2022 has been a terrible year for the crypto market regarding price action. This has also affected exchanges as investors’ confidence dwindled and transaction volume declined. One of the most drastic declines was Coinbase’s 2022 transaction revenue, which remained just 1/3rd of 2021. The company also reported a loss of $2.46 per share in Q4 2022 and $11.81 for the whole year.
Coinbase’s annual report 2022
The exchange’s trading volume has seen a decline of 50% on a year-on-year basis. At the same time, the revenue from these transactions fell by 66%. Coinbase didn’t give up because of this and remained headstrong, and was able to get through the challenging phase. As per the company’s statements, they said the decline was due to two major crypto industry events. First was the collapse of the Luna and UST tokens in May 2022. It wiped off over $50 billion from the crypto market and affected millions of investors. Secondly was the collapse of FTX as it filed for bankruptcy, and users lost their funds.
In 2021, Coinbase reported a total revenue of $7.4 billion, dropping to $3.1 billion in 2022. The exchange has also been working towards diversifying its revenue sources with various services and subscriptions. This means they are trying to reduce their dependency on trading fees which vary massively with market cycles. This has also helped them increase their quarterly revenue from Q3 2022 to Q4 2022.
Layoffs and other important metrics
Coinbase agreed that they hired too many people too quickly, leading to layoffs in the company. They aim to reduce their operating expenses by 1/3rd in Q1 2023. The exchange also said that its OPEX was $1.2 billion per quarter, increasing 3% on a quarter-on-quarter basis. They still have enough funds to march through this bear market, as the company’s balance sheet still has $5.5 billion in resources.
The company’s share price is currently $62.07, less than 1/5th of what it opened during the IPO. In the last 1 month, they have seen a 10% rise in share prices. And we can expect this rise to continue as the crypto markets become bullish again. During January, Coinbase recorded $120 million in transaction revenue.
What are your thoughts, as Coinbase’s 2022 transaction revenue was a mere 33% of last year? Let us know in the comments below. And, if you found our content informative, share it with your family and friends.