key takeaways
- Coinbase reported higher than expected earnings yesterday.
- The company earned $604 million in revenue in the last quarter of 2022, topping the $590 million it had earned in the third quarter.
- Coinbase’s performance was partly due to growth in its interest income.
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Coinbase claimed in its latest earnings report that it had proven “largely resilient despite major system shocks.”
largely resistant
Coinbase is starting the year strong.
The Leading US Crypto Exchange reported $604 million in revenue in the fourth quarter of 2022, beating estimates that it would generate $589 million. That’s 5% more than the $590 million the company earned in the third quarter of the year.
Coinbase’s performance was partly due to growth in its interest income, which totaled $186 million, compared to $101 million in the prior 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 to lessen the company’s reliance on good market conditions.
“Coinbase and cryptocurrencies have proven largely resilient in 2022 despite major system shocks,” the report states. While crypto market capitalization declined 64% year-over-year and volatility hit multi-year lows, the company stated that long-term fundamentals remained strong for both Coinbase and the cryptocurrency sector.
The report also addressed the regulatory landscape in the United States, which it called “disjointed.” He singled out the FTX crash in November as a major catalyst for the increased attention crypto companies have been receiving from regulators, especially the SEC. The report indicated that Coinbase ultimately benefited from a clearer regulatory framework, which may eventually come in the form of Congress passing federal crypto legislation. “Politics is my top priority this year,” Armstrong said during an earnings call.
Regarding its outlook for 2023, Coinbase stated that it was “prepared to manage [its] business through a wide range of transaction revenue scenarios in 2023, including potential increases, decreases, or stabilization in 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 article owned BTC, ETH, and various other crypto assets.
