Exploring Coinbase’s better-than-expected fourth quarter results

Alternative revenue streams may be a key driver for exchanges as Coinbase sees trading volumes drop, but other non-trading areas increase

Earlier this afternoon, Coinbase released its fourth quarter and full year 2022 results. TechCrunch’s first look at the numbers is here. In response to the company’s raw numbers, Coinbase shares are down around 2.2% in after-hours trading at the time of writing. (The company initially fell much further before returning to positive territory, gains which it then lost before its earnings call.)

In preparation for today’s data download from the US cryptocurrency exchange, TechCrunch identified a number of questions we wanted to answer, including questions relating to the company’s revenue mix. , consumer activity, and the ability to defend its fee levy rate during current crypto. slowdown or winter.

Let’s see what we can learn from the new data.

Questions answers

Starting with the revenue mix, in the fourth quarter of 2022, Coinbase saw commercial revenue decline and non-commercial revenue increase compared to the third quarter of the same year. This largely answers our question regarding where Coinbase’s frontline originated in a world of more limited trading activity.

Of the company’s $604.9 million in net revenue in the fourth quarter, some $282.8 million came from subscription and services revenue, or just under 47%. This same figure was 36.5% in the third quarter of 2022 and 8.6% a year ago.

Simply put, Coinbase has undergone a massive shift in revenue mix, from trading revenue representing the vast majority of its revenue to just half; the change was driven more by declining trading revenue, but year-over-year, Coinbase’s “subscriptions and services” revenue grew a respectable 32.5%. In a crypto winter, there is nothing to sneeze at. (Coinbase benefited from a rising interest rate environment with respect to interest revenue itself in the fourth quarter compared to the prior year period.)