Cryptocurrency exchange Coinbase said its revenue fell 61 percent in the most recent quarter as crypto prices fell and trading volume plummeted.
The San Francisco-based company reported an after-tax loss of $1.1 billion Tuesday, compared to the $1.6 billion net income it posted amid the crypto boom a year ago. It said $446 million of the loss reflected an impairment of its crypto and venture investments.
Coinbase shares fell more than 5 percent in after-hours trading after shedding nearly 11 percent earlier in the day.
The plunge in bitcoin and other crypto prices sent the company into the red in the first quarter, causing it to lay off 18 percent of its employees in June. With a further 30 percent drop in trading volume compared to a weak first quarter, the company suffered a pre-impairment operating loss of $647 million and its net cash position fell by about $400 million to $2.8 billion return.
In a bid to allay Wall Street’s worries about its financial health amid a so-called crypto “winter,” Coinbase released additional information about its cash burn, saying it hasn’t suffered any loan losses despite the financial strains others would have hit crypto companies.
Chief Financial Officer Alesia Haas said that along with the long-term debt it took on when interest rates were lower, Coinbase believed its $6.2 billion in available capital would allow it to continue investing during the downturn.
She added that Coinbase believes it can stick to its plan to limit this year’s earnings loss before interest, taxes, depreciation and amortization to no more than $500 million.
However, the company also faced questions from analysts about its mounting non-cash losses, with the net loss of $1.52 billion representing 77 percent of its revenue in the first six months.
Stock-based bonuses to employees accounted for 49 percent of revenue last quarter, and Coinbase forecast that they would remain at the same level in the current quarter before falling next year.
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Haas said the company understands investors’ concerns about stock-based compensation and is “balanced” with shareholders on the issue. However, she also said Coinbase took a longer-term view of costs due to the volatility of crypto markets.
At $46 billion, trading volume on behalf of retail clients fell by more than two-thirds compared to the previous year. Despite the setback, it claimed that the downturn was part of a typical cycle in crypto markets, saying its analysis “suggests [retail] Customers are not leaving the Coinbase platform.”
Coinbase reported net sales of $803 million and a loss per share of $4.98 for the quarter. Wall Street had expected a loss of $2.65 a share on sales of $832 million.
Shares have been volatile for the past few days, up more than 30 percent last week on an alliance with BlackRock. They had already given up two-thirds of the profit before Tuesday’s earnings were announced.