Coinbase 1st Quarterly Earnings in 2022 Fails To Hit The Estimates

Coinbase 1st Quarterly Earnings in 2022 Fails To Hit The Estimates
  • The revenue raised by Coinbase is nowhere near the estimates.
  • Coinbase’s market share of the total crypto market cap in Q1 is 11.2%.

The Securities and Exchange Commission (SEC), SAB 211, demands entities to release ‘form 10Q” disclosures that should include their financial statements and the details of crypto assets held on their platforms. As one of the largest crypto exchanges, Coinbase unveiled its financial report for Q1 2022 on Wednesday through an official shareholder letter. The revenue raised by the exchange in Q1 declined by 31% to $1.17 billion from the last quarter.

Coinbase CEO Brian Armstrong commented:

“We have no risk of bankruptcy, however we included a new risk factor based on an SEC requirement called SAB 121, which is a newly required disclosure for public companies that hold crypto assets for third parties.”

Evident Declines

The monthly transacting users (MTUs) on the exchange declined to 9.2 million by the end of Q1 indicating a loss of 2.2 million MTUs from Q4. The Q2 2022 started with 8.9 million MTUs. As per the letter, the total assets on the platform in Q1 accounted for $256 million, a reduction of $22 million from Q4.

Despite these declines, the exchange’s new enrolment in Cardano (ADA) staking was able to attract more users to invest in its yield generation products. The user base increased by 17% from 3.6 million users in Q4 2021 to 5.8 million in Q1 2022. Coinbase NFT, the native NFT marketplace which was launched on May 4, failed to board many users on its platform. As per statistics, the NFT marketplace initiated 2,273 transactions and included 1,837 users since April 20.

The Coinbase team said, “our investment in our business now is especially critical – these periods of low volatility can provide the opportunity to focus more intently on product development.” The team also predicts that trading volume and MTUs will be much lower in Q2 when compared to Q1. 

The current global inflationary period continues to lead the prices of crypto assets to plunge to their lower levels and cause panic among investors. Stocks on various crypto entities continue to nosedive.

A diploma graduate who is passionate about digital currency and loves writing. He loves the concept of crypto and keeps himself up to date with the latest development and news of the crypto world.