Coinbase Global, Inc.

Good afternoon. My name is Christy and I will be your conference operator today. At this time, I would like to welcome everyone to the Coinbase First Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. I would now like to turn the call over to Anil Gupta, Vice President, Investor Relations. You may begin your conference.

Thank you. Good afternoon, and welcome to the Coinbase First Quarter 2023 Earnings Call. Joining me on today's call are Brian Armstrong, Co-Founder and CEO, Emily Choi, President and COO, Alicia Haas, CFO, and Paul Graywall, Chief Legal Officer. I hope you've all had the opportunity to read our shareholder letter, which was published on our Investor Relations website earlier today. Before we get started, I'd like to remind you that during today's call, we may make forward-looking statements. Actual results may vary materially from today's statements. Information concerning risks, uncertainties, and other factors that could cause these results to differ is included in our SEC filings. Our discussions today will also include references to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the shareholder letter on our investor relations website. Non-GAAP financial measures should be considered in addition to, not as a substitute for, GAAP measures. We are once again using the SAIT Technologies platform to enable our shareholders to post questions. In addition, we will take some live questions from our research analysts. So with that, I'll turn it over to Brian and Alicia for opening comments.

Thanks, Anil. I think it's always helpful to zoom out and remind everyone why Coinbase exists with our mission and vision. And our mission at Coinbase is to increase economic freedom in the world. think crypto is the most important technology out there to do that so many people today they're still thinking about crypto as an asset class that people like to trade and that that certainly is part of it but it's actually a technology that can be used to update many different aspects of the financial system and we think that's really important because 80 of americans believe the financial system doesn't work for them they see you know issues with it they see that it's too slow it's too expensive there isn't equal access for everyone that's not really surprising a lot of the traditional financial system is running on outdated code with laws that in some cases are 100 years old so crypto can help improve this it can help make payments fast and cheap and global like sending an email it can improve settlement times it can reduce fees it can even tokenize different asset classes to make markets more efficient and help with non-financial use cases like decentralized identity or voting and new types of ways for artists to monetize their content so you can think of crypto as technology to update the financial system. It's also kind of the next generation of the Internet, if you will, what people are calling Web3. And Coinbase has a very important role to play here where people's primary financial account in the crypto economy, making it trusted and easy to use. And we're going to hopefully help bring the power of this technology to eventually a billion or more people someday. So with that background, I just want to touch on two areas that are most relevant for Q1. The first one is going to be about how we've shifted the business to operate more efficiently in this down market by driving positive adjusted EBITDA in Q1. And secondly, we're going to talk about how we've had a really impressive pace of product innovation, again, even in this down market operating in a more lean environment. So let's talk about operating more efficiently. Q1 marked a real turning point in our financial performance. Revenue was up and costs were down. So net revenue increased 22% quarter over quarter. while we decreased total operating expenses 24% quarter over quarter. The net result of this is that we had positive adjusted EBITDA in Q1. We're better positioning Coinbase to generate adjusted EBITDA in all market conditions, as I mentioned on our last earnings call. And to cut the expenses 24% quarter over quarter, we had to take a close look at every investment we're making, every vendor we work with, every dollar that goes out the door, and frankly, even every headcount in the company. And we asked ourselves, how can we do more with less to be a more efficient company? We conducted a reduction in force in January. We reduced costs substantially from our top five vendors by rebuilding parts of our technology stack to do things like optimizing data storage and CPU utilization in the cloud. We also reduced our real estate footprint to achieve additional savings. And just in general, it took a much scrappier approach with more nimble teams. All of this, of course, we continue to have a strong balance sheet of five point three billion dollars of USD resources. And with this more nimble or efficient team, we've still been able to encrypt to ship an incredible amount of product. So that's my second topic here. Let's talk about how we've been continuing to drive product innovation in the crypto space. We have a more nimble team and we're also in a bit of a down market in crypto. And I've said this in the past. I actually think down markets are the best time to do the building of new of new things. Because in the up market, things seem to be growing so fast that we often have to focus most of our time on scaling. And so we've gotten a chance to build a lot of great stuff, even as we've become more efficient. And some recent examples of that, just in the last week, we launched our international exchange, which helps us get into the derivative space. We acquired One River Asset Management, which helps us get into the asset management business. I think this could be a really interesting source of subscription and services revenue over time. We launched our base layer two solution, which is a really important way for us to help scale blockchains. This is going to be one of the most important ways we unlock the next wave of crypto adoption. And we launched something called wallet as a service, which is an important part of our Coinbase cloud offering. It helps any business out there integrate crypto custody into their services. So just zooming out, you know, crypto obviously goes through many up and down cycles, but the best companies in the world, including the most trusted brands like Coinbase, they tend to get stronger in down markets. This is the fourth crypto cycle that Coinbase has been through, and we've emerged stronger after each one of them. So I think we've built a really resilient business here. We've diversified our revenue stream away from trading fees, and we're in a really strong financial position with positive adjusted EBITDA in Q1. With that, let me turn it over to Alicia to discuss our financial results in more detail. Thanks, Brian.