Coinbase Expects ‘Softer’ First Quarter After Strong Q4

Lower crypto asset prices are partly driving the trend seen in the first few months of 2022, execs say

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Coinbase CEO Brian Armstrong | Source: Coinbase

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key takeaways

  • Company’s leadership spoke about revenue diversification, NFTs and stock price during its latest earnings call
  • Execs don’t view OpenSea as a chief competitor as it preps NFT marketplace, noting there will be many winners in nascent space

Though Coinbase reported sharp fourth quarter revenue and user growth Thursday evening, executives said they are expecting lower monthly transacting users and total trading volume in the first quarter.

Coinbase Chief Financial Officer Alesia Haas noted during the company’s earnings call Thursday that the “softer” trend seen in the first couple months of 2022 is in part driven by lower cryptoasset prices. The price of bitcoin, for example, is down nearly 20% since the end of 2021.

Monthly transacting users (MTUs) have averaged roughly 10 million, and the company has set an expected 2022 MTU range between 5 million and 15 million. MTUs hit 11.4 million during the fourth quarter.

Meanwhile, Coinbase has seen about $200 billion in trading volume quarter to date. Trading volume totaled $547 billion in the final three months of 2021, a nearly 70% quarter-over-quarter increase.

CEO Brian Armstrong said he no longer views downturns as “crypto winters,” noting the increased use cases for crypto outside of trading, such as NFTs and decentralized finance (DeFi).

“The biggest problem we have is not to think about what’s going to happen in any given quarter, but how do we actually capture the size and scale of this opportunity in front of us when there’s so many multibillion-dollar business opportunities around us,” Armstrong explained.

Diversifying revenue

Though transaction revenue remains the lion’s share of Coinbase’s revenue, Haas noted the company’s focus on diversifying its revenue streams in 2022.

Coinbase generated more than $500 million of subscription and services revenues last year — a tenfold increase from 2020 — including $214 million during the fourth quarter.

This segment comprised 7% of the crypto platform’s net revenue in 2021, up from 4% the year prior.

The company had 3.6 million users earning yield on their assets at the end of the year — five times 2020’s total. 

“We plan to open up assets like ETH for institutions later this year, and we also plan to add more assets, more proof-of-stake chains for users to participate in,” Haas said.

Coinbase versus OpenSea?

Executives said they expect more than one winner in the nascent NFT (non-fungible token) market.

Coinbase revealed in October that it would launch an NFT marketplace allowing users to purchase, mint, showcase and discover the cryptoassets. 

Emilie Choi, Coinbase’s president and chief operating officer, noted on the call that she and others at the company are “huge fans” of OpenSea. Coinbase Ventures was an early investor in the NFT marketplace.

“We see a lot of opportunity for innovation, [and] we definitely don’t believe that this is a zero-sum game,” she added during the call.

“Today, people can buy on Coinbase, transfer to a wallet and then go to the marketplace; if they can do that all in one app with a few clicks, that’s a win.”

Armstrong said NFTs will grow well beyond digital artwork. 

“There are going to be a lot of winners,” the CEO said. “Oftentimes, if you put out a product and another product looks similar in the early days, they tend to diverge over time and find their own niches after at some point.”

What’s up with the COIN price?

Executives also addressed Coinbase’s stock price, which was about $175 at 11 am ET on Friday — down roughly 30% year to date. The company became the first publicly traded crypto exchange last April.

Inflation, interest rate concerns and geopolitical tension — such as Russia’s recent invasion of Ukraine — have contributed to a sell-off of high-growth companies in recent months, Haas explained.

The stock, she added, is correlated with crypto prices. Bitcoin’s price, which hit an all-time high of nearly $70,000 in November, was below $40,000 on Friday morning. 

“We honestly don’t truly understand this,” Haas said, “as this correlation does not take into account the growth in our market share…the diversification of our business beyond investing, and let alone the future potential of our business as we expand into new assets and new product streams.”


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