The user growth slowed in the second quarter and is set to fall further over the balance of this year as top-line results came in well shy of expectations, according to Coinbase Global COIN.
The largest criptocurrency exchange in the U.S. reported monthly transactions of 9 million in Q 2, more than the 8.4 million analysts had predicted, but down from 9.2 million in the prior quarter. The company expects that the average annual MTUs will be 7 -- 9 million in 2022.
The trading volume of the second quarter fell by $92 billion, a reflection of the swoon of the market during the quarter.
Net revenue came in at $802.6 million against expectations of $854.8 million, with the company s quarterly results not being taken into account by Wall Street estimates. Net revenues rose to $2 billion in the same quarter last year.
In its second quarter letter to shareholders, the company said it's never as good as it seems and it's never as bad as it seems.
Coinbase is an all-weather company with experience in navigating through the price cycles of cryptocurrencies. We continue to take a long-term view and focus on building for the future. After hours trading, the company's shares were down about 5%. The stock has lost two-thirds of its value this year.
From the beginning of April to its trough on June 18, the total market value for all cryptocurrencies has gone up by 63% from $2.15 trillion to $802 billion, according to Coinmarketcap.
In its report, Coinbase stated that dramatic market movements shifted user behavior and trading volume, which impacted transaction revenue.
The monthly transacting users of MTUs dropped to 9 million, down from 9.4 million in Q1 but about 600,000 more users than Wall Street anticipated.
Total trading volumes fell by 29% through the second quarter to $219 billion from $309 billion by the end of the second quarter. Retail buy-the- dip activity, which was part of the increase in the first quarter, deteriorated into the second quarter.
Retail trading volume was $46 billion, a decline of $28 billion compared to Q 1, while institutional trading was $171 billion, a decrease of $64 billion.
In the quarter, the platform's most-traded asset was the bitcoins, which accounted for 31% of the transaction revenue. The additional 47% was accounted for by the additional 22% of transaction revenue.
Subscription and services revenue such as staking, which analysts had previously hoped could be a diversified revenue stream to crypt trading volume, continued to decelerate in Q 2. Coinbase will lower its full year expense range for Technology Development and General Administrative expenses while also taking a pause, maintain and prioritize approach to product development outside key areas, due to the 18% workforce reduction announced on June 14.
As of Tuesday afternoon, it was down 3% on the day, as it took a less bearish turn in recent weeks. Since January, the market's largest criptocurrency has dropped from $47,163 to $23,163 at the beginning of January.
Coinbase stated that while Q 2 results were consistent with the outlook we provided in May and reflect challenging market conditions, we are actively adjusting to market conditions.