Coinbase Beats Earnings Expectations – Crypto Briefing

Coinbase claimed in its latest earnings report that it had proven itself to be “largely resilient despite major shocks to the system.”

Largely Resilient

Coinbase is starting out the year strong.

The leading U.S.-based crypto exchange reported $604 million in revenue in the fourth quarter of 2022, beating estimates that it would bring in $589 million. That’s 5% up from the $590 million the company made in the third quarter of the year.

Coinbase’s performance was partially due to a growth in its interest income, which came in at $186 million—compared to $101 million in the previous quarter. Of the $186 million, $146 million came from the company’s USDC interest income. Coinbase CEO Brian Armstrong had previously stated his ambition to move the exchange away from relying primarily on transaction fees as a source of revenue in order to decrease the company’s dependency on good market conditions. 

“Coinbase and crypto proved to be largely resilient in 2022 despite major shocks to the system,” stated the report. While the crypto market capitalization declined 64% year-to-year and volatility reached multi-year lows, the company claimed that long-term fundamentals remained strong for both Coinbase and the crypto sector.

The report also addressed the regulatory landscape in the United States, which it called “disjointed”. It singled out FTX’s collapse in November as a major catalyst for the increased attention that crypto companies have been receiving from regulators, especially the SEC. The report stated that Coinbase ultimately stood to benefit from a clearer regulatory framework—which may eventually come in the form of Congress passing federal crypto legislation. “Policy is my top priority this year,” Armstrong indicated during an earnings call.

As far as its outlook for 2023 was concerned, Coinbase stated that it was “prepared to manage [its] business through a wide range of transaction revenue scenarios in 2023, which include possible increases, decreases or stabilization of crypto market capitalization and crypto asset volatility compared to levels at the end of 2022.”

Disclaimer: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.