Coinbase Global Inc reported a larger-than-expected quarterly loss as investors worried by this year's rout in risky assets shied away from trading in cryptocurrencies, sending its shares down 6% after the bell on Tuesday.
Trading volumes at the cryptocurrency exchange more than halved to $217 billion in the second quarter, with retail participation sinking 68% and institutional trading falling 46%.
Coinbase said it expects trading volumes to fall further in the current quarter, underscoring the turmoil brought to the sector by the collapse of certain crypto ventures and a broader selloff in financial markets.
That downturn has sent bellwether bitcoin 50% lower in 2022, forced several companies including Coinbase to cut jobs and raised fears of a drop in interest from small traders.
Coinbase said its monthly transacting users fell 2% sequentially to 9 million in the April-June quarter.
"Coinbase did not see a mass migration off its platform during the quarter, but its users are becoming more passive in their cryptocurrency investing," said Michael Miller, equity analyst at Morningstar Research.
That could be a material drag on Coinbase's earnings as the company generates most of its revenue from trading fees, Miller added.
Adjusted loss was $4.76 a share in the quarter, compared with the $2.65 expected by analysts, according to Refinitiv data. Revenue fell 63%, missing market expectations.
Even though operating expenses surged 37%, the company lowered its annual expenses forecast for technology, development and administration to between $4 billion and $4.25 billion, from $4.25 billion to $5.25 billion.
"The reduction is unlikely to restore profitability at current revenue generation levels," Miller said.
(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Aditya Soni)