Coinbase Global (COIN) Q1 Earnings and Revenues Fall Y/Y – May 11, 2022

Coinbase Global (COIN Free Report) reported first-quarter 2022 loss of $1.98 per share in contrast to the year-ago earnings of $3.05 per share.

In the quarter, Coinbase witnessed lower trading volumes in both retail and institutional as the trend of both lower crypto asset prices and volatility that began in late 2021 continued into the first quarter of 2022.

Coinbase Global, Inc. Price, Consensus and EPS Surprise


Behind the Headline

Total revenues came in at $1.2 billion, which missed the Zacks Consensus Estimate of $1.4 billion. The top line dropped 35.2% year over year, reflecting decreases in transaction revenues, subscription and services revenues as well as other revenues.

Monthly Transacting Users (MTUs) grew to 9.2 million, up 50.8% year over year, driven by higher retail and institutional volume.

The trading volume of $309 billion declined 7.8% year over year, attributable to lower trading volume in both Retail and Institutional. Total trading volume continued to diversify beyond Bitcoin into Ethereum and other crypto assets.

Total operating expenses more than doubled year over year to $1.7 billion, attributable to an increase in transaction expense, technology and development, sales and marketing and general and administrative and other operating expense.

Adjusted EBITDA was $20 million in the reported quarter, a drop from $1.2 billion reported in the year-ago quarter.

Financial Update

As of Mar 31, 2022, cash and cash equivalents were $6.1 billion, down 14.4% from the figure at 2021 end. Total assets were $20.9 billion, down 1.8% from the level at 2021 end.

At the end of the first quarter of 2022, the long-term debt of the company was $3.4 billion, up 0.1% from 2021 end.

Total shareholders’ equity was $6.5 billion at the end of the reported quarter, up 1.8% from the value on Dec 31, 2020.

Cash used in operations was $830.1 million versus cash from operations of $3.4 million in the year-ago quarter.

Q2 Guidance

Coinbase estimates retail MTU and total Trading volume to be lower in second-quarter 2022 compared with first-quarter 2022.

Transaction expenses are expected to be in the lower twenties as a percent of net revenues.

Operating expenses will be between $1.1 and $1.3 billion. Sales and marketing expenses are expected to be in the mid-to-high teens of as a percentage of net revenues.

2022 Guidance

The annual average retail MTU is expected to be between 5 and 15 million.

While subscription and services revenues are expected to strongly grow over 2021, transaction expenses, as a percentage of revenues, are expected to be in the low 20%. Sales and marketing expenses, as a percentage of revenues, are expected to be about 12-15%. Technology & development and general & administrative expenses are projected to be between $4.25 and $5.25 billion.

Adjusted EBITDA losses are expected to be about $500 million.

Zacks Rank

Coinbase Global currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Securities and Exchanges

Of the industry players that have reported first-quarter results so far, Nasdaq Inc. (NDAQ Free Report) , CME Group (CME Free Report) and MarketAxess Holdings (MKTX Free Report) beat the respective Zacks Consensus Estimate for earnings.

Nasdaq’s adjusted earnings per share of $1.97 beat the Zacks Consensus Estimate by 2.1% and improved 0.5% year over year. Revenues of $892 million increased 5% year over year and matched the consensus estimate. The operating margin of 51% contracted 200 bps year over year.

Nasdaq expects 2022 non-GAAP operating expenses in the range of $1.70 billion to $1.76 billion, narrower than the prior expectation of $1.68 billion to $1.76 billion.

CME Group’s first-quarter 2022 adjusted earnings per share of $2.11 beat the Zacks Consensus Estimate of $2.00 and increased 17.9% year over year due to higher clearing and transaction fees and market data and information services.

CME Group’s revenues of $1.3 billion increased 5% year over year and beat the Zacks Consensus Estimate by 5%. Average daily volume increased in five out of the six products lines.

MarketAxess’ earnings per share of $1.73 beat the Zacks Consensus Estimate by 1.8%, driven by revenues and trading volumes but declined from $2.11 per share a year ago. Total revenues were $186 million, reflecting a decrease of 4.6% year over year but matching the consensus estimate. The operating margin of 47% expanded 340 basis points year over year.

Emerging markets volume decreased 7% year over year while emerging markets ADV was up 5%. The total credit category’s trading volumes decreased 3% year over year to $12 billion.