On November 3, renowned crypto exchange platform Coinbase reported that its revenue in recent times has fallen short of analyst estimates.
As trade activity waned, the company’s revenue dropped by more than 50 percent compared to the previous year. This resulted in a $545 million deficit compared to a $406 million profit in Q3 2021. The company stated in a shareholder letter:
“Transaction revenue was significantly impacted by stronger macroeconomic and crypto market headwinds, as well as trading volume moving offshore.”
Coinbase records major loss
Coinbase derives up to 90% of its revenue from transaction fees that are higher than the industry average, and in a bear market, this business model is obviously struggling.
The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) dropped to a loss of $116 million. This is less than the $618 million profit recorded during the same period in 2021. Notably, Coinbase made $2.2 billion for the last quarter of 2021 as reported by TheCoinRise.
The exchange said that the trade activity had shifted away from the U.S. because of regulatory issues and unpredictability, and hence the loss in number of its customers. During the third quarter, Coinbase reported 8.5 million monthly transactional users (MTUs), falling from 9 million in Q2 and 9.4 million in Q1.
In comparison to the previous quarter, trading volume decreased 27% to $159 billion from $217 billion. Ethereum, which has recently outperformed Bitcoin, accounted for 33% of the period’s total volume, while Bitcoin accounted for 31%. Coinbase stated predicting for next year:
“For 2023, we’re preparing with a conservative bias and assuming that the current macroeconomic headwinds will persist and possibly intensify.”
Despite lower-than-anticipated sales data, COIN actually gained over 5% in after-hours trading. From its all-time high of $343 last year, COIN has plummeted around 83%, a steeper loss than the crypto markets as a whole. Previously in June, COIN faced a massive decline in its value due to Goldman Sachs hindrance, as TheCoinRise reported.