Cryptocurrency exchange Coinbase Global Inc (COIN.O) reported a smaller loss than anticipated in the first quarter, thanks to cost reductions and revenue diversification. As a result, its shares surged 7% in after-hours trading on Thursday.
The company’s partnership with One River Digital Asset Management has allowed it to expand its product offerings in subscription and services revenue. Additionally, Coinbase has introduced wallet-as-a-service and other products to facilitate the scaling of blockchain technology.
Chief Financial Officer Alesia Haas stated, “We’re also seeing the benefits of increased cost efficiencies, and we’ve learned valuable lessons from growing too rapidly. We intend to exercise prudence in our future spending.”
Coinbase’s loss per share was 34 cents, while analysts had estimated a loss of $1.35. This positive result indicates that investors are cautiously returning to the speculative asset class to hedge against market risks following a challenging downturn last year.
However, this trend has not yet translated into significant gains for the cryptocurrency exchange. Trading volumes more than halved to $145 million, and retail trading volumes, which played a significant role in Coinbase’s popularity in 2021, plummeted by 72%.
Earlier this year, the company announced its third round of layoffs, with an additional 950 jobs being cut. Haas expressed confidence that the improved cost structure will help Coinbase achieve its goal of enhancing core profitability year-over-year by 2023.
Operating expenses were reduced by 24% compared to the previous quarter, with total expenses amounting to $607 million, significantly lower than the previous range of $625 million to $675 million.
Dave Weisberger, CEO of CoinRoutes, an algorithmic-trading platform for the digital asset industry, commented, “Everyone was expecting disastrous results, and it does not look to be a disaster for Coinbase at all.”
Coinbase shares experienced an 85% decline in value in 2022 but have rebounded nearly 40% this year as cryptocurrencies regain some stability.