Coinbase Beats Q2 Revenue Expectations, Expects to Win Legal Battle with SEC
August 3, 2022 — Coinbase Global, the popular cryptocurrency exchange, has exceeded second-quarter revenue expectations due to higher interest income. Additionally, company executives expressed confidence in winning their ongoing legal battle against the U.S. Securities and Exchange Commission (SEC).
In June, Coinbase and its rival Binance were sued by the SEC for allegedly trading at least 13 crypto assets that are considered securities without proper registration. The SEC’s action is part of a broader crackdown on the crypto industry.
During a post-earnings call, Coinbase’s Chief Legal Officer, Paul Grewal, stated, “With respect to the litigation with the SEC, I want to be very clear, we do think we can win. We expect to win.”
Despite Coinbase’s positive performance, the company’s shares dipped by 1.2% during volatile extended trading. However, Coinbase’s stock has experienced substantial growth this year, surging by 156% due to renewed retail interest in cryptocurrencies and a wider rebound in the tech sector.
Analyst Owen Lau from Oppenheimer acknowledged the initial investor enthusiasm over Coinbase’s results but highlighted subdued sentiment as investors delved deeper and realized the guidance was in line with expectations.
Looking ahead to the third quarter, Coinbase projects subscription and services revenue of at least $300 million. This forecast falls just below estimates of $336.15 million.
For the second quarter, Coinbase reported revenue of $707.9 million, surpassing Refinitiv’s estimated figure of $663 million.
Notably, interest income in the quarter spiked to $201.4 million compared to $32.5 million in the same period last year. Alesia Haas, Coinbase’s finance head, attributed this surge to lower crypto volatility, which she described as reaching multi-year lows.
Furthermore, trading volumes in the second quarter declined to $92 billion from $217 billion in the same period last year. Despite reduced trading volumes, Coinbase managed to narrow its loss to $97 million from $1.09 billion in Q2 of 2022.
Coinbase’s strong performance bodes well for the company as it navigates the legal challenge imposed by the SEC. The outcome of this lawsuit will have significant implications for the broader cryptocurrency industry.
Reporting by Manya Saini and Sri Hari NS in Bengaluru; Editing by Maju Samuel and Arun Koyyur
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About the Author: Manya Saini specializes in reporting on prominent publicly listed U.S. financial firms, including major banks, card companies, asset managers, and fintechs. She also covers late-stage venture capital funding, initial public offerings on U.S. exchanges, and news and regulatory developments in the cryptocurrency industry. Her work predominantly appears in the finance, markets, business, and future of money sections of the website.