Coinbase Global Reduces Q1 Losses, Stock Price Still Subdued Due to SEC Enforcement

Coinbase Global Inc managed to reduce its losses in the first quarter and experienced a smaller revenue decline than analysts had expected.

Reports highlighted that the US-listed exchange benefited from its recent cost-saving measures and a more diversified revenue mix.

Coinbase Reveals Smaller Than Expected Loss in Q1

Coinbase reduced its losses significantly in Q1, from around $430 million in the previous year to about $79 million. Meanwhile, revenue fell by about 34% to $772.5 million.

However, it’s worth noting that revenue increased compared to the previous quarter when the cryptocurrency market experienced a significant downturn. Despite the company’s fifth consecutive quarterly loss, Coinbase’s revenue exceeded the average analyst estimate of $654 million compiled by Bloomberg.

Per reports, the company lost 34 cents per share, while analysts had predicted a loss of $1.35 per share.

The company’s revenue streams have been diversified through its partnership with One River Digital Asset Management. It has also launched new products, such as wallet-as-a-service, to add revenue mix. Coinbase also reduced its headcount by over 2,000 employees in the last seven months. CEO Brain Armstrong had previously said the cuts would reduce quarter-on-quarter expenses by 25%.

Chief Financial Officer Alesia Haas said, “We’re also seeing the benefits of increased cost efficiencies, and we’ve taken deep lessons from growing too quickly and believe that we are going to be prudent in our spend going forward,”

Coinbase reduced its operating expenses significantly by 24% compared to the previous quarter. The company reported $607 million in expenses. Haas stated that the company’s improved cost structure would aid in achieving its goal of increasing core profit year-over-year by 2023.

Stock Reacted Positively, But Regulatory Pressure Remains

The stocks on Nasdaq responded positively to Coinbase’s financial figures in the post-trading hours. The rally was a piece of good news for investors after SEC’s Wells Notice subdued the price action for the exchange. Considering Cathie Wood’s ARK Invest recently bought shares worth $8 million.

According to the shareholder letter, Armstrong assured, “We’re committed to providing Americans with a secure, regulated platform to access the growing global cryptoeconomy.”

However, the top executive expressed disappointment at the U.S. regulation by enforcement, “causing it to fall behind the rest of the world.”

Meanwhile, under regulatory pressure, Coinbase ceased issuing Bitcoin-backed loans through its Coinbase Borrow service on May 10.