Cryptocurrency trading platform Coinbase is seeing broad adoption of its products by institutional investors, company CFO Alesia Hass said during the company’s second quarter earnings call this week.
“We now have 10% of the top 100 hedge funds measured by [assets under management] who are now clients of Coinbase and are engaging with the crypto economy,” Hass said. “About a year ago, hedge funds weren't participating in crypto.”
For retail customers, she said, the company’s main product has seen growth, noting customers can borrow up to $100,000 against their holdings through Coinbase Credit.
She said the company is ramping up marketing, with expenditures for the second quarter up about 65% year-over-year, mostly on digital outlets.
Hass called the increase in adoption a key component of its growth in monthly transaction users (MTUs).
Going forward, the CFO said, marketing will focus on partnerships and sponsorships.
She added the firm is going to look at new strategic channels and new venture channels, which could include TV or out-of-home to increase visibility of its products.
“We need to learn and iterate to get the right balance between optimize and new channels to drive additional growth and return on our investments over time,” she said. “We believe all these new investments in brand campaigns and strategic and venture channels will drive the full funnel of customer growth and bring more and more people into the crypto economy, which is really our long-term goal of driving one billion people in crypto and creating economic freedom.”
Cash focus
Hass stressed Coinbase wants to ensure it has enough cash and resources to weather any prolonged crypto winter cycle and still be able to grow and execute on its business goals.
“We have no intention of any near-term return of capital to shareholders in the form of a dividend or share repurchase.”
In the second quarter, Coinbase users generated $462 billion of trading volume, which led to $2 billion in net revenue and $1.1 billion of adjusted EBITDA.
For the second quarter, average retail transaction fees were 1.26%, compared to 1.21% in Q1.
For transaction revenue relative to institutional trading volume, the weighted average fee was 3 basis points, as compared to 4 basis points in Q1, which Hass said was driven by Coinbase’s tier-based pricing and the higher volume in Q2.
