On Thursday, Coinbase, the leading crypto exchange in the US, reported that its loss in the second quarter of the year amounted to $97 million.
However, the financial results of the crypto exchange turned out to be better than expected, which drove up the shares of the company in after-hours trading.
The results
The revenue for the second quarter was about $708 million and this resulted in losses of $0.42 per share for Coinbase, while analysts had expected revenue of $634 million and a loss of $0.76 per share.
In the same period a year earlier, the crypto exchange had generated revenue of about $808 million, which means there was a significant decline this year.
Nonetheless, the losses of the crypto exchange were still significantly less than the losses that the San Francisco-based entity had reported last year of about $4.98 per share.
The second-quarter performance of Coinbase was a decline from its performance in the first quarter when the exchange reported revenue of $773 million and a loss of $0.73 per share.
Towards the end of last year, the crypto exchange had managed to build some positive momentum, even though crypto prices were declining after the collapse of the FTX exchange.
There had been a 22% rise in the company’s revenue sequentially.
Shareholders
Coinbase revealed in its letter to the shareholders that the company’s focus on efficiency was part of the reason behind the strong quarter.
The company pointed out that its recurring operating expenses had seen a decline of 50%, as in the same time span, it had also reduced its workforce by 30%.
Anil Gupta, the Vice President of Investor Relations at Coinbase, said that the exchange had begun its journey of becoming more financially disciplined almost a year ago.
He said that the headcount had been reduced and the entire company had undergone a great deal of efficiency and optimization.
More details
In the second quarter, Coinbase generated interest income of about $201 million. It has a revenue-sharing agreement for USDC reserves from Circle, which contributes about $151 million.
By the end of the quarter, the total USDC reserves on Coinbase stood at about $1.8 billion. The exchange also revealed that its trading volume had reduced substantially quarter-over-quarter.
It had gone down from $145 billion to $92 billion. In the same period last year, its trading volume had stood at $217 billion but had now seen a decline of 57%.
It had been predicted by some analysts that it would be the first time that transaction revenue would be less than the revenue generated from services and subscriptions.
These include interest income generated via supporting assets like the USDC stablecoin and products like staking.
Coinbase also reported that the transaction revenue in the second quarter was about $327 million, which is significantly lower than what it had been a year earlier at $665 million.
There was a rise in revenue from subscriptions in the same period, which had been $147 million last year but was now $335 million.