Coinbase is keeping a close eye on its expenses as the company looks to navigate the ongoing crypto winter.
|COIN||COINBASE GLOBAL INC.||90.49||+6.49||+7.73%|
For full year 2022, the cryptocurrency exchange expects sales and marketing expenses between $500 million and $600 million.
Costs for technology and development and general and administrative expenses are expected to come in between $4 billion and $4.25 billion, down from previous guidance of $4.25 billion to $5.25 billion.
“The lower range is largely due to our hiring growth freeze and headcount reduction efforts, as well as ongoing cost management initiatives related to our software spending, professional services vendor management, and BPO outsourcing,” Coinbase wrote in its second quarter shareholder letter.
COINBASE REPORTS LOSS AMID CRYPTO TURMOIL, SHARES FALL
Chief financial officer Alesia Haas told analysts and investors on the company’s second quarter earnings call Tuesday that while crypto cycles are “never clear”, crypto winters have historically lasted between two and four years.
“We do look at all of those historic scenarios to see can we operate through those,” Haas said. “This year, we did set a guardrail that if we went into a winter that we would operate to a $500 million loss.”
The company is “cautiously optimistic” that it will be able to maintain that guardrail assuming the industry’s market capitalization does not meaningfully deteriorate below its July 2022 levels and that there is no significant behavioral change among its customers.
Coinbase said it may exceed the guardrail if it is not able to cut expenses quickly in the event performance deteriorates further or approaches the low end of the MTU [monthly transacting users] range in the updated outlook.
“However, despite short term, we want to commit to you that we’re going to operate more efficiently as we build for the future,” Haas added.
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Coinbase reported a $1.1 billion net loss during the second quarter, compared to $1.61 billion in net income during the same quarter last year. During the quarter, the company incurred a $377 million noncash cryptocurrency-related impairment charge.
Revenue was $802.5 million compared to $2.03 billion in the prior year quarter.
MTUs were 9 million, up from 8.8 million year over year.
Trading volume fell to $217 billion from $462 billion due to a shift in customer and market activity, driven by macroeconomic and crypto credit factors.
Looking ahead, Coinbase expects more than $600 million in subscription and services revenue for full year 2022 and annual average monthly transacting user growth between 7 million and 9 million.
The stock is down more than 60% year to date.