Crypto trading platform Coinbase posted fourth-quarter earnings that showed a surge in retail trading volumes – and volatility. Trading volumes are likely to decline in the current period, the company said.
Investors were less than cheered by the results (and the hint of a slowdown) immediately after the Thursday (Feb. 24) evening announcement, sending the shares down a bit more than 5% to $169.10. That would put the stock within sight of recent lows (and all-time lows) of just under $156.
In terms of headline numbers, the company said that total transaction revenues were $2.3 billion in the most recent quarter, up from $476 million a year ago. Net revenues were $2.5 billion, gaining from the year ago $497 million, and topping the Street at about $2 billion.
The company said that its retail monthly transacting users in the latest period were 11.4 million, up 4 million over the third quarter, representing 54% sequential growth. Coinbase said that 32% of its MTU were using both investing and non-investing products, which is an increase from the 22% seen at the end of last year. The company also said that at the end of the latest period, it had 3.6 million users who were earning yield on their crypto assets.
The company said that trading volumes surged by 67% as measured year on year, and retail trading was 32% of the tally. Along that time frame, we’ve seen bitcoin trade as high as nearly $69,000, touching a recent low in the roughly $35,000 range.
Of the trading volume, bitcoin was 16% of the total in the latest quarter, and Ethereum was also 16%. As measured by transaction revenue, bitcoin was 16% of the total in the most recent period.
The total assets on the company’s platform were $278 billion, up from $255 billion at the end of Q3.
Related: Cryptocurrency Pushing Into Regulated Derivatives Sector
Declines in the Near Term
Looking ahead, the company said that 2022’s first quarter to date has seen a decline in crypto asset volatility and asset prices from all-time high levels seen last year. Total trading volumes should be around $200 billion quarter to date and volumes overall should be lower than had been seen in the fourth quarter.
CEO Brian Armstrong said on the conference call with analysts that “I don’t think we are entering a crypto winter … The biggest problem is not what is going to happen in any quarter. It’s how do we capture this size and scale of the opportunity in front of us.”
Chief Financial Officer Alesia Haas said that subscription and services revenues in the year, with $500 million generated in the year and $200 million in the fourth quarter, was up 10x over 2020, representing 7% of revenues, up from 4% a year ago. The company said it expects annual average retail MTUs to come in between 5 million and 15 million individuals. The company expects “Average Transaction Revenue Per User” to decline to “pre-2021” levels.
Management also said the firm is “taking steps to diversify” and grow its non-transaction revenue streams. The company also plans to add more assets to its platform and made explicit mention of non-fungible tokens (NFTs), where volumes and prices are less correlated with other crypto assets.
Said Haas: “We’re focused on a social experience, on building a community … today people can buy on Coinbase transfer to a wallet and then go to the marketplace. If they can do that all in one app with a few clicks, that’s a win.”
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