Shareholder Letter Q4 2022
Shareholder Letter Q4 2022
Letter
We founded Coinbase with a conscious choice that we would be the most trusted, and easiest to
use crypto platform. Our products enable millions of consumers, institutions, and developers
around the world to discover, transact, and engage with crypto assets and web3 applications. We
have built reliable infrastructure, a durable business model, and a strong balance sheet. We have
prioritized prudent risk management and emphasized transparency with customers, market
participants, and government authorities, all to help encourage the cryptoeconomy’s
development. That transparency is punctuated by our decision to make Coinbase a publicly
traded company, embracing the attendant disclosure and regulatory requirements.
Throughout our history, we have routinely worked with industry and legal experts, as well as
global regulators and policymakers, to develop products that are safe for consumers and
compliant within the countries that we operate. Given the nascency of crypto and evolving
regulatory landscapes, we have certainly not been perfect. But when we identify issues, we work
to remediate as quickly and thoroughly as possible - most recently evidenced by our January
2023 settlement with the New York Department of Financial Services (NYDFS). We remain
committed to working with global regulators and policymakers to drive prudent regulation to this
emerging asset class.
We have rigorous processes to evaluate assets to list on our Spot Market and the majority of
assets we review have not met our listing criteria and therefore have been rejected. We have
avoided offering high leverage products to consumers which has both protected consumers and
helped us avoid credit risk. We do not operate as a market maker that trades against our
customers, and we do not issue exchange tokens. We do not believe we have violated any
securities laws: Coinbase staking products are not securities, USD Coin (USDC) is not a security.
The list goes on. We expect 2023 to be a year of regulatory focus and we believe our strong
foundation will make us a net beneficiary of this new environment. Our business decisions do not
always match competitive offerings, or result in maximizing near term growth or profit - but
rather they are intended to maximize safety for customers, legitimacy for the cryptoeconomy,
and longevity for Coinbase.
These principles can all be seen in our 2022 results and how we managed the company through a
tumultuous year. Our Q4 results were consistent with our outlook, including coming in well within
our full-year Adjusted EBITDA loss guardrail we conveyed in February 2022. In the latter half of
2022, we pivoted and began reducing expenses which has culminated in a materially lower
expense run rate beginning in Q1’23.
Chapter 2
Revenue has been diversifying with Q4 net revenues increasing 5% Q/Q, driven by Subscription and Services. While
transaction revenues declined 12% Q/Q in Q4, subscription and services revenue grew 34% Q/Q to $283 million.
Chapter 3
We have cut our expenses and are positioning Coinbase for improving financial performance. We anticipate that our
recent headcount reduction and ongoing cost management efforts will result in a 30%+ reduction in technology and
development, sales and marketing, and general and administrative expenses in Q1’23 compared to Q4’22, which would
constitute a 25%+ reduction when excluding the NYDFS settlement in Q4'22.
Chapter 4
Risk management strength provides for a strong liquidity position and modest counterparty risk. Our longstanding
commitment to sound risk management continues to differentiate us and protect customers. In 2022, our total corporate
exposure to client or counterparty insolvencies was $14 million with no customer funds lost. We ended Q4 with $5.5 billion
in total $USD resources, in addition to $426 million in crypto assets, which we believe puts us in a strong financial position.
Chapter 5
Regulation is coming and we believe we are positioned to benefit. Crypto policy is in an important period of transition.
Policy developments could pave the way for crypto to realize its full innovative potential — as we’re seeing in many
jurisdictions around the world — and we believe Coinbase will be a beneficiary.
Chapter 6
Outlook. We are operating toward a goal of improving full-year 2023 Adjusted EBITDA in absolute dollar terms versus full-
year 2022 and believe our recent cost reduction efforts help position us to do so. When Coinbase went public, our goal was
to operate at roughly break even across each crypto cycle. We have evolved our approach and are now setting our sights on
positioning the company to generate Adjusted EBITDA in all market conditions.
Technology and Development +
Around $4 billion, including approximately $3.9 billion, including $1.5
General and Administrative Expenses
$1.5 billion of stock-based compensation billion of stock-based
1 Represents Average MTU over including stock-based compensation compensation
the course of the year vs. Q4’22
figure of 8.3 million Adjusted EBITDA Within $(500) million guardrail $(371) million
90
80
UST/LUNA
70
60
3AC/CELSIUS/VOYAGER
50
FTX
40
30
JAN 22 FEB 22 MAR 22 APR 22 MAY 22 JUN 22 JUL 22 AUG 22 SEP 22 OCT 22 NOV 22 DEC 22
In total, crypto market cap declined 64% or approximately $1.5 trillion over the course of 2022. As
a result, our 2022 total trading volumes and transaction revenues declined 50% and 66% Y/Y,
respectively. When zooming out and looking at the most recent price cycle which started in 2020
– and after the industry endured the collapse of $LUNA and FTX – we have seen growth and
advancement of both the industry and Coinbase:
Average Bitcoin prices in Jan 2023 were still up 80%+ compared to the average price in 2020
Monthly active developers in crypto have more than doubled since 2020 to over 20,000
Progress in global crypto regulation – notably the EU’s Markets in Crypto Assets (MiCA)
framework, recent laws in Brazil, plans to regulate crypto in the UK, and other proposals in
jurisdictions like Australia, Japan, Switzerland, and Hong Kong
Major brands (Starbucks, Adidas, Nike, Coca-Cola) and social media platforms (Instagram,
Twitter, Reddit) partnered with web3 protocols and/or launched NFT powered technologies.
Coinbase has stood apart from the competition and continues to be recognized as a trusted
platform
Trading volume grew to $830 billion in 2022 from $193 billion in 2020
Subscription and services revenues grew over 17x to nearly $800 million in 2022 from less than
$50 million in 2020
Roughly 25% of the top 100 largest hedge funds in the world by reported AUM have chosen to
onboard with Coinbase, up from a handful at the end of 2020
Announced industry leading partnerships, including with Blackrock.
Tranaction Revenue
Total transaction revenue 2,276.6 1,013.0 655.2 365.9 322.1 6,837.3 2,356.2
Transaction Revenue
Q4 total transaction revenue declined 12% Q/Q to $322 million. Consumer transaction revenue
was $309 million, down 11% compared to Q3, while institutional transaction revenue was $13
million, down 32% compared to Q3.
The decline in transaction revenue was driven by lower Q4 total trading volume although we
gained overall trading volume market share in the quarter. Q4 total trading volume was $145
billion, down 9% Q/Q, outperforming global crypto spot market trading volume which declined
21% Q/Q. Our total consumer trading volume declined 23% Q/Q in Q4. Our institutional trading
volume declined 6% Q/Q in Q4.
FULL-YEAR
TRADING VOLUME (% OF TOTAL) Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 2021 2022
Other crypto assets 68% 55% 47% 36% 33% 55% 45%
FULL-YEAR
TRANSACTION REVENUE (% OF TOTAL) Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 2021 2022
Other crypto assets 68% 52% 47% 45% 46% 54% 49%
Advanced traders on our consumer platform were much less active in December 2022 which we
believe was primarily driven by multi-year low levels of volatility. As a result, we had a lower mix of
advanced trading volume in Q4.
Our Q4 blended average consumer fee increased compared to Q3. The primary factor was a lower
mix of advanced trading volume. In connection with multi-year lows in crypto asset volatility and
the migration of the majority of users from Coinbase Pro to our advanced trading experience on
our consumer application, we saw a notable decline in advanced trading volume particularly in
December. Since advanced trades carry a lower fee, the result was an increase in our blended
average fee.
Our institutional blended average fee declined in Q4 compared to Q3, driven by lower fees
associated with our market maker program. The vast majority of our reported institutional trading
volume came from our Spot Market, where market makers and high frequency traders are the
core customers.
213.4 210.5
$200 $200 189.6
151.9 147.4
145.1
102.6 103.1
$100 $100 91.4
78.2
56.4 73.6
52.0
33.6
$0 $0
Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22
1 Graph is illustrative of
subscription and services revenues
Blockchain rewards revenue declined 1% Q/Q to $62 million in Q4, or 10% of net revenue. As a
assuming that average crypto reminder, we recognize blockchain rewards revenue on a gross basis. Rewards passed through to
asset prices from the fourth
quarter of 2022 were consistent
customers (less applicable fees) are recognized in transaction expenses. Adjusting for these
throughout the period shown payouts, blockchain rewards represented approximately 3% of net revenue in Q4. While we saw an
increase in native unit staked balances across all assets supported for staking in Q4, the
sequential decline was driven by lower average crypto asset prices in Q4 compared to Q3. Our
largest staked balance is ETH2, which was approximately $3.0 billion as of 12/31. In Q4, we
expanded access to ETH2 staking to Canada and Australia, allowing more users to earn staking
rewards.
Custodial fee revenue was $11 million, down 21% Q/Q. The decline was driven primarily by lower
average crypto prices compared to Q3. Average assets under custody declined 13% Q/Q to $41.6
billion, and were partially offset by modest net inflows into our custody product.
A key driver of our blockchain rewards and custodial fee revenue is the amount of assets we hold on
platform for our users that are participating in staking or custody products. Total assets on
platform declined 21% Q/Q in Q4, largely driven by lower crypto asset prices, which declined 16%
from 9/30 to 12/31. To a lesser extent, we had modest net outflows in Q4, approximately ⅓ of which
were a reduction in fiat balances. A reduction in customer fiat balances is consistent with behavior
observed during the prior down market. Despite the market turmoil, our retail customers largely
continued to “hodl” on Coinbase at levels similar to Q3. We believe this indicates that retail
customers, on average, maintained long-term conviction in crypto and, assuming history repeats
itself, are likely to become more active when market conditions improve.
FULL-YEAR
ASSETS ON PLATFORM (% OF TOTAL) Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 2021 2022
USDC 1% 1% 2% 1% 1% 1% 1%
Other Crypto Assets 30% 30% 27% 30% 26% 30% 26%
Fiat 4% 4% 7% 6% 6% 4% 6%
Interest income grew 79% Q/Q to $182 million in Q4, of which $146 million was derived from
USDC. The primary driver of the increase was the rising interest rate environment which
benefited our business in two ways
First, higher interest generated via our participation in the USDC ecosystem. We have entered
into an agreement with the issuer of USDC, pursuant to which we share any revenue generated
from USDC reserves pro rata based on (i) the amount of USDC distributed by each respective
party and (ii) the amount of USDC held on each respective party’s platform. In Q4, average
interest rates earned on USDC reserves increased compared to Q3. At the end of Q4, we had
approximately $2 billion of USDC on our platform - consisting of $1.1 billion of customer USDC
and $861 million of corporate owned USDC. In Q4, we continued to expand our USDC Rewards
program internationally, and it is now available in nearly 70 countries. USDC Rewards allows
eligible customers to earn up to 1.5% APY rewards for holding their USDC on the Coinbase
platform
Second, we generated higher interest on customer fiat balances in Q4 compared to Q3. While
customer fiat balances on our platform declined to $5.0 billion as of 12/31 from $6.6 billion as
of 9/30, the increase in average interest rates in Q4 more than offset this decline. Customer
fiat balances vary on a quarter to quarter basis depending on customer activity and we do not
manage our business to grow these balances.
Finally, other subscription and services revenue was $27 million, down 15% Q/Q. The primary
driver for this was fewer Learning Rewards campaigns in Q4 vs. Q3. The largest component of
other subscription and services is Coinbase One, where we continued to see growth in paid
subscribers in Q4. In Q4, we expanded access to Coinbase One to users in certain international
markets and launched several additional benefits, including access to Messari Pro for advanced
market insights.
financial As the events of 2022 unfolded, it became clear that we had hired too many people too quickly.
performance. We moved quickly, both mid-year and just after year-end, to implement difficult but prudent
actions to reduce our headcount while also reorganizing the company to focus on efficiency. We
feel confident that we have a more durable cost structure, which combined with our strong
balance sheet, positions our expenses to better align with the range of scenarios we are currently
forecasting.
We anticipate that our January 2023 headcount reduction and ongoing across-the-board cost
management efforts will result in a greater than 30% reduction in Q1’23 technology and
development, sales and marketing, and general and administrative expenses compared to
Q4’22, which would constitute a greater than 25% reduction when excluding the NYDFS
settlement in Q4'22.
Sales and marketing 244.6 200.2 140.9 75.9 93.1 663.7 510.1
% of net revenue 10% 17% 18% 13% 15% 9% 16%
Technology and development 459.6 570.7 609.2 556.3 590.1 1,291.6 2,326.4
General and administrative 297.4 413.6 470.2 339.2 377.7 909.4 1,600.6
Other operating expenses, net 73.5 258.6 422.8 74.8 40.6 630.3 796.8
Total operating expenses 1,576.2 1,720.9 1,852.7 1,146.8 1,184.0 4,762.9 5,904.4
Non-cash crypto related impairment 43.8 209.8 377.0 0.0 5.7 119.4 592.5
Total operating expenses,
1,532.4 1,511.1 1,475.7 1,146.8 1,178.3 4,643.5 5,311.9
absent impairment
Full-time employees (end of quarter) 3,730 4,948 4,977 4,706 4,510 3,730 4,510
Sales and marketing expenses were $93 million, up 23% Q/Q. The primary driver of the increase
was seasonally higher marketing spend, notably driven by our NBA partnership. Full-year 2022
sales and marketing expenses were $510 million, down 23% compared to 2021, and were
consistent with our outlook.
Technology and development expenses were $590 million, up 6% Q/Q. As expected, the primary
driver of the sequential increase was the timing of certain stock-based compensation awards.
Full-year 2022 technology and development expenses were $2.3 billion, up 80% compared to
2021.
General and administrative expenses were $378 million, up 11% Q/Q. This includes our NYDFS
settlement. Full-year 2022 general and administrative expenses were $1.6 billion, up 76%
compared to 2021.
Other operating expenses declined 46% Q/Q to $41 million. The primary driver of the sequential
decline was a reduction in certain platform related incidents and net impairment expenses. Full-
year 2022 other operating expenses were $797 million, up 26% compared to 2021.
Profitability
Q4 net loss was $557 million. Full-year 2022 net loss was $2.6 billion and included $694 million in
unrealized non-cash crypto asset impairment and impairment to our ventures portfolio.
Q4 Adjusted EBITDA was negative $124 million. Full-year 2022 Adjusted EBITDA was negative $371
million, well within the $500 million loss guardrail we communicated in February 2022.
Share Count
On our first earnings call as a public company, we disclosed that we had a fully diluted share
count of 261.9 million which included both basic shares as well as options and RSUs that had not
yet vested or been exercised. Since then, we have issued approximately 13.5 million net new
shares – inclusive of shares issued for acquisitions, the impact of our ESPP, assumes our
convertible notes convert to shares, forfeitures, and the impact of net share settlement practice
– resulting in a Q4 fully diluted share count of 275.4 million. This includes 230.9 million common
shares and approximately 44.6 million additional dilutive shares (which includes 3.9 million shares
associated with our convertible notes which have a conversion price of $370.45). Accordingly,
total dilution since going public in April 2021 has been approximately 5.2%.
counterparty risk.
Capital and Liquidity
We ended Q4 with $5.5 billion in total available $USD resources which we define as cash and cash
equivalents, USDC, and custodial account overfunding. This represents a decline of 3% or $148
million compared to Q3. As a reminder, custodial account overfunding represents both customer
transaction fees that have been paid but not yet been transferred into a corporate bank account
and corporate funds utilized to facilitate customer liquidity – since crypto trades 24/7 and banks
are not open 24/7, we are not able to settle these accounts real-time. To calculate this balance,
investors should subtract “customer custodial cash liabilities” from “customer custodial funds”
on the balance sheet. As of December 31, 2022, this amounted to $212 million.
USDC
$861M
CUSTODIAL
ACCOUNT OVERFUNDING
$212M
$2,250M
Sep 30 j x+ y
Ad . Op. Cash Cape Internall M&A + y m
Cr pto Invest ents ,
Financing Short-term Net Equity Other 5 Dec 3 1
w, x
Flo e cl. Developed Ventures Inventor y
P roducts Borrowings Transactions3
In-transit w
Soft are and Other 2 and Other
We also consider our crypto assets held as investments as additional unencumbered resources to
us. The fair market value of our crypto assets held as investments was $426 million as of
December 31, 2022 and had a cost basis of $289 million. When including our crypto investments,
total available resources totaled $5,924 million.
Non-current assets:
Crypto assets held 424,393
Page 164 of 10-K (in $ thousands)
Cash held at
Lease right-of-use assets 69,357
3rd Party Venues3 143M Property and equipment, net 171,853 Prepaid expenses and other current assets
Goodwill 1,073,906
Intangible assets, net 135,429 Prepaid expenses 98,204
Other non-current assets 1,401,720 Assets pledged as collateral 100,007
Total assets 89,724,873
427M Other 18,837
Total credit and counterparty Liabilities 217,048
Total prepaid expenses and other current assets
risk, excluding banks
Current liabilities:
Other non-current assets
Customer custodial cash liabilities 4,829,587
Strategic Investments 326,683
1 We extend loans in fiat and Customer crypto liabilities 75,413,188
crypto, collateralized by fiat and Accounts payable 56,043 Deferred tax assets 1,046,791
crypto. Our Retail Borrow Accrued expenses and other current liabilities 331,236
program allows customers to Deposits 10,989
borrow up to 40% of the value Crypto asset borrowings 151,505
of the Bitcoin in their account, Lease liabilities, current 33,734 Other 17,257
up to a total of $1 million. In our Total current liabilities 80,815,293 Total other non-current assets 1,401,720
Institutional program, our
standard practice is to require Non-current liabilities:
100%+ in collateral, and we Lease liabilities, non-current 42,044
always measure risk against a Page 112 of 10-K (in $ millions)
Long-term debt 3,393,448
substantially higher stressed Other non-current liabilities 19,531
price move. Cash and cash equivalents
Total liabilities 84,270,316
2 When we enter into hedging Cash equivalents 2,250.1
transactions or when we Note: Figures presented may not sum precisely due to rounding. Cash held at banks 2,031.7
borrow, we may be required to
post collateral. Cash held at venues 143.2
We also have counterparty exposure to banks where we hold customer and corporate fiat. We
have policies and procedures that govern where we deposit client cash, how much we put in each
bank in aggregate, and how much we can hold in each bank per customer.
The public conversation around crypto policy is receiving more attention from the crypto
community than it ever has before. FTX’s collapse in November 2022 was undeniably a catalyst for
this increased attention. The actions taken by some regulators in response to that collapse,
however, have kept the policy conversation at the forefront. Coinbase has concerns about those
actions that appear more designed to be punitive and reactive than to address actual consumer
interests and the realities of how crypto works.
There is, nevertheless, a lot of reason to be optimistic about how crypto policy is developing
globally. The European Union’s MiCA framework was finalized in October 2022. Since then, the
EU and its member states have directed their attention toward operationalizing and
implementing this framework. The significance of this agreement cannot be understated – a fit-
for-purpose framework for crypto will be applied throughout 27 different member nations
(representing roughly one-sixth of the global economy) in order to create predictability and
stability for the industry in those nations.
The EU is not the only jurisdiction that sees the value of this. The President of Brazil signed
legislation into law in December 2022 that affirms crypto’s use as a payment within the country,
directs the appointment of a single regulator to oversee crypto, and ultimately ensures better
consumer protection and compliance with anti-money laundering rules. The United Kingdom also
published a detailed consultation in January of this year that outlines the UK’s plan for regulating
crypto asset service providers; this consultation appears to be the first step in the UK executing
on its commitment to become a global crypto hub. Finally, the Indian government resolved to
champion the development of an international crypto regulatory framework as part of their G20
presidency this year. Other major crypto proposals are being developed in jurisdictions like
Australia, Switzerland, and Hong Kong.
These international jurisdictions are doing the hard work of drafting fit-for-purpose rules to
govern the industry, which will benefit both consumers and industry participants alike.
To be sure, Coinbase and other industry players are also putting in the work to create alignment
between the developing cryptoeconomy and reasonable government regulation. Coinbase
entered into a consent order with the NYDFS in January of this year that stemmed from past
shortcomings in our compliance program. We took NYDFS’s concerns seriously and did intensive
work to address their concerns, including building new crypto-focused anti-money laundering
and sanctions tools, enhancing our Transaction Monitoring System, maturing our Enhanced Due
Diligence program, and more. These kinds of steps and collaborative work with regulators
position Coinbase to thrive in the regulated space – for example, we are now the standard bearer
when it comes to complying with the guidance NYDFS issued in January 2023 on custodial
structures for consumer protection.
We have shown the same dedication to pragmatism in our policy advocacy. In July of last year we
filed a petition for rulemaking with the Securities and Exchange Commission (SEC) that asked for a
public rulemaking on digital asset securities. The purpose of our petition is to encourage the SEC to
work with the public on a process to eliminate the barriers to crypto companies seeking to register
with the agency in order to offer digital asset securities, while ensuring customer protection and
fair and orderly markets. To further contribute to this effort, we submitted a comment that detailed
some of what we believe should be contained in that SEC rule. We are pleased that more than 1,600
submissions also came in to the SEC in support of our petition, including from the Center for
Markets Competitiveness at the US Chamber of Commerce, and other organizations.
While the SEC moves to expand its jurisdiction, other agencies seem to prefer for crypto to be
pushed out of the regulatory sphere. The Federal Reserve, Federal Deposit Insurance
Corporation, and Office of the Comptroller of the Currency issued a joint statement in January
2023 discouraging banks from owning crypto assets on public blockchains. Some banks have felt
subsequent pressure to provide fewer basic services to crypto companies. Because banks engage
in thorough vetting of companies that they take on as clients, this loss of access to banking
services has the unfortunate effect of reducing protections for consumers, and ultimately cedes
this important innovation to the rest of the world. We will continue to partner with financial
institutions globally to work through these challenges, demonstrating the rigorous and mature
approach Coinbase has taken to maintenance of these important relationships.
In the face of this disjointed approach in the United States, the need for federal legislation is
more important than ever. We believe and strongly advocate that the United States should follow
the lead of jurisdictions around the world that have created frameworks to establish consistency
and certainty for the industry. Congress seems to recognize this need – it has held multiple
hearings on crypto since the fall of FTX. We expect the relevant committees in Congress to begin
concrete action to develop and consider crypto-related legislation. Tangible progress in
Congress will be important, and will also demonstrate to relevant agencies the importance of
allowing crypto companies to operate in and with the regulated sphere in ways that advance the
goals of consumer protection, protect against systemic risk, and grow this innovative industry.
Chapter 6
We enter 2023 with a focus on cost management, efficiency, and a goal to improve full-year
Outlook Adjusted EBITDA in absolute dollar terms on a year over year basis. Crypto remains volatile and
we have limited ability to forecast our transaction revenues which remain correlated with crypto
market capitalization and crypto asset volatility. As such, we are prepared to manage our
business through a wide range of transaction revenue scenarios in 2023, which include possible
increases, decreases or stabilization of crypto market capitalization and crypto asset volatility
compared to levels at the end of 2022.
In addition to our focus on cost reduction and efficiency, we are more rigorously assessing our
product-market fit, and taking a scrappier approach to investments in new and unproven
products by, for example, getting back to smaller team sizes. We are controlling what we can
control and contingency planning for what we cannot. You can expect us to be nimble and adapt
to the market if conditions evolve outside the range of scenarios we have currently planned for.
Q1’23 Outlook
Crypto markets have improved thus far in Q1 compared to Q4. Total crypto market cap is up 40%
year-to-date through February 17. In addition, crypto asset volatility is 5% higher over this same
time period compared to Q4. These market dynamics are reflected in our trading business. We
generated $120 million of transaction revenue in January 2023. We caution investors not to
extrapolate these results forward. Last year’s experience reminds us how quickly the market can
evolve and we are mindful that industry dynamics - across multiple dimensions - remain in flux.
of our business, specifically subscription and services revenue and expenses, as outlined below.
Metric O UTLOOK
Looking Ahead
Given the unpredictability of crypto markets, we have limited certainty around the rest of the
year. But in the spirit noted above, we are operating toward a goal of improving Adjusted EBITDA
in absolute dollar terms versus full-year 2022 and believe our recent cost reduction efforts help
position us to do so. As we look out to the full year, we do not expect to meaningfully increase our
A reconciliation of Adjusted EBITDA to net income (loss) can be found below in the table
captioned “Reconciliation of Net Income (Loss) to Adjusted EBITDA.” Investors are encouraged to
review the related GAAP financial measures and the reconciliation of Adjusted EBITDA to its most
directly comparable GAAP financial measure, and not to rely on any single financial measure to
evaluate our business. We calculate Adjusted EBITDA as net income (loss), adjusted to exclude
provision for or benefit from income taxes, depreciation and amortization, interest expense,
crypto asset borrowing costs, stock-based compensation expense, crypto asset impairment, net,
impairment on investments, other impairment, non-recurring direct listing expenses,
restructuring, change in unrealized foreign exchange, fair value gain or loss on foreign exchange
derivatives, fair value gain or loss on derivatives, non-recurring legal reserves and related costs,
and other adjustments, net.
December 31,
2022 2021
Assets
Current assets:
Cash and cash equivalents............................................................................................. $ 4,425,021 $ 7,123,478
Restricted cash ................................................................................................................. 25,873 30,951
Customer custodial funds ............................................................................................... 5,041,119 10,617,552
Customer crypto assets(1) ................................................................................................ 75,413,188 —
USDC ................................................................................................................................. 861,149 100,096
Accounts and loans receivable, net of allowance ....................................................... 404,376 304,706
Income tax receivable...................................................................................................... 60,441 61,231
Prepaid expenses and other current assets ................................................................ 217,048 135,849
Total current assets..................................................................................................... 86,448,215 18,373,863
Crypto assets held ................................................................................................................. 424,393 988,193
Lease right-of-use assets ..................................................................................................... 69,357 98,385
Property and equipment, net ............................................................................................... 171,853 59,230
Goodwill................................................................................................................................... 1,073,906 625,758
Intangible assets, net ............................................................................................................ 135,429 176,689
Other non-current assets...................................................................................................... 1,401,720 952,307
Total assets .................................................................................................................. $ 89,724,873 $ 21,274,425
Liabilities, Convertible Preferred Stock, and Stockholders’ Equity
Current liabilities:
Customer custodial cash liabilities................................................................................. $ 4,829,587 $ 10,480,612
Customer crypto liabilities(2) ............................................................................................ 75,413,188 —
Accounts payable ............................................................................................................. 56,043 39,833
Accrued expenses and other current liabilities ............................................................ 331,236 439,559
Crypto asset borrowings ................................................................................................. 151,505 426,665
Lease liabilities, current ................................................................................................... 33,734 32,366
Total current liabilities ................................................................................................. 80,815,293 11,419,035
Lease liabilities, non-current ................................................................................................ 42,044 74,078
Long-term debt ....................................................................................................................... 3,393,448 3,384,795
Other non-current liabilities .................................................................................................. 19,531 14,828
Total liabilities............................................................................................................... 84,270,316 14,892,736
Commitments and contingencies ........................................................................................
Stockholders’ equity:
Class A common stock, $0.00001 par value; 10,000,000 shares authorized at
December 31, 2022 and 2021; 182,796 and 168,807 shares issued and
outstanding at December 31, 2022 and 2021, respectively ........................................... 2 2
Class B common stock, $0.00001 par value; 500,000 shares authorized at
December 31, 2022 and 2021; 48,070 and 48,310 shares issued and
outstanding at December 31, 2022 and 2021, respectively ........................................... — —
Additional paid-in capital ................................................................................................. 3,767,686 2,034,658
Accumulated other comprehensive loss ....................................................................... (38,606) (3,395)
Retained earnings ............................................................................................................ 1,725,475 4,350,424
Total stockholders’ equity........................................................................................... 5,454,557 6,381,689
Total liabilities, convertible preferred stock, and stockholders’ equity ........... $ 89,724,873 $ 21,274,425
__________________
(1) Safeguarding assets
(2) Safeguarding liabilities
Coinbase Global, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Net income (loss) .................... $ 840,208 $ (429,659) $ (1,093,654) $ (544,635) $ (557,001) $ (2,624,949) $3,624,120
Note: Figures presented above may not sum precisely due to rounding
(1) Crypto asset impairment, net represents impairment on crypto assets still held.
(2) Other impairment represents impairment on intangible assets of $0.5 million, $1.2 million, $3.2 million, $0.1 million and $0.2 million
for the three months ended December 31, 2021, March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022,
respectively, and $3.6 million, $1.0 million and $17.2 million of impairment on property and equipment for the three months ended
June 30, 2022, September 30, 2022 and December 31, 2022.