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2) A lot of the same mistaken takes on it. First, crypto's down. So are Coinbase's earnings. Nothing surprising there, and nothing Coinbase specific.

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3) Second: the quarterly "look at that diversified income!" take. Coinbase knows what they're good at: consumer crypto investing/trading. That's where all their profit comes from. "But how about that Services revenue?" Nah.

4) See, while they recorded ~$150m/$800m of their revenue as "services"... ...check out their opex. See that "Transaction expense" of $167m? I'm pretty sure that includes items offsetting much of the services revenue; it's passthrough to customers from e.g. ETH staking.

5) So their real revenue was probably closer to the $650m Transaction revenue. Once again, over 90% of that comes from retail, because of the pricing differences between the (retail) mobile app and the (mixed) website/exchange. So, netting out the ~$150m...

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6) You get a revenue of ~$650m, and expenses of... ...well: a) $150m of marketing b) $600m of dev payroll c) $500m of other payroll d) $100m of 'other' e) $400m of balance sheet asset price decline for a total of ~$650m rev, ~$1.4b core expenses, plus $400m impairment.

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7) That leads to a loss of roughly $700m, plus another $400m from impairment. My guess is the vast majority of the expenses are coming from payroll/bonuses/etc. here. Coinbase has ~5k FT employees, paying roughly $4b/year for them. (Makes sense, for devs.) Revenue now ~$2.5b.

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7) I *think* this include stock-based-comp. So, roughly speaking, *annualized*, Q2 would imply: a) $2.5b of real net revenue (~90% mobile app trading fees) b) $4.4b of employee comp c) $1b of other expenses --> on net, losing roughly $3b/year, including stock based comp

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A message from Coinbase CEO and Cofounder, Brian Armstrong

8) It'll be interesting to see the impact of their recent headcount changes on upcoming earnings! FWIW I highly recommend Brian's well-written post on it: blog.coinbase.com/a-message-from And macro. Remember: Coinbase is more sentiment-dependent than FTX! Large upside in a recovery.

coinbase.com

Earlier today, I shared the following note with all Coinbase employees.

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9:17 PM · Aug 9, 2022Twitter Web App

9) (Not investment advice! There might be errors in the above, I haven't double checked it all!)

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Yonder Orphan (joyful arc)

@0xBarnacle

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why sunset coinbase pro, if most of their revenue is from retail?

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Sam do you own pudgy penguins?

Roaring Hammy Pew Pew

@RoaringHammy

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Thread by @SBF_FTX on Thread Reader App

so in short, you are still bullish on coinbase?

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Hi! here is your unroll: threadreaderapp.com/thread/1557113 See you soon. 🤖

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@SBF_FTX: 1) Some thoughts on Coinbase's 2022Q2 earnings! s27.q4cdn.com/397450999/file… previous: 2) A lot of the same mistaken takes on it. First, crypto's down. So are Coinbase's earnings. Nothing...

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Hey, solana comment along with Tron boy?

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Yes, stock-based-comp is included! If you strip that out (~$391m), annualized loss for the year is $1.4B. Sure looks ugly as a point in time, but they also have $5.7B in cash, good for 4 years at this rate or…plenty for the next cycle 😏

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and

Tl;dr - if you believe crypto *ever* recovers, there’s really nothing surprising about this report. And if you don’t believe that, why bother following $Coin?

@metaverseavi

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