Coinbase expects full year 2022 to see cost management initiatives

120
2
Coinbase expects full year 2022 to see cost management initiatives

The company is trying to navigate the ongoing winter of criptocurrencies, and the company is keeping a close eye on its expenses.

The exchange expects sales and marketing expenses between $500 million and $600 million for the full year 2022.

Costs for technology and development and general and administrative expenses are expected to come in between $4 billion and $4.25 billion, down from previous guidance of $4.25 billion to $5.25 billion.

The lower range is due to our hiring growth freeze and headcount reduction efforts, as well as ongoing cost management initiatives related to our software spending, professional services vendor management and BPO outsourcing, Coinbase wrote in its second quarter shareholder letter.

Chief Financial Officer Alesia Haas told analysts and investors on the company's second quarter earnings call Tuesday that while cryptocurrencies cycles are never clear, winters have historically lasted between two and four years.

Haas said that we look at all of those historic scenarios to see if we can operate through those. This year, we set a guardrail that if we went into winter we would operate to a $500 million loss. The company is cautiously optimistic that it will be able to maintain that guardrail if the industry's market cap does not significantly deteriorate below its July 2022 levels and there is no significant behavioral change among its customers.

Coinbase said it could exceed the guardrail if it is not able to cut costs quickly in the event performance deteriorates further or approaches the low end of the MTU monthly transacting users range in the updated outlook.

Despite the short term, Haas said that they want to commit to you that they're going to operate more efficiently as we build for the future.

In the second quarter, the company reported a $1.1 billion net loss, compared to $1.61 billion in net income during the same quarter last year. The company incurred a $377 million non-cash impairment charge during the quarter.

Revenue was $802.5 million compared to $2.03 billion in the previous year.

MTUs were 9 million, up from 8.8 million a year ago.

The shift in customer and market activity and the shift in customer and market activity caused the trading volume to fall to $217 billion from $462 billion.

Coinbase expects to have more than $600 million in subscription and services revenue for the full year 2022 and an average monthly transacting user growth between 7 million and 9 million.

The stock is down more than 60% year to date.