The crypto exchange giant is bracing for a slow second financial quarter – noting that crypto volatility and prices slumped last month – forecasting a drop in users and trading volume to continue into FY2022 Q2.
In its latest letter to shareholders, the company revealed that trading volumes had fallen by 44% in the first quarter, posting worse-than-expected earnings.
The number of monthly transacting users (MTUs), customers who make active or passive transactions at least once per month dipped by nearly 20% to 9.2 million (down from 11.4 million in the final quarter of the last financial year), but Coinbase is preparing for further dips on this front, writing in its outlook:
“We believe MTUs will be lower in Q2 compared to Q1.”
The company also said it thought that total trading volume would “be lower in Q2 compared to Q1,” and said it was expecting “subscription and services revenue” to “be similar to modestly lower in Q2 compared to Q1.”
The firm stated that a “continued” trend of “both lower crypto asset prices and volatility” dating back to “late 2021” was the reason for the slowdown. But, the firm stated that it was convinced that such “market conditions” were “not permanent” – meaning that Coinbase could “remain focused on the long term.”
The dip in trading volume, Coinbase added, was “consistent with the broader crypto spot market.”
In his earnings call (transcribed by The Motley Fool), the Coinbase CEO Brian Armstrong stated:
“We […] tend to see the down period as a big opportunity, because we’re greedy when others are fearful. We tend to be able to acquire great talent during those periods and others pivot, they get distracted, they get discouraged. And so we tend to do our best work in a down period. I’ve never been more bullish on where we are as a company. And I think it’s really important to separate our performance, how are we executing toward our goals versus how is the broader market doing.”
In February, the crypto exchange had adjusted its outlook for lower quarter-to-quarter MTUs, trading volume, and revenues. But posting a net loss of USD 430 million appears to have spooked investors in the company – with share prices tumbling by almost 16% on the NASDAQ stock market in after-hours trading, per stock market data.
Meanwhile, crypto markets are largely red today. At 8:16 UTC, bitcoin (BTC) is down 3.5% in a day and nearly 19% in a week, trading at USD 30,666. At the same time, ethereum (ETH) is trading at USD 2,323, after it fell 2.6% in da day and almost 17% in a week.
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