posted net revenue of $3.15 billion. The company had trading volume of $830 billion in 2022.

Bitcoin represented 29% of full-year trading volume compared to 24% in the previous year. Ethereum represented 25% of trading volume in the full year compared to 21% in the previous year.

Subscription and services revenue hit $793 million in the full fiscal year, beating a company estimate of $700 million and up significantly from the $50 million reported in 2020.

Coinbase said around 25% of the top 100 largest hedge funds by assets under management use Coinbase.

Related Link: Trading Strategies For Coinbase Stock Before And After Q4 Earnings

What’s Next For Coinbase: The company is forecasting first-quarter subscription and services revenue to hit a range of $300 million to $325 million.

“We enter 2023 with a focus on cost management, efficiency, and a goal to improve full year adjusted EBITDA,” the company said. “Crypto remains volatile and we have limited ability to forecast our transaction revenue, which remain correlated with crypto market capitalization and crypto asset volatility."

Coinbase said it had $120 million in transaction revenue in January 2023.

Coinbase On Crypto Regulation: The company shared an update on where the cryptocurrency sector stands on regulation in its shareholder letter.

“Regulation is coming and we believe we are positioned to benefit.”

The company said it remains committed to working with global regulators and policymakers on regulation in the cryptocurrency sector.

“We do not operate as a market maker that trades against our customers, and we do not issue exchange tokens.”

Coinbase said it believes it will benefit from increased regulation compared to competitors.

“We are proud of our ability to execute, and position our business as a regulated and legitimate market leader. The journey ahead will have its challenges, but our grit, determination, and resolve have been strong for 10+ years and we are excited for the future.”

COIN Price Action: Coinbase shares are down 2% to $61.01 in after-hours trading Tuesday. Shares have traded between $31.55 and $206.79 over the last 52 weeks.

Read Next: Why This Coinbase Analyst Is Dropping His Bullish Stance

Photo courtesy of Coinbase.