Item 2.02. Results of Operations and Financial Condition.
On January 10, 2023, Coinbase Global, Inc. (the "Company") announced certain
preliminary unaudited financial and operating results for its year ended
December 31, 2022. The Company expects to report Average Annual MTUs, Average
Transaction Revenue Per User, and Subscription and Services Revenue, as well as
certain operating expenses - comprising Transaction Expenses, Sales and
Marketing Expenses (including stock-based compensation), and Technology and
Development + General and Administrative Expenses (including stock-based
compensation) - to be consistent with the Full-Year 2022 Outlook provided in its
November 3, 2022 letter to shareholders (the "Shareholder Letter"). As a result,
Adjusted EBITDA for the full year ended December 31, 2022 is expected to be
within the negative $500 million loss guardrail that the Company provided in the
Shareholder Letter.
The Company's audited financial statements for the year ended December 31, 2022
are not yet available. Accordingly, these preliminary financial and operating
results are an estimate and subject to the completion of the Company's financial
closing and other procedures and finalization of the Company's consolidated
financial statements for its year ended December 31, 2022, including the
completion of the audit of the Company's financial statements. Accordingly,
actual financial and operating results that will be reflected in the Company's
Annual Report on Form 10-K for the year ended December 31, 2022, including its
audited financial statements, when they are completed and publicly disclosed may
differ from these preliminary results.
The Company further announced that it expects certain of its operating expenses
- comprising Sales and Marketing Expenses, Technology and Development + General
and Administrative Expenses, including stock-based compensation and excluding
restructuring expenses and Other operating expenses, net - for the quarter
ending March 31, 2023 to be approximately 25% lower than those operating
expenses for the quarter ended December 31, 2022. This is the result of ongoing
cost management initiatives, including the Plan (as defined below).
The information furnished with this Item 2.02 shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise subject to the liabilities of that section, nor
shall it be deemed incorporated by reference into any other filing under the
Securities Act of 1933, as amended, or the Exchange Act, except as expressly set
forth by specific reference in such a filing.
Item 2.05. Costs Associated with Exit or Disposal Activities.
On January 10, 2023, the Company announced a further restructuring plan (the
"Plan") to manage its operating expenses in response to the ongoing market
conditions impacting the cryptoeconomy, as well as ongoing business
prioritization efforts. The Plan involves a reduction of the Company's workforce
by approximately 950 employees. The Company expects execution of the Plan to be
substantially complete by the second quarter of 2023.
In connection with these actions, the Company estimates that it will incur
approximately $149 million to $163 million in total restructuring expenses,
consisting of approximately $58 million to $68 million in cash charges related
to employee severance and other termination benefits. Of the aggregate charges
that the Company expects to incur in connection with the Plan, the Company
expects that approximately $91 million to $95 million will be in stock-based
compensation expenditures relating to the acceleration of the vesting of
outstanding equity awards in accordance with the terms of such awards. The
Company expects to recognize substantially all of these charges in the first
quarter of 2023.
The estimates of the charges and expenditures that the Company expects to incur
in connection with the Plan, and the timing thereof, are subject to a number of
assumptions, including local law and consultation requirements in various
jurisdictions, and actual amounts may differ materially from estimates. The
Company may also incur charges and expenditures not currently contemplated due
to unanticipated events that may occur in connection with the Plan.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements including,
but not limited to, statements related to the Company's preliminary unaudited
financial and operating results for the year ended December 31, 2022, outlook
for the quarter ending March 31, 2023, the number of positions affected by the
Plan, and the estimated restructuring charges associated with, and the time
frame for completion of and recognition of
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charges associated with, the Plan. These forward-looking statements are based on
management's beliefs and assumptions and on information available to management
as of the date they are made. However, investors should not place undue reliance
on any such forward-looking statements because they speak only as of the date
they are made. The Company does not undertake any obligation to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law. In addition, forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results, events and developments to differ materially from the Company's
historical experience and its present expectations or projections. These risks
and uncertainties include, but are not necessarily limited to, those described
in the Company's filings with the Securities and Exchange Commission.
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