Coinbase, the biggest centralized cryptocurrency exchange in the United States, announced its earnings for the fourth quarter of the year, which exceeded the expectations of analysts, but the company still faces challenges. In a shareholder letter released on Feb. 21, Coinbase reported net revenue of $605 million, surpassing analysts’ forecast of $589 million. However, the company’s net income showed a loss of $557 million, leading to an adjusted EBITDA loss of $124 million. Additionally, the revenue for the entire year of 2022 was 57% lower than that of 2021, with $3.1 billion versus $7.3 billion, and the adjusted EBITDA for 2022 was negative $371 million compared to $4.09 billion for 2021. The company acknowledged these results and stated that there are challenges ahead.
More Lay Offs Ahead
lesia Haas, the Chief Financial Officer of Coinbase, indicated that she did not dismiss the possibility of additional staff reductions to enhance the company’s financial performance. As per Bloomberg’s report, Haas stated:
“We are looking to improve EBIDTA year over year. If we find we are not able to do so, we will right size our expenses. We are nimble, we will take necessary steps.”
In January, Coinbase cut down its workforce by 20%, following an 18% layoff in June. The company may take further measures to downsize in the future.
CEO Brian Armstrong justified the January layoffs as necessary to achieve a 25% reduction in expenses from one quarter to another. In the past eight months, over 2,000 jobs have been terminated by the firm.
In addition, more than half of Coinbase’s Q4 revenue, approximately 53%, was generated by transaction fees, which are among the highest in the industry. The company made $2.35 billion in transaction fees in 2022.
To reduce its reliance on steep transaction charges, the company has diversified its revenue streams. Subscriptions, custodial fees, interest income, and blockchain rewards contributed to 34% of the total revenue.
Armstrong stated that he would challenge the SEC in court if the regulatory body deemed Coinbase’s staking service to be selling securities.