Alternative revenue sources may be a key factor for exchanges as Coinbase sees trading volumes fall but other nontrading areas rise
Earlier this afternoon Coinbase reported its fourth-quarter and full-year 2022 results. In response to the company’s raw numbers, shares of Coinbase are off around 2.2% in after-hours trading as of the time of writing. (The company initially fell much farther before recovering to positive territory; gains that it later shed ahead of its earnings call.)
In preparation for today’s data download from the American cryptocurrency exchange, identified a number of questions that we wanted to answer, including queries relating to the company’s revenue mix, consumer activity and ability to defend its fee take rate during the present-day crypto downturn.
Let’s see what we can learn from the new data.
Starting with revenue mix, in the fourth quarter of 2022 Coinbase saw its trading revenues fall and its nontrading revenues rise when compared to the third quarter of the same year. This largely answers our query regarding where Coinbase’s top line would come from in a world of more limited trading activity.
Of the company’s $604.9 million worth of net revenue in the fourth quarter, some $282.8 million came from subscription and services revenues, or just under 47%. That same figure was 36.5% in Q3 2022 and 8.6% in the year-ago period.
Put simply, Coinbase has undergone a massive revenue makeup change from trading incomes comprising the vast majority of its top line to merely half; the shift was more driven by falling trading revenues but on a year-over-year basis, Coinbase’s “subscription and services” revenue rose a respectable 32.5%. In a crypto winter, that’s nothing to sneeze at. (Coinbase benefited from a rising interest rate climate when it came to income generated from interest itself in the fourth quarter when compared to the year-ago period.)