The company said it had 8.3 million monthly transacting users (MTUs) during the fourth quarter, down from 8.5 million the prior period

Coinbase reported user numbers that dropped short of analysts’ estimates even as Q4 earnings and revenue beat projections. The stock increased over 2 per cent in extended trading after falling 4.8 per cent during the day.

Revenue dipped approximately 75 per cent from a year earlier as the ‘crypto winter’ continued to drag on crypto currencies’ price. The firm also reported a (non-adjusted) net loss of $557mln, a year after Coinbase generated net income of $840mln during the height of crypto adoption.

Coinbase’s user base continues to drop. The firm said it had 8.3mln monthly transacting users (MTUs) in Q4, down from 8.5mln the previous period. Analysts were anticipating 8.22mln, as per StreetAccount. Trading volume dropped 9 per cent to $145bln from the earlier quarter.

Transaction revenue dropped 12 per cent to $322mln from the earlier quarter, which was below the $327mln consensus among analysts polled by StreetAccount.

For the first quarter of 2023, the firm estimated subscription and services revenue of $300mln to $325mln, and reorganisation expenses of nearly $150mln. Diversifying its revenue flows away from just trading fees has been a top priority for the firm, with subscription and services taking centre stage. Traction in products like Staking, Earn, and Custody generated more than $200mln in Q4.

Coinbase has gone through two major rounds of layoffs since June 2022 in a bid to pare back expenses to conserve cash. The exchange cut 20 per cent of its staff last month, after an 18 per cent cutback of its employees in the previous year.

Prior to Tuesday’s after-hours moves, the stock was more than 75 per cent higher in 2023, after last year′s dip in crypto prices along with a pull back from the riskiest equities. In 2023, bitcoin, the most popular crypto currency, has gained over 48 per cent.

Coinbase’s business could also be affected by potential US Securities and Exchange Commission actions that would govern specific types of crypto currency tokens and crypto services as securities. Tweets by Chief Executive Officer Brian Armstrong and Chief Legal Officer Paul Grewal have proposed the firm would challenge any such step in court.