- Earnings call transcript Q3 2022

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Operator

Good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Coinbase Third Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank instructions] [Operator President, you Vice conference. begin Investor Gupta, may Relations, your Anil

Anil Gupta

afternoon Coinbase the welcome quarter Good to call. third and XXXX earnings

on you've Relations today. letter, all which Brian website are the opportunity Choi, earlier and today's published our and had Haas, me shareholder read Alesia hope Emilie COO; President on Armstrong, I CFO. was to CEO; and Joining Co-Founder call our Investor

remind results you make Before vary that to today's cause our like we in get statements. may Actual started, these SEC included call, uncertainties, factors today's forward-looking from to statements. risks, and may I'd materially we results concerning that is filings. during Information differ other could

comparable today to should provided include references are not will on measures. in GAAP certain our discussion substitute shareholder Reconciliations in IR considered also as measures financial most financial GAAP a website. Non-GAAP for, letter measures financial Our to, directly addition our be non-GAAP to the measures.

using platform analysts. and With we some turn are questions for research will our the addition, comments. We over to from it Say take in opening our again to shareholders that, post And Technologies Alesia once some questions. to Brian enable I'll

Brian Armstrong

All Anil. Thanks, right.

revenue. of right a see obviously I on means that the have it's a streams. trend see has And the of revenue that environment growth in there which really of it's direction. So moving the still to is to building on was products these the company ways We we seeds subscription come portfolio the great to where excited less This overall. has provide our services started I something years really for directly ago started some some that at go fruition, to works in volatility the look trading Coinbase revenue just as with to long started into being but macro headwinds and the back ties that, three lines were different and parent and product quarter, planting macro down revenue, different we've plus and but our

leaving wanted that I sharing One so to the to touch elevating to that for thoughts group leaders continue Chief just the been touch to which Product idea how few right, lead kind that in environment company. accelerated while, a our product move touch I'm in even of the on will change company by move read to be was the this regulatory about news this in you a end have And us little I Officer we're structure thinking the help to then org. a a and of So our I think is product few on going want faster. All environment. on our And to I'll a about going going may the had group is we topics.

decided And three They'll that we going we and to reporting on make And be they're different so the team. really that Coinbase serves. to me. to now have segments executive directly customer be change

breakdown and cleanly segments, three groups across institutions, And we've product so we those got – consumers, developers. the customer

things that there, a have into the to connecting crypto, with and generating fourth instance, there use, the shared transactions, build is for going group, blockchains which we're that. storing product like product components this Now we're group calling different platform to groups different products of out product across our all

this excited reasons. change So about I'm really few for

have what the little three really And a put those our by ownership more will to different group org, a groups that them is how each to the excited drive company we at larger stars year to a blog it's and of scale, decision which our talents more, big operate ability efficiency I scale, leaders. down – and We efficiently and I'm different to incredible want the and in out product too. a startups think the pushing way having post move this them company. can P&L each we're of here, where nimbly for the that want to rising we probably some look and more I autonomy the think now quickly see company in really do and I operate we're going enough ownerships within earlier bit good and back like give which leaders go product at we're making at of have giving to them

regulatory know one of help crypto the even to touch course up go perhaps that an the the to right I from growing And don't on biggest we're it's for unlocks there's way, at of point opportunity the think because could and me if By of kick of clarity the the I have regulatory but getting let term that'll environment So and in to – the things back I prices one is environment as the that this well, off. environment. that the direction. is the prices in just some happen, industry think we regulatory potentially broader macro of that possibilities decouple think going one

it Hong clarity that's say a the world, the is called Europe clarify been clarifies over is of also just simultaneously the in stablecoin, or it's really Overall or has And policymakers going regulatory exception the It the with positive. it's do. some exchanges at Act. market centralized we're We're course, The for bill Kong around the little of towards referred I is through would is emerge custodians, So as good. that a the Stabenow U.S. gives or globe, And all moving whether environment the Congress bit a CFTC. actually to but DCCPA, thing being primary seeing Currency in or in in regulatory regulation of and it to with Boozman around positive Protection I course There's Australia and moving behind, regulatory because exciting if also Brazil. whole positive a Bill generally, development. world. Consumer we look clarity, China, GXX, positive Digital the and really it's generally direction. authority a of the engaging helps spot which which, this

there's build that and the and wallets think we're language going also access in to people helping I Now these really really important and of X.X a self-custodial who companies people billion the with all bill account protocols world, of crypto of super where access input tools around When today. is back new part ability or is and the some about you this including bank policymakers essential in forth And have decentralized DApps are hear the draft and look going. financial give apps provide that over WebX any these DeFi part to don’t DeFi and for to to are or and to itself, world DeFi. services go have participants the the these

included So and necessarily come a There’s on see sort industry And I preserve. DeFi innovation agree that way focus world, in that I and plus on can lot regulation. that not we’d and think win. Stabenow-Boozman just in if like in to think would everybody maybe to should can centralized preserved Bill work basically potential an and early DeFi the We to back do exchanges so really further Bill and a that the just somehow this of to be of regulated. for to study But Bill. DeFi the the really ideal take we later. stablecoins there’s good create opine custodians of be needs and something

bipartisan So anyway, to that excited its It we’re has make Bill through very support. Congress. see way

to think I in it to so go are a do this continue that and SEC. there on I regulation effect change see think it’s for U.S. regulatory chilling less great we’d the be that be clarity where regulated. the that environment actually in enforcement a of that are regulated from by U.S. It’s not U.S. U.S. encouraging sense we’re be leader or offshore and that’s space. seeing creating in to And this the to the U.S. market. exchanges them like in to the harming would And change current investors the can the unfortunately, to a kind

our even back crypto trying also mission all the clarity, it’s around making has to people going our about course the sitting increased policy jurisdictions serve there’s how world building across to and of and because continue to economic something us businesses world. little freedom continue to regulatory build they’re we’re on we’re investments on innovate further or for we’re the attract a As of various world. just And efforts, rest of we’re the suites, all going product working or think to are can these not internationally, that idly, make there, ahead the

fruition efforts all of about help think we the in countries same so world. around as policy at have to we these time And to that the come

ton that’s of lead wrong to markets, I in more. bottom in we’re globally. effort no I’m sometimes a the the true different enjoyed say, excited four reasons. market, a I Coinbase happening. into innovation down the in that very happen for trusted the this just kind There’s to kind funny, And true at you down ton to a ready who’s this cycles actually the always scaling cycles, environment and continue institutions the sense yes, has last And the this of crypto still and So building a In we we’ve find bit little approach the through of cycles take compliant when in rush there’s what and builder, down really on this to of is doing down macro a In and crypto that done up environment. of years everyone’s focus get there to advantage should signing a XX been There’s energized. Coinbase. We’ve getting lot of tons believer people market up, of it’s taking going a environment, case. in and and actually

or We’re move trying corners cut too not new fast. to

in We’re for term. the more trying right term, short to it’s do if difficult the even long the thing

off I think for that’ll us. pay

in that of economy. leaning the also into the all We’re variety are use crypto different cases emerging

economy usage, into this that’ll can we all fruition. come want continue leaning the come is us. just the into it’s of also into revenue a really that a to the not a and big lot Trading revenue of source different for And streams that natively future, crypto use in be diversity WebX It’ll – our be of to trading It’s support of crypto been so functionality our cases, but We’re great. platform. app. to building a

to going get make benefiting easier X eventually the how to billion from use crypto to using world on and crypto people half and trying to and we’re that’s We’re it.

companies that and terms been So ease use one we in leader course a of I we’re the of of has have think of has – a Coinbase And and, portfolio of a products. different design.

so is this great. And

customers can crypto, just earn it. Our but click with they sign They to us. up one just do their it’s easy. already an anything with or crypto their once, stake NFT buy more love It’s to stored on crypto. and want yield have They

unmatched portfolio is continue and build And think we’ve that in I products the so industry out. the created, that we’ll to

that, through let over our with who’s QX numbers. to go it turn to me So going Alesia

Alesia Haas

key Brian. few highlights I’m a Thanks, just the recap in quarter. going quickly to financial

results and letter. in great at shareholder Our covered are in detail our length

in efforts decline EBITDA million So think respectively. sequentially that speaks million both sequentially this negative net really while took to $XXX and $XXX to did management we our adjusted $XXX negative to we revenue our loss million, And the net and QX. cost improved

trading volume our by discussed sequentially headwinds in Our ongoing we letter. XX% that declined driven

to this prices million staking in amid engaging trading X.X massive behaviors to as our price transactions. shift to generating continuing are volatility. in from and users X% user declined products, and And lower asset MTUs crypto reward reduction increasingly Our non-trading

We able constant, subscription interest XX% price you which to interest reduce or the charges are we were back to is contributor alluded decisive when grown rising expenses so if took QX our price impact so our that the grew pleased, earlier, on is from within to XX% $XXX rate operating this in we We that million. prices XX% and if impairment sequentially, QX, cost services very XX%. were on by and this revenue the out And income, of item non-cash same action Brian importantly, crypto environment. benefiting line assets. sequentially would’ve our were they biggest hold The

in are evaluating We expenses to market our plans dollar worsen. X.X resources. prepared operating reduce updating billion quarter as ended conditions further scenario and We and the U.S. actively with total

In $XXX in combined, strong addition, market we assets and puts crypto to us believe we manage held face. million we a portfolio headwinds in this through of these position a

touch to outlook. want I closing, on in just So our

cautiously optimistic we $XXX down and remain guardrail is full changes any that EBITDA cap deteriorate doesn't previously XXXX, we go operate For adjusted This year behaviors. market customer communicated. in that to the will see XXXX, we below meaningfully within for assuming October, we the loss and be don't able million the

XXXX intensify. we preparing currently with a approach assuming potentially persist conservative bias the As and macroeconomic headwinds current we're planning, and will

providing not a are quantitative We yet time. outlook this

feel stronger we stress conclude, side. on a we're manage position emerge through to confident So to in the will market and other good the that

let's that, questions, Anil. go to with So

Anil Gupta

both. you Thank Great.

Before we I'll call get principles. into our reiterate Q&A, quickly

So first, uploaded the we together might most the of by we'll answer questions number same determined and themes. the questions on that group touch shares

are questions issued plan no Second, potential the questions blog we'll answer don't to the about the assets. third, material answered listing past to posts in we And there new past or avoid related of updates. if we've in

Manuel for what's O. next asked years. five with from that, who the Brian? question the is prediction So the first

Brian Armstrong

Yes. Thanks, Anil.

course, say predict here statements, we way lawyers predict this future. the want on So, the have to actually forward-looking future kind the always invent can't it. of I I we to to The to too best clarify, of is don't just like quote. make but to nervous

things our certainly people best of impact on great a potential, some that's – and think can do have world. the we we it's build that an that So way to have can the

investors our that the under to in seeing around institutional five That's a going what's surface, GXX the in the are from seeing signing addressed this mean used to crypto think years? market, up the more environments language I unlock we be shareholder in like platform [indiscernible] spring lot really in regulatory across more we're there's going that clear the look, I and challenging is even that capital. letter I to as Prime adoption So basically be We're earlier, world. different Coinbase coiling. around going to Well, the and the I

a when I people next preparing of lot think upswings happen. for there's the

a scale with I to other they whole unlock seeing blockchains little We to but Ethereum's the will improve. just continue to is think this this similar dial-up saw the with how updates really more moved solutions, cases scalability will year, bunch We're X lot a of the merge blockchain continue bit of have new Lightning exciting. and Network and broadband. Layer a is use which to That various Internet there. from

a trading, decentralized exchanges, trading continue excited will grow percentage global about of we're decentralized think all DEXes, to as I with and that.

tender, actually U.S. in similar five to as adopt see and way see adopter, world they I early surprised how cryptocurrency actually be of that think the just Bitcoin. kind other did you'll legal in legal probably their the didn't tender, to El were the adopt there a more – be that going as in with if countries we Salvador would countries continue very cryptocurrency is pegged countries next to currency their some I to the dollar. years, know I

of I in central set digital other I digital actually up that facto largest U.S. followed, think policymakers the need lot world think Tether, will but bank being U.S., the that the the the rise. de kind solutions probably market pursue think in And Coin at had been the a frameworks on going it are countries create be point, bank In central I Coin private ahead a to a USD end in U.S. will the of guess. actually in I be the of currency also really words, has currencies. will USD and to And rapid the will to if

believe hard billion be Today, us compliance, crypto. world, ease for at the hopefully, Coinbase. And within XXX take happen. for the That's can't easily we've the that that at in big time, impact of mission a market we approach lot have have, could to just crypto work. a will going think the tell and of That's economic a years. using people I million, and what XXX again, crypto security and there's sure freedom. kind we billion But of used million using a probably on recognize made thoughtful trust, we going long-term And is I think to start we people around people to And think this is five who've I crypto. of will really use.

Anil Gupta

Great.

Our who downturn? current Cordaro Coinbase how comes next plan Brian? surviving question from S. on the does asked economic

Brian Armstrong

I Yes. Well, the I'll kind there. like just the just knit one mention in surviving downturn. economic don't of language word current

there valuations money those. whether get don't hyper-growth pay opportunities scaling If to is we Obviously, think debt. in tech we of and to powder come at is around whatever, infrastructure to of a around deals, in dry of much in I market our next markets, just advantage improvements kinds And opportunities focus down that just environment, opportunities tech M&A on will got thrive future, across actually opportunities good opportunities. raise And there help so to magnitude is opportunities up, lot debt to but at all when down down. seeing – also There's to next build, to higher lot right? this We've the all there's help or looking there's a We're environment. could us. the prices us there's of the we're technical build order a do run. have that take in the there's

to So there's of opportunities lots thrive.

mentioned, right? off know really don't in And That's subscription is course, cycle. We coming seeds take to big next revenue that another the Of what we services fruition. and to planted one exactly I diversify streams. will those

decentralized Metaverse, Dow's native about right? of a use. inside social we're exciting we easier and and make think, to work items of got Metaverse the things digitally why excited decentralized all various happening building part People these making continue – games. need WebX with gaming, the to to want media, innovating. to lot I That's So own There's, we've I'm how so

So these got easier around but sure we and get time, trading need all and make as use not there well, easier opportunities use to with things to just all products cases. other we've our over these

what else. Google. I and we're see continuing Meta partnerships, do Let's and great mean BlackRock to

I public think overall, processes see last company. going gone through we've the as – work and a Other As we've public diligence even to through been to that. us them cycles to we're manage has just with our the a with And done company, are better. delighted really and way I the been willing crypto companies we've last crypto this four through that excited think

have be about our and good that, costs these product like we opportunities obviously, to managing rigorous different changes around groups. efficiently in like these to growth we're And operating So things going some there's keep of and making revenue but yes, areas.

Alesia Haas

If your to couple behind Right. I'd just could, on like a comments. I add numbers of

I cash on to just billion and with the our a to expenses to expense excluding operating we plans. believe we our just sheet thought runway downturn, our We side, macro conditions. would XX%, crypto me lower mentioned in developing expense team, QX to given have billion spend a it's operating needed. through $X.X and the and about and we add On impairments. volatile or total in these in action I as time as reduced extend And $X how important variety through we plans to manage resources a of share And $XXX a very combined end we lot we to by million And markets. our so operating So team our thinks if weather have resources. did a of contingency scenarios balance this over expenses thinking crypto, develop think multiyear closely earlier, USD for crypto continuing final question, we're

Anil Gupta

plan get competition. fee Emilie? I'll zerX how to are trades We companies you compete that about summarize companies had by saying to with the market. questions them into offer other or U.S. that several do starting

Emilie Choi

for Thanks question. the

headlines So zero bit. seeing we a fees, to want we are that about a unpack make I and lot of sure little

a is generating a revenue spread trading. And generally still charging ways So a that and there's fee companies are there two partner. spread fee. is companies generate that zero There say or through

of terms premium willing product, So any product. because to in quality to of other right pay total before companies in our price not are customers are going about with talked now, costs. of we for and the are our In compete the line we roughly case, on we

We as customers also product offer fee where Coinbase do zero trades. can One subscription

on our level, highest the move we me users and customer let wallet developer. At the to grow now segments: across is then consumer, our So of share how and compete. three institutional goal to

always three have props. differentiators widely on We the taken the person, major We've One and most of without we're security, viewed safest is average know is crypto utility too we can view understand of complex the that the compliant with in long-term player are as compliance that and and for value most for technical and technology a to details. all we crypto Ease-of-use, Coinbase space. having people the get the trusted.

We Finally, and of an one that activity. winners plenty be crypto only to opportunities one suite. of great the crypto and be places every Coinbase have many product we crypto extract where can of account is have will is there to integrated there sort you But do know in going TAM. for everyone

You can we cetera. et trade, borrow, prove that pay, begun create, believe have this multiproduct to we strategy. earn, out And stake,

So pretty that's subscription and also that these staking efforts for growth great we TAM expansion, now specifically finally, Google crypto growth with big we And results services then historically compared spot our market. one markets. started U.S. crypto big examples market, we're that And And partnerships others. ones has TAM we've a seeing product future a the and the to global And to BlackRock, suite focused trading are continue by We announced opportunities our spot that revenue. XXXX. towards in smaller around the with invested great opportunity, look note and been like USDC plant back is invest yielding of as in as seeds in of we XXXX. but we that is in demonstrated this, through should

in market, like of geographic globally, think a derivatives we and grow that U.S. expand ways there's expansion in a includes opportunities that TAM. So at lot to the larger as look TAM product to and we things revenue

TAM trusted, over use integrated different of of an So, lots over We moves. help to win is three to in believe share these having in users being that going summary, wallet the us to across time. segments easiest in time expanding most customer product continue suite

Anil Gupta

Thanks.

ways Our can profits revenue question crypto comes Ezra asked your next diversify who you and Alesia? from the from are prices. W. what

Alesia Haas

Thanks for the question, Ezra.

I to with We're think company So it's important start crypto XXX%. in all crypto. we're and we're all a

be So our crypto to revenue or profits market and form tied will some fashion. intrinsically overall in the

we the However, effect dampen of can direct comparison.

So crypto today, our largest revenue stream, with and trading revenues, crypto is directly prices volatility. correlated price

that So volume see revenue. over you high the can as were prices we rising last the lot generated as XXXX, XX we experience volatility in months a in of

come volatility down, headwinds As has come year. prices trading and have had this we've down

to that's $XX these Brian been we in from has And In we you've year industry. lines. very In that volatility recognize our and XXXX, price and products XXXX, with But year, important you are new $XXX out the our earlier of that significant But given $XX of staking market takes it planning specifically subscription note grew them this services we growth we that revenue, think revenue achieve and a declines. and build because now significant and million. can years it's to to full proud be In in started cofounding I early there in subscription we of So to heard services XXXX, revenue this we're the in center with asset. that crypto scale. first great trading to how is generating XXXX that despite streams, really and million, going proud we million. the these volatility, is time now Emilie this our products And both revenues. And our great outlook started it comments in that over $XXX platform, services rolled are within million seeds back investing headwinds was talked ago, see and our subscription about over we to USDC. and for

that our and we continue here to dampen we're revenue the the invest pleased we So see. this need drivers think the making, volatility of create some to will and we're and progress multiproduct with of out the strategy to diversify we

Anil Gupta

you how question detach Bitcoin from value next who Our Alesia? asked O. comes to value. planning are Manuel the from share

Alesia Haas

flavor. question, right. All Different same

from revenues So similar our stock talked correlation to about our from reducing on P&L the Bitcoin. we just prices. answer crypto coin it's diversifying volatility reduce a And in

asset from So largest revenue fees. generate market trading and Bitcoin meaningful by and we again, Bitcoin crypto cap, is test the

be So element there that it's this I But correlation to not important between note a stock always will some I think relationship. our Bitcoin. think been of and consistent has

So of It low QX, we Coin XX%, in correlation Bitcoin and between and interestingly, approximately periods there's really some XX% correlation. have was XX%.

So I of things how note. but don't know investors I are few a there's this, think to think important are thinking I that

or managers investors So in one asset all ability not have is actually large the to invest directly spot Bitcoin.

via some to Bitcoin access investors and Coin. And so are broadly crypto company, the first public gaining as

using companies for see ETFs underlying or may between Coin they have go the as a traded proxy assets. crypto spot hopefully development trends, We not more more how so, derivative directly and vehicles, easy to public, financing of get as to approved the can as stock our trading alongside U.S. And and have they're with may I less less correlation Coinbase. the institutional Bitcoin. we and see could to where in opposed markets could correlation access Further more short these to Bitcoin investors believe

most that is in focused control And our drive to overall. The that create and I see is correlation drivers said any singularly our deliver single with are value crypto the or before. to thing coin product think customers we to strategy, comes less revenue that P&L, our on. multiproduct can we'll more to Lastly, and we I diversify it what what different strategies back

Anil Gupta

Steven from have on or question the J. next comes software technological asks Coinbase updates Our who way? does what

Brian Armstrong

I one. can Yes, that take

want can well, preannounce just that's first powerful for updates, I of have or to coming the we talk that all, technology really I I think, already pipe are So live generally the in here, anything what us. but that about have don't process down we

stack. actually I of of them, underappreciated or is MPC sort think, is one tech competition our So multiparty

things is it details the MPC a store keys even more our crypto into to way Without of which also Adapt apps. familiar, it It decentralized like secure aren't allows who those using enables it, in us and in something crypto you and our environment. what wallet securely in hot retail is using go getting WebX different store access core have apps app securely different to technical For allows that. app, can called functionality we like that does customers our Wallet,

of to derivatives. protection exchange, experts think this scalable go make IP on This spot it and some some but has a FairX, like normally participate Other real of that Sorry, this have Unbound, in cybersecurity the a made jargon, basically really that us would us over to time, is for in-house and core cryptography rely talent all access of a acquisition differentiator too and came we with mean, in self-custodial security a they I if I piece our the third-party actually derivatives most to and Coinbase. through is We going but allows exchange lot they the key over got and And be just technology a we work updates, the customers have developed and this really much practice. in-house. the on technology technical these core time. best-in-class that core to acquired was allowed apps reliable that both in they wallet,

customers protocols over us lot major listings we the this experience in various a a world-class app. tech various across million scalability began oriented culture, for that's improved – our stack we had using Coinbase time, future. recently And of make over our that allows gracefully. performance a all ecosystems doesn't a it's architecture And startup one of down just on of has especially we marketplaces clean problem, it it's and sense to and bring service-oriented has that marketplaces the we've been improved a companies about of interface sure out degrade this think our the out stack. the seen in to and to one keep is in NFT tech there billion our that that the be -- our that will service bit to stack serve then, major and the working of if app we users, And of these it's a at be from course, a thing really and scalability, users and app By get blockchains architecture, in would to tech in Amazon. you've kinds investments down NFT. whole that tech build scale, there. update nice generally a really resiliency the And allowed Google We and lot investments market, of seen background, still can requires that aspect it during are want we now there's evolve moving aggregating – cool different with be. these be start-up interoperability actually It's us Coinbase but to the think the to to it's also a really I used the billion apps – XXX to things over little our able our but the where

Anil Gupta

more question switching analysts. the to before We'll take one over Okay. Great.

T. asked, procedures safety? on what case taking and for taking your to Michael are ensure are of by will in backed – So your you money be Emilie? theft my ever funds Exchange

Emilie Choi

for question, Thanks the Michael.

trusted compromised the that way. any take is since we seriously. in that because have event things of this proud space, XXXX. the So have invested the we're have had company of never the history the I in being very we've and of we player that where most materially of the And all funds customer in the invested systems securing an been responsibility we would over add and

policy industry-leading hot the an have wallet. insurance for We

learning protection million invested for One $X and AI best-in-class our Coinbase account in have detection. We've machine subscribers. fraud We

We have these live a and XXX-plus in person and more. continue we'll and security and team in-app support invest phone to things chat

new nascent So is crypto important And know to that will like it seek users. a scammers of technology. take advantage is many always technologies, to

about users credentials to how using So their account keys safe, educating invest keep user and example, we for also and our other things. in heavily

Brian Armstrong

Great.

turn for the we analysts Abby, it So why questions? with over that, don't to

Operator

comes MoffettNathanson. question line of Ellis first the Your Lisa from from

Lisa Ellis

I the good Thanks up, to and good strategy. here. wanted on international Hi, stuff taking Brian, for follow questions afternoon. my

for of you. fiat to together Thank continuing holistically for outside of and you year. and just in and offshore is that it, this the thinking then trading us shareholder that Coinbase of the noticed course how kind highlighted volume been that Netherlands, expand you volumes U.S.? Can crypto you letter to of commission USDC some And had I over You moving also think, Coin. all the tie added talk offshore added trading about the have Singapore about and recently zero I capturing of guys

Brian Armstrong

Yes, sure.

locations. on global our is have to expansion want different in which for good freedom and step just I’m a front We to approval well. end we’re Singapore up to acquiring seen the that right increasing really license doing got a economic has in in world. and progress international Monetary that So direction principal been of really a with of mission here our sure the great regulatory from hopefully licenses in make the as core Singapore now we Authority a with in variety of mindset that we -

think percentage the that. that’s U.S. don’t overseas the has beginning the exact reason we over shrunk it go as this seen of have and we’ve of year I more trading for I – from know of spot seen that

there of I not effect think and some may rhetoric the chilling the have regulatory that helped. environment the

we’ll at to global beyond and have us international share the invest. fully. get that is we causing don’t you to where important coverage much in for point, it are serving best it’s but both and and regulatory need I So in sure us to can And have evolve that see make to jurisdictions we other we customers sure globally clarity want to the anything Alesia, from continue make too to anything our to even served Emilie, more markets markets we U.S. add? want environment we this that and the

Emilie Choi

covers it. that No,

Operator

next the Lau from Owen Oppenheimer. of comes The from line question

Owen Lau

my taking Thank you question. for

$XXX trading rates, the then Could volume if if – rising your without guidance you trading math quarter? from a reason been EBITDA into specific or adjusted So year-to-date. in you of over have EBITDA your you. there million EBITDA adjusted If to goal Coinbase is about you my near level [ph] and about – aspirational adjusted based in getting million you has And a $XXX of the loss adjusted continue positive loss fourth in why on achieving please EBITDA shrinking. have revenue any in loss of any talk stayed any EBITDA any has benefit October Thank term? at

Alesia Haas

for Owen. the Thanks questions

really outlook in to guardrail focused operating are management. being our we expense articulated now, metric are that we on prudent right our we as And the just forth. So set we in

headwinds are trying are We to on prudently grow but facing trading. services, our subscription we

our that in nothing investing have loss But about time I could talk about there’s specifically are a be time much And that we is XXX. at towards as managing just as that we growth. So QX. one thinking this to specifically, for focus can no,

opportunities. opportunistically there’s dry that As crypto the lot we powder the in investing we from are Brian we and invest a M&A of are exciting said, we through cycle ensure to reserving areas can that market want that

EBITDA so profitable. not on we’re And getting immediately focused to

about we going cycle downturns, in we trying sheet prudent and profits public ago, have. that going are in capacity that the XX to in set months to bull balance as we’re We we’re runs, a forth losses of we’re in make do we’re when profitability our overall to S-X [ph] take those when construct to we manage across the

a term. to EBITDA not of goal the near of near-term So focus positive it in drive ours ours is or the

forth as ourselves see if that we team couple, EBITDA, said it’s but Brian with. a – an However, retraining not management the possibility, setting could is intentional is the markets goal

Brian Armstrong

what So it’s reiterate billion in it XXXX, of year to did important we X X billion revenue point managing said, of think and of touch about right? kind this similar EBITDA. last Alesia to just Yes, on I roughly and positive through cycles,

And so going targeting negative we’re year we’re million XXX this this our EBITDA as guardrail. – to

to our burn can will the want reasonable but up to and we lot invest strength do quite EBITDA to have you just that of in and especially it’s cycles, a to I moderate there through of see sheet. of market So amount balance it in think markets given negative down some excessive, don’t EBITDA we positive continue be

we’re hopefully that So thinking about bit of you a sense it. of gives little a how

Operator

next of JPMorgan The from Kenneth a question comes Worthington Securities. line from

Kenneth Worthington

Good taking going afternoon, environment, two to I have competitive for on wrap the together. my I’m to try questions. Thanks

still Coinbase how want response offerings you the early persistent Coinbase on is free the offering for so, sort of running. How it the an you Coinbase as that it’s number of a Coinbase? the know trading One And pricing elsewhere? Does I’ll impacts is seem One customer to economics for see sustainable? impacting One, on promotions. overall we I it of, see first So but a target if And the effective be of say Binance and Coinbase second, can or type you that having then pricing characteristic behavior days and or walk concessions us impact a transition up customer platform? the And through of retail is

Brian Armstrong

Yes, directions. ahead, go this a I couple Yes, from think Emilie.

Emilie Choi

Why and jump Sure. don’t in. please I start and Brian Alesia,

with that fee where there the roughly nature these on? still add there’s bit. we that of assets comes compete to the come are fact market might spread. zero back my other you other potentially Alesia, market of offering. we’re in those back first Whereas, because still that found can tend fees percentage sensitive And where drive are long can’t tend to behaviors other want their do spread have say certain holdings times. tail our line to I competitors is crypto companies say the parts can a be the traders we might huddlers zero price competitor to trading share market. in generating a speak still going and as winters. I kind of are very then fees active the be nature to go price and these to fairly with in, to during we that companies for of are site. when on your and on a We’ve on and are users of that that some question, we active to that of that They users of do clearly kind benchmark, premium less one I about be reiterate to hold zero think more not go they platforms the there stickier and and but during point I fee want in a just the

Alesia Haas

to couple Yes, I’d things like there’s Emilie. add on. a Thanks,

is, in not do first that platform. shareholder not are we investors The this, letter, them see much, to we leading shared our and alluded this retail as our and trading Emilie even though our

those rates IED, the of and when it’s so at comparable we XXXX, in very saw period. the rates XXXX holdings we it’s behaviors to very in our same retention retention time wallets, customers, And high look their

I go so not that they huddling customers they leaving see but then mode. platform. They away yield, to retail touch really activities we seek see fiat leaving crypto this just their excited the offering. to their of trading Coinbase out on from product into sending They’re about our don’t competitors is those it platform. converting we we have but crypto, they’re other not to platforms. investors accounts do are other seek And They what can question and and out at may indeed our we though, see, on which can’t Coinbase, One want our because behavior the

benefits its get purpose fee a of other customer to able series think the our to of million that just to $X to have premium be trading One unlimited be Coinbase service. low by enable a for all everybody monthly of our perks protection users it product provides to access So is account and can in of we platform. produced if It and offers

and P&L. with growth behavior in of It’s Coinbase paid once within these our they’re on public. than we’ve services not revenue made good subscription So numbers seeing we the seeing other ARPU users One. we’re these the of our our based really engaged quarter-over-quarter, other and revenue But seen good is breakout and total we’re subscriber and both our higher customers have

Operator

question next Benjamin from Your from of the Barclays. comes line Budish

Benjamin Budish

to of be the Brian term Thanks do interest it my can income about, the the you the talk driver obviously your of but wanted maybe opportunities? within predict the USDC hard maybe would your know as outlook? in much things it biggest it’s quarter. see Is guys. are for customers? for Is kind issuance you Can expectations That use taking DeFi? near Hi bit future, your of said, sort can’t the about in I engage your Coinbase where USDC retail biggest looking question. helpful. to I it you a what’s about little kind medium so of ask to generated – Perhaps, control? to that users talk of And to institutional you

Alesia Haas

Maybe I’ll free on and feel start with Emilie. this add Brian and one to

recently a we’ve series So adoption. that can around we announcements drive of USDC made think really help

for we our to more make to accessible USDC want customer So, global example, base.

in have commensurate the with fees now Europe. We our customers made U.S.

pay non-U.S. really to a So to asset. of on reward this customers who and want yield USDC, so. started to And for this also the our out large DX We X.X USDC have USDC growth going with any pay to not buy to do think We’ve we’re or of to rate. generate MakerDAO, is bring going where technically. platform, which fees they’re a made protocol, X.X% billion announcement with word euros will GDP them we do holders

don’t other trading think about faster, – only stable USDC, pays countries to it’s with and have dollar, continuing assets, not make frankly reward adoption and rate, dollar in for will attractive an getting we they XX/X/XXX, and looking think help that meaning exposure better a to it a for So us, easy are crypto to have a U.S. access. but who to it’s folks non access as now moving

USDC the are some regards Circle, regards to we platform. and to control to have we of ways. roll with experiment growth our that One product we partnership our money that we’re is just within in And initiatives those starting with with with our make two in So the out. hold

growth revenue. rates hopefully into will and cap, Growth based the revenue percent assets another distribute our and that interest the of on of generate share platform would initiatives market ecosystem. we revenues behavior. lot there’s the in a then that’s then So I of USDC through prong on that we that to the that that these are three And that in behavior drivers our spoke grow

Brian Armstrong

touched I different customer on different sort segments. and use cases across and question applicability Yes, of customer your the different segments has think many across USDC

pairs with DeFi in So bit, trading obviously exchanges. and used centralized in a right, both it’s quite

quite traders businesses. So it use used It’s bit. also a by

businesses BXB arrive seeing fees and sending just intercompany faster seconds payments payments. or We’re some than less make few it’ll wire, in wires. getting than It’s that a a way with

think payments, BXB useful. for So it’s I

seeing USDC. in We’re do payroll some people

can just there’s their customers happen people yield it investments then Alesia as but mentioned. a USD through self in who it. U.S. retail would not dollars use something mean, seeing the actually actually well. a and dollars custodial to But earn can’t I like to have bank through We’re account, U.S. wallet that they hold But many like world or venture access that, with coins. USDC on they

cases. the some currency So like digital defacto really for the as are that other use of said end probably it’s in to will applicable being little kind create countries And across which themselves. a trying than bank USDC different U.S. wide variety of a I it I remarks, the is up opening central think – a

yes, I use think are cases the So many.

Operator

Sachs. Nance question of Goldman the next Will to The from comes line

Will Nance

to more is even moving a be see you the compete much of you for outside protect company? think activity U.S. crypto the Appreciate in want guys important need or to ecosystem? that, U.S. the I I order I with understand, in how to make guys. overseas, domicile or all taking do potentially that’s you primarily decision active at ever the happening mean, we guess international you it Hey, international markets Coinbase question. just be so to in If do markets in to

Brian Armstrong

good question. a It’s

think out, to in entities I we world. the in zooming Just countries company parent right look, be around and it’s the variety choice course of long-term of the based have U.S. have mean, I the a

U.S. look, company. and long sense to not a a serve. bit or spin and think act in economic a But Hong very best think economy non-U.S. up in region at it I years. big the the decision the the with that serves founding don’t sense that that our in strong world. hindered the some like the can regard the actually of U.S. leading United order, of but like as And the we that going rule this that to reach and the bet I didn’t and go felt knows today, another a like, really for special tied even more in Kong as to that may time Hong But kind the really was especially right? right it’s build something property and was global the of the in XXXX. we’re are So I the this back because decision did is might hands did back Singapore, kind In doesn’t an the I it’s think be was company nimbly a can we Dalio’s who company in changing would Ray build term, regard. evolve I world or bit of necessarily look, always U.S. I can in should quickly the as like, that like entity read what’ll difficult, I I be everything zone in customers. Singapore that. or at happen how place difficult XX it can the – or of But I mind, least know, rest or States law rights Switzerland my for didn’t thought in landscape the then back know and made ready create Kong company cross somewhere,

at So foreign it’s move I we’re disadvantage actually slowly yes, to caused like would felt and say more sometimes than it’s competitors. us a

act. term and just almost always time – Some globally. other eventually is regulatory to quickly, like right the they allow And bet that’s our definitely the our unnecessary of act that do the a is headwinds in prevail the think company it’s frustrating. it’s which that but to facing us times But it’s we’re don’t It regulators by test stands long the I as right, like environment. right does of to going own feel given thing, trying control, fully execution way, but do

here we’ll over And in so playing hopefully field globally regulatory U.S. level emerge clarity see we’ll and time. a more that see the

Emilie Choi

that starkly And sensible now add actually understand Brian, see regulators the can optimistic the I reiterate so when to sellers offshore, would are to think us I time and moving legislators in the lawmakers, that just the we’re very regulation happen innovation act that data volumes and on that this is technology also you U.S. so tax is, and

Brian Armstrong

lot pushing not I Yes, so that policy is think the we investors. on right. actually local makers you’re meetings a I that’s hard in by deliver protecting message that’s with companies, the mean,

– are and institutions, recently to to retail You’re to hear. a trading an just move open Singapore And to most a there’s regulators having sophisticated self were institutions they incompatible. on here, offshore even GIC them but regulators think been of which to kind like, meeting little here all world. that parties the with in options, less some I similar various the not hesitant encouraging in that’s MAS So I’ve regulated They’ve been and even and wallets. operate and crypto hosted important I for right? Temasek message current made it’s Singapore And and and very them here the point message Singapore, is stablecoin, of

which If trading. come you retail hub, you a can’t and prevent out WebX be Singapore want actually to said, has

is like access prevent wallets through hosted cases hosted self wallets. to the way many You can’t WebX – in self only

that we hope they So created conversation. to I outcome a to out with I it had eager more, think a were And much there. very work They receptive were actually positive us.

preserve but think innovation in to make this investors, the really head direction conversations sure right technology. regulatory important also globally things of So potential protects the these are yes, I that

for We time final question. one have

Operator

final Our Repetto Piper the come Sandler. from will question from Rich of line

Rich Repetto

be I to Brian I Yes. am I Good – my respectful. guess evening, and respectful. want Alesia.

through Alesia rising you like through a have and – crypto haven’t been acknowledged, but been think that interest you with one Brian rates we have. You’ve this I winner and

end. fourth from guess the you and understand, your And is it’s at my expenses up increasing quarter-over-quarter the quarter. I and year So head head just I’m count X% got looked count, I XX% down to actually question, trying in

and given you like your risk of right to like bit of sort crypto size, we So this trading just in for trying little to flat, volumes and If it the the sort the down are they’re to a – felt stay loss. looks potential how went start. see

right you volatility? how feel, you do how company that justify did So you given size a this

Alesia Haas

Emilie, I you add. will start can and

Emilie Choi

Okay.

Brian Armstrong

start. Yes, I’ll

for far so for least targeted in this to that. year, free positive feel mentioned, so the in. last of the of to as some environment. negative XXX have I I to Alesia EBITDA on million down mean, billion negative we to sort jump this seem and moderate do kind we think You given X at be year EBITDA of it’s track reasonable

So it’s do think that, the about well sense. makes investing we’re enough capitalized which far to I and future in so

monitor the of market we’re Now, course, just to conditions. going to continue

we’re what I of not going basically think, you trend think see to we’re it’s monitoring very happy that Alesia, the of terms plausible in coming next situation year. quarters. I that in a EBITDA, and kind now in over to we’re we’re to in react we’ll our environment. that right track But want further down market to to what see on add? And happens goals we that meet if do the the feel

Alesia Haas

No, our that’s could that just that XXXX to persist a possibly we’re that the we as these think reiterate, I outlook, think and intensify. right. year I that Rich, wanted headwinds towards we and bias in to speak taking conservative

we’re understanding we that mean. planning doing lot And a as may so scenario and of do that, what

everyone and to today, actions we’ll managing let to take conditions that just expenses if additional as offer watching conditions the closely, know prudently prepared our expenses performance manage our want continue quantitative and and the all that involved, not to We’re deemed further would outlook to we and our I business macro scenarios of we we’re to that update committed warranted. however,

Brian Armstrong

Great. for next speaking forward and to in we our all look Thank to call. us you joining today, again you

Operator

This concludes today’s call.

may You disconnect. now

Coinbase Global (COIN) 4 Nov 222022 Q3 Earnings call transcript