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Crypto exchange Coinbase just reported its largest quarterly net loss of more than a billion dollars for the second quarter this year. The company attributed the staggering net loss to the fast and furious crypto market downturn, April which dragged the prices of popular cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) to their lowest levels so far this year.
“Net loss was $1.1 billion and was heavily impacted by non-cash impairment charges,” Coinbase wrote in its second quarter 2022 Shareholder Letter on Tuesday. “Absent non-cash impairment charges, net loss would have been $647. Adjusted EBITDA was negative $151 million.”
The decline in crypto prices significantly affected trading volume and resulted in a significant decline in the crypto exchange’s second quarter revenue and contributed to the net loss. The $1.1 billion loss is the company’s largest since its April 2021 listing on the Nasdaq Stock Exchange (Nasdaq), according to Cointelegraph.
“The decline in crypto asset prices significantly impacted our Q2 financial results, which were consistent with the outlook provided in May,” Coinbase said. “Net revenue was $803 million, down 31% compared to Q1, driven by lower trading volume. Total operating expenses were $1.9 billion, up 8% compared to Q1.”
While the crypto exchange described the second quarter as a test of durability for crypto companies, it also highlighted some positive developments in its business. Trading volume might have dropped but there was an overall increase in subscriptions and services while the decline of its monthly transacting users (MTUs) only declined slightly.
“Q2 was a tough quarter, with trading volume and transaction revenue each down by 30% and 35% sequentially, respectively,” the company said. “Both metrics were influenced by a shift in customer and market activity, driven by macroeconomic and crypto credit factors alike. However, we are encouraged by the 44% year-over-year growth in subscription and services revenues, and pleased to see our MTUs decline only 2% compared to Q1.”
The current crypto market downturn is just part of a cyclical process seen in the past. As in previous down markets, Coinbase is shifting its focus on building new innovative products. These include the Coinbase Retail App, Coinbase Prime, Staking, Developer Products - Coinbase Cloud, and Web3.
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