Cryptocurrency exchange Coinbase announced a Q1 loss that was smaller than anticipated. This was attributed to the implementation of cost-saving measures and the diversification of revenue streams. Following this news, the company’s shares rose by 7% during after-hours trading on Thursday.
Coinbase has expanded its product offerings in subscription and service revenue by partnering with One River Digital Asset Management, which has been beneficial for the company. Additionally, Coinbase has launched new products, including a wallet-as-a-service, in order to increase the scalability of blockchain technology.
Chief Financial Officer Alesia Haas shared,
We’re also seeing the benefits of increased cost efficiencies, and we’ve taken deep lessons from growing too quickly and believe that we are going to be prudent in our spend going forward.
Alesia Haas, coinbase cfo
In spite of a significant selloff last year, investors are cautiously returning to the speculative asset class, using it as a hedge against increased market risks. As a result, when Coinbase reported a loss of 34 cents per share in the first quarter, it was better than expected. Analysts had anticipated a loss of $1.35 per share.
Although investors are beginning to return to the speculative asset class, Coinbase has yet to benefit from this trend. In the first quarter, the company’s trading volumes fell by over 50% to $145 million. Additionally, retail trading volumes, which were crucial in making Coinbase a well-known name in 2021, decreased by 72%.
Coinbase announced its intention to implement its third round of layoffs since last year, resulting in 950 additional job losses. However, this cost-cutting measure has improved the company’s financial structure. CEO Brian Armstrong has stated that this improvement will enable Coinbase to achieve its goal of improving core profits on a year-over-year basis by 2023.
In the first quarter, Coinbase reduced its operating expenses by 24% compared to the previous quarter. As a result, the company reported expenses of $607 million, which is considerably less than the prior estimate range of $625 million to $675 million.
Dave Weisberger, the CEO of CoinRoutes, which is an algorithmic-trading platform for the digital asset industry, stated,
Everyone was expecting disastrous results, and it does not look to be a disaster for Coinbase at all.
Dave Weisberger, coinbase ceo
After experiencing an 85% decline in value in 2022, the shares of Coinbase have experienced a notable recovery this year. As of Thursday’s close, the company’s shares had increased by almost 40%, a trend that reflects a broader increase in value for cryptocurrencies.
