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Coinbase Global (COIN) Q2 Earnings Miss on Lower Trading Volume

Zacks Equity Research
·4 min read

Coinbase Global COIN reported second-quarter 2022 loss of $4.95 per share, wider than the Zacks Consensus Estimate of a loss of $3.04. Results also compared unfavorably with the year-ago earnings of $6.42 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 second quarter of 2022.

Coinbase Global, Inc. Price, Consensus and EPS Surprise

 

Coinbase Global, Inc. price-consensus-eps-surprise-chart | Coinbase Global, Inc. Quote

Behind the Headline

Total revenues came in at $803.3 billion, which missed the Zacks Consensus Estimate by 7.9%. The top line dropped 63.8% year over year, reflecting decreases in transaction revenues, subscription and services revenues as well as other revenues.

Monthly Transacting Users (MTUs) were 9 million, up 2.3% year over year, driven by higher retail and institutional volume.

The trading volume of $217 billion declined 53% 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 increased 36.9% year over year to $1.9 billion, attributable to an increase in technology and development, general and administrative, restructuring expense and other operating expense.

Adjusted EBITDA was a loss of $151 million in the reported quarter, in contrast to $1.2 billion earned in the year-ago quarter.

Financial Update

As of Jun 30, 2022, cash and cash equivalents were $5.7 billion, down 20.2% from the figure at 2021 end. Total assets were $105.5 billion, up about five-fold from the level at 2021 end.

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

Total shareholders’ equity was $5.8 billion at the end of the reported quarter, down 8.9% from the value on Dec 31, 2021.

Cash used in operations was $3.8 billion in the first half of 2022 versus cash from operations of $7.4 million in the year-ago quarter.

Q3 Guidance

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

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

Sales and marketing expenses are expected to be about $100 million.

2022 Guidance

The annual average retail MTU is expected to be between 7 and 9 million. Average transaction revenue per user is estimated at low $20s.

Subscription and services revenues are estimated to be more than $600 million.

Transaction expenses, as a percentage of revenues, are expected to be in the low 20%. Sales and marketing expenses are expected between $500 and $600 million. Technology & development and general & administrative expenses are projected to be between $4 and $4.25 billion.

Zacks Rank

Coinbase Global currently carries a Zacks Rank #3 (Hold). 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 second-quarter results so far, Nasdaq Inc. NDAQ, CME Group CME and MarketAxess Holdings MKTX beat the respective Zacks Consensus Estimate for earnings.

Nasdaq reported second-quarter 2022 adjusted earnings per share of $2.07, beating the Zacks Consensus Estimate of $1.91 by 8.4%. The bottom line improved 8.9% year over year. Nasdaq’s revenues of $893 million increased 5.6% year over year. The top line beat the Zacks Consensus Estimate by 1.1%. The operating margin of 54% remained unchanged year over year.

CME Group’s second-quarter 2022 adjusted earnings per share of $1.97 beat the Zacks Consensus Estimate of $1.92 and increased 20.1% year over year due to higher clearing and transaction fees and market data and information services. Revenues of $1.2 billion increased 4.9% year over year and beat the Zacks Consensus Estimate by 5%. ADV was 23.1 million contracts, including non-U.S. ADV of 6.3 million contracts, led by 40% growth in Latin America, 36% in Asia and 15% in EMEA. This marks the third-highest quarterly average daily volume.

MarketAxess’ second-quarter 2022 earnings per share of $1.78 outpaced the Zacks Consensus Estimate by 4.1% and improved 1% year over year. Total revenues of $182 million increased 3% year over year but fell short of the consensus mark by 1.2%. U.S. high-grade trading volume of MarketAxess increased 11% year over year. Emerging markets' trading volume rose 11.5% year over year.


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