Coinbase announces another round of layoffs, expecting full-year losses in 2022 to be less than 500 million USD.

The long-standing U.S. cryptocurrency exchange Coinbase, which has experienced numerous bull and bear market cycles, has announced layoffs once again. In a letter to employees yesterday, CEO and co-founder Brian Armstrong analyzed the market environment for 2023 and emphasized the need for Coinbase to reduce expenses to ensure better performance opportunities in the future. This action includes laying off approximately 950 employees and cutting operating expenses by 25%.

Restructuring Plan

Coinbase announced a restructuring plan on January 10th to reduce operating costs in response to the ongoing downturn in the cryptocurrency market and prioritize current business operations. The plan involves reducing approximately 950 employees. This plan is expected to be completed in the second quarter of 2023 and is estimated to incur restructuring costs of approximately $149 million to $163 million, including around $58 million to $68 million in cash costs related to employee severance and other termination benefits, as well as approximately $91 million to $95 million in stock-based compensation costs related to the layoffs.

Coinbase also plans to cut 25% of operating expenses, including marketing expenses, technical and development costs, general administrative expenses, and stock-based compensation, but excluding the aforementioned restructuring-related costs.

After preliminary calculations of the financial position for 2022, Coinbase estimates that the full-year adjusted EBITDA will be below the $500 million loss previously mentioned in the shareholder letter.

Future Outlook

In addition to thanking all employees for their efforts and support, Armstrong has committed to providing comprehensive support to the 950 affected employees, including at least 14 weeks of base pay, health insurance, and other benefits for those residing in the United States. For the remaining employees, Armstrong provided a message of confidence:

As we see now, tough times separate the wheat from the chaff. But those of us who believe in cryptocurrency will continue to create great products and increase economic freedom in the world. Better days are ahead, and when they come, we will be ready. Thank you for everything you've done to get us to this point and for everything you will do to help us move forward.

Coinbase is expected to reveal more details during the fourth-quarter earnings conference call in February.