In June, Coinbase shared an earnings report that worried investors, citing market conditions as the primary reason behind the drop in figures.
At the time, Coinbase representatives assured investors that the company faces no major issues and that it will focus on consolidation to ensure that future business prospects take a turn for the better.
Unfortunately for Coinbase, Q2 recently drew to a close – and its business report shows nothing less than the biggest quarterly net loss since the company went public on the NASDAQ stock exchange.
$1.1 Billion Lost, Traders Turn Passive
Citing customers being more inclined to hedge their bets, an operational cost up by 8% compared to Q1, and an overall drop in revenue, Coinbase has confirmed a net loss of $1.1 billion, with an EBITDA loss of $151 million.
It’s important to note that the increase in Coinbase’s operational costs has occurred despite the company laying off 18% of its staff in June.
Therefore, it’s possible that the operational costs of the platform might be even higher than they appear since the downsizing in question should have reduced costs by a large amount.
Subscriptions Up, Trades Down
The report partially attributed the unsatisfactory bottom line to a drop of 30% in trading volume over Q2, leading to a loss in overall transaction revenue of 35%.
According to the document, future prospects might not be as bleak. The decline in trading volume is not due to a loss in traders – the quarter only saw Coinbase lose 2% of its user base, which, in the current bear market, is not bad at all. Instead, the drop in trading volume is reported to be due to the passive stance adopted by HODLers, as traders decline riskier trades and prefer to hedge their bets on cryptocurrencies they’ve already invested in.
There is, nevertheless, a silver lining for Coinbase – fees earned from subscriptions and services have increased by 44% since the beginning of the fiscal year.
In spite of the adversarial conditions faced by the company, Coinbase representatives remain optimistic and assure investors that they have plenty of resources to keep operations chugging along.
“Down markets are builder’s markets, where many casual competitors step back. At Coinbase, we are optimists and are focused on building great products and services for our users. We are incredibly proud of the speed of product deployment and the recent feedback we have been receiving from our customers. We have conviction that if we continue to focus on building the right products and services, we will emerge stronger than before.”
As markets begin stabilizing again, it’s up to Coinbase’s leadership to recoup their losses in the coming quarter.