Coinbase released its second-quarter financial report, posting $663 million in net revenue and a net loss of $97 million on $708 million in revenue. This is deemed significant given recent regulatory actions. The top exchange attributed this to being selected by many leading asset managers to provide critical infrastructure underpinning their proposed Bitcoin spot ETF products.
Although net sales were 10% lower than in Q2 2022, Coinbase’s earnings still exceeded investor expectations, demonstrating its market dominance in the United States, where its closest rivals, like Binance, have come under regulatory scrutiny. The $97 million net loss is also significantly less than the corresponding quarter last year.
This was the first quarter where recurring revenue [e.g., USDC income, staking, subscription] exceeded transaction revenue [51% to 49%]. It is also the first time it has generated positive Adjusted EBITDA and increased its USD resources, a feat last seen in late 2021.
Moreover, its quarterly recurring operating expenses have dropped nearly 50% Y/Y [defined as technology and development, general and administrative, and sales and marketing]. The report also highlighted how the 30% Y/Y layoffs, which were a difficult decision, have paved the way for a more efficient environment where teams exhibit stronger execution and yield results.
Coinbase Eyes Crypto Use Cases Beyond Trading
In Q2, we made further progress toward this bold goal such as expanding access to derivatives
products to customers outside the US and taking tangible steps to move our Base product from pilot to general availability. As we look ahead, we are expanding our focus toward crypto use cases beyond trading.
Another significant statement made by the exchange was its intention to file a request for the Securities and Exchange Commission to dismiss the lawsuit on August 4, with the legal counsel for the cryptocurrency exchange stating that they anticipate winning the case.
Coinbase Chief Legal Officer Paul Grewal expressed confidence that the exchange will prevail in the legal action initiated by the regulator during the company’s August 3 second-quarter 2023 earnings call. “With respect to the litigation with the SEC, I want to be very clear. We do think we can win. We expect to win.”