The crypto exchange giant Coinbase is putting a positive spin on another quarter of sub-par results – and its CEO Brian Armstrong has stated that “across price cycles,” the exchange is still trending upward. But the firm appears braced for another rocky ride in the coming third quarter of FY2022.
In an earnings call, Armstrong claimed that “crypto is not linear,” and added:
“Any given quarter could be up or down or even any given year. But if you evaluate the business across price cycles, it tells a much different story.”
Armstrong was speaking against a gloomy backdrop of lower-than-estimated financial results. The firm’s revenue declined by over 60% to USD 808.3 million – lower than a USD 854.8 million estimate from Bloomberg-polled financial analysts.
Possibly more worrying was a quarterly fall of 2% in monthly transacting users (MTUs) to the 9 million mark. In July, that number shrank to just 8 million. As such, trading volumes took a lower-than-estimated tumble, and the worth of the assets on Coinbase’s platform fell – along with crypto prices – by 63% to USD 96 billion.
In a letter to shareholders, the firm outlined a modest – and mixed – outlook for Q3 of the current financial year. The firm stated that it expected another drop in MTUs in the next quarter, with more retail investors likely staying away from the markets. “We expect a higher portion of MTUs to be non-investing users compared to investing users compared to Q2,” the firm wrote.
It also wrote that it expected trading volumes to shrink again in Q3. But it predicted that its subscription and services revenue would experience “modest” growth, with “increases in interest income” expected.
The company blamed “soft crypto market conditions” for its less-than-rosy forecast.
In the earnings call, Armstrong remarked that Coinbase had “been through many crypto cycles before.”
“It seems scary, but it’s never as bad as it seems. It’s never as good as it seems. Coinbase has succeeded over the last 10 years by continuing to focus on great product execution during down markets and managing expenses closely.”
And the firm also addressed its recent struggles with the regulatory United States Securities and Exchange Commission (SEC), which is set to probe the platform for possible “securities fraud” violations.
The company said that it had already provided the commission with information and “looks forward to having the opportunity to engage further.”
The firm wrote:
“In May, the SEC sent us a voluntary request for information, including about our listings and listing process. We do not yet know if this inquiry will become a formal investigation.”
Coinbase added that it was seeking “productive discussion” with the SEC and other regulators and “policymakers” to enable the development of Web3.
And Armstrong claimed there was reason for optimism, remarking that Coinbase was a “responsible company” in the crypto space with “plenty of cash on the balance sheet and strong fundamentals.”
He pointed to positive news on the partnerships front, claiming that in the past two years, Coinbase had “won deals with the largest companies to integrate crypto into their offerings.”
The CEO asserted:
“We’re going to be here through the long term, through the ups and downs of this industry.”