Coinbase CEO Brian Armstrong called the quarter a “turning point” for the company as it worked toward a more “financially disciplined” company.
Cryptocurrency exchange Coinbase managed to significantly reduce its net loss in the first quarter of 2023, due in part to strong gains from retail investor trading activity.
The company’s net loss fell from $557 million in the fourth quarter of 2022 to $79 million in the first quarter, partly attributed to a 22% increase in revenue, to $736 million.
The results exceeded expectations from some analysts, leading to a 7% rally in Coinbase’s (COIN) stock price in after-hours trading.
Transaction income -derived from the commissions it charges for operations- from its institutional base increased a whopping 66% to over $22.3 million, while transaction income from retail investors increased 14.1% to $352.1 million, according to Coinbase’s May 4 letter to shareholders.
In general, transaction revenue increased 16% qoq to $375 million, although trading volumes remained fairly flat.
Interest income and blockchain staking rewards contributed the majority of revenue for the quarter, which increased to $240.8 million and $73.7 million, respectively, from Q4 2022.
The percentage of income from Bitcoin operations (BTC) (36%) y Ether (ETH) (18%) remained almost identical during the quarter.
The company is inching closer to profitability after a tumultuous 2022 in which it posted global net losses of $1.16 billion, $803 million, $576 million and $605 million in each of the respective quarters of the year. past.
Coinbase explained that the quarter represented a “tipping point” toward building a more “efficient” and “financially disciplined” firm:
“We have reduced costs, stepped up operational excellence and risk management, and continue to drive product innovation and regulatory clarity. Our efforts are showing significant progress.”
“Our teams are smaller but more agile than ever and we are pleased with the pace of innovation and the results we are seeing,” added signature.
Coinbase cut staff by 18% in June 2022 and then another 20% in January 2023 in order to ensure the firm maintains an appropriate level of “operational efficiency,” Armstrong explained.
Coinbase’s comments were made in light of theWells notice hanging over their heads from the United States Securities and Exchange Commission (SEC):
“We see this as an opportunity to continue to push for a clear rule book in the US for cryptocurrency regulations.”
The firm said it is “encouraged” to see increased bipartisan support for incoming cryptocurrency legislation and looks forward to playing a role in championing a rules-based industry.
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