The stock has lost more than 70% of its value since late March, as a broader slide in tech stocks and the value of cryptocurrencies hit Coinbase particularly hard. Bitcoin, the most popular cryptocurrency, briefly dropped below the symbolic price threshold of $30,000 on Monday, and is down more than 30% this year.
Overall, usage on Coinbase declined from the fourth quarter. Retail monthly transaction users (MTUs) fell to 9.2 million, down from 11.4 million in the fourth quarter, while total trading volume dropped from $547 billion in Q4 to $309 billion.
Revenue fell 27% from a year ago, and it also reported a net loss of $430 million in the first quarter.
But Coinbase doesn’t appear to be worried about its long-term prospects. The company doubled down on an argument that it has made before, reminding shareholders that its stock should be thought of as a long-term investment due to the volatile nature of cryptocurrency price moves.
“We believe these market conditions are not permanent and we remain focused on the long-term,” the company wrote in a letter to shareholders accompanying its earnings release. It also said that it’s focusing on the next generation of crypto opportunities beyond trading.
Increased spending also helped to drag down the company’s bottom line. Overall operating expenses came in at $1.72 billion, outstripping revenue for the first time since the company began reporting finances publicly.
General and administrative expenses were $414 million, up 39% compared to the prior quarter. Coinbase attributed the rise to higher expenses related to full-time and contractor-related headcount. The purpose of that spending, according to the company, was to “invest to strengthen and scale our customer support, legal, compliance, and business support functions.”
Emilie Choi, president and chief operating officer of Coinbase, added on the company’s earnings call that the company invests heavily in compliance.
“That’s important to us, because it helps us solidify our relationship with our customers and regulators, so that’s another piece of headcount that matters,” Choi said.
While Coinbase had previously disclosed plans to increase headcount, operating expenses jumping nearly 70% in six months does suggest the company is still spending like it is in a hyper-growth phase, even though users and transaction volume dipped between quarters.
Coinbase CFO Alesia Haas said on the company’s call with analysts that it could have grown more slowly to focus on profits, but chose to spend on growth and diversifying product lines instead.