In the Q1 2023 Shareholder Letter released on Thursday (4 May 2023), Coinbase shared its Q2 2023 outlook, which may offer valuable insights for crypto investors and traders. As one of the leading cryptocurrency exchanges, Coinbase’s performance and market expectations could provide some indication of the overall industry’s direction.

According to Coinbase, the average crypto market cap in April 2023 was $1.3 trillion, up 17% compared to Q1’s average of $1.1 trillion. However, crypto asset volatility in April was 25% lower than the Q1 average. The exchange generated approximately $110 million in total transaction revenue in April 2023, but they cautioned investors against extrapolating these results, as the market can change rapidly.

For Q2 2023, Coinbase anticipates the following:

  • Subscription and Services Revenue: Around $300 million
  • Transaction Expenses: Low to mid-teens as a % of net revenue, depending on the revenue mix
  • Technology and Development + General and Administrative Expenses: $600 million – $650 million (including ~$190 million in stock-based compensation)
  • Sales and Marketing Expenses: $80 million – $90 million (including ~$15 million in stock-based compensation)

The company expects a sequential decline in subscription and services revenue, driven mainly by the decline in the USDC market cap, which was 23% lower in April than the Q1 average. They also foresee a sequential increase in General and Administrative expenses due to higher legal expenses, higher rent expenses from lease termination, and higher Sales and Marketing expenses in Q2 resulting from seasonal spending associated with their NBA partnership.