Coinbase reports 22% revenue growth, net loss of $79M for Q1; notes lower volatility in Q2

Coinbase said May 4 that its net revenue increased by 22% quarter over quarter to $736 million and its operating expenses fell by 24% from the previous quarter.

The reduction in operating expenses is related to the fact that the company laid off 950 employees in January. Though the restructuring strategy cost it $144 million, Coinbase said that it is now a “more efficient” company that can “do more for less.”

The firm said that these trends resulted in a net loss of $79 million but generated $284 million in adjusted earnings before interest, taxes, depreciation and amortization (EBIDTA).

Coinbase added that its balance sheet holds $5.3 billion in U.S. dollar resources, including cash, cash equivalents, USDC, and custodial account overfunding.

More revenue and activity trends

Coinbase’s transaction revenue increased 16% to $375 million, with consumer transaction revenue up 14% and institutional transaction revenue up 67%.

The firm reported a quarterly trading volume of $145 billion, equal to the previous quarter.

Coinbase reported that its “assets on platform” — that is, the U.S. dollar value of various digital assets stored on its services — increased 62% to $130 billion.

The company also saw its quarter-over-revenue increase in several other categories. Subscription and services revenue grew 28% to $362 million, blockchain rewards revenue grew 18% to $74 million, custodial fee revenue grew 49% to $17 million, and interest income grew 32% to $241 million.

Coinbase provides Q2 outlook

Coinbase also provided its outlook for the second quarter of the year.

The firm expects transaction expenses to make up as much as 15% of its net revenue. Conversely, it expects to see $300 million in subscription and services revenue, a decline driven by a reduction in the market cap of USDC.

The firm also said project that technology and development expenses, as well as general and administrative expenses, could reach $650 million. This represents an increase in costs and is partially due to Coinbase’s higher legal expenses. The company has an ongoing conflict with the U.S. Securities and Exchange Commission (SEC).

Coinbase added that its sales and marketing expenses could be between $80 million and $90 million, partially driven by an NBA partnership and stock-based compensation.

The company noted that crypto market cap and asset volatility diverged in Q2 compared to Q1, with the average crypto market cap coming in at $1.3 trillion, which is 17% higher when compared to the Q1 average of $1.1 trillion.

Coinbase said crypto asset volatility in April was 25% lower than the Q1 average and had an impact on the company’s transaction business as it generated about $110 million of total  transaction revenue in April.

The company warned investors not to extrapolate from this data, noting that “last year’s experience reminds us how quickly the market can evolve.”

Coinbase stock (COIN) is up 1.51% today and up 7.05% after hours.