Coinbase posts $1.1 billion loss, falling revenue in Q2

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Coinbase released its second quarter earnings on Tuesday afternoon, posting a loss of $1.1 billion on revenue of $803 million—both figures fell short of analyst expectations, and are below what the company posted in the first quarter of the year.

The results also amount to the second consecutive quarterly loss for Coinbase, which posted massive profits after going public last year but has struggled to maintain momentum during the latest “crypto winter.”

“We continue to take a long-term view and remain focused on building for the future. Q2 was a test of durability for crypto companies and a complex quarter overall. Dramatic market movements shifted
user behavior and trading volume, which impacted transaction revenue,” said the company in a letter to shareholders.

One relative bright spot is that the number of transacting users on Coinbase appeared to remain relatively steady at around 9 million.

Here is a larger breakdown of the Coinbase’s recent performance:

The company’s revenue from both retail and institutional trading fell sharply, while its custody and services businesses—both key priorities for Coinbase–also stumbled. The only area of growth came from an uptick in money from interest income:

Coinbase’s earnings flop comes as the company tries to navigate an industry-wide downturn in the crypto market, and also reassure nervous investors about a recent report that the SEC is investigating the company for illegally listing securities. Coinbase also suffered a reputational blow last month when the Justice Department announced it arrested a former product manager for insider trading.

In response to weaker than expected growth, CEO Brian Armstrong announced in June that Coinbase would lay off more than 1,100 employees, representing around 18 percent of its workforce.

The company did get a big of good news earlier this month, however, when it announced a tie-up with investment giant BlackRock—a development that will make it easier for businesses to hold crypto, and that sent Coinbase’s share price soaring more than 20 percent.

Coinbase shares were off around 10 percent as of Tuesday afternoon, trading around $87.