Crypto exchange Coinbase (COIN) has said it is planning to reduce its headcount by around 950 employees as part of a restructuring which it expects to be complete by the end of Q2 2023.
Coinbase said new expenses of between $149 million and $163 million for the first quarter. The layoffs, along with other restructuring measures, will bring Coinbase’s operating expenses down by 25% for the quarter ending in March, according to a new regulatory filing. The crypto company also said it expects adjusted EBITDA losses for the full year to be within a prior $500 million “guardrail” set last year.
Coinbase began shedding jobs last June when crypto’s bear market began to take hold. CEO Brian Armstrong said at the time that the company had “grown too quickly” in the cryptocurrency bull market, scaling from 1,250 employees to over 5,000 at the start of 2021.
The firm began by cutting 1,100 jobs, equivalent to 18% of its workforce at the time, followed by another 60 in November, as the crypto winter grew even colder with the collapse of fellow exchange FTX.
Armstrong “it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario” and there was “no way” to do so without reducing headcount.
Coinbase will also be shutting down several projects with a “lower probability of success.”
COIN stock rose over 4% in pre-market trading following the news. At the time of writing, the stock is down around 1% at $38.
“We also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion,” Coinbase Chief Executive Brian Armstrong said in a blog post.
Coinbase said it had no additional comment on the projects it was planning to shelve.
“With perfect hindsight, looking back, we should have done more,” CEO Brian Armstrong told CNBC in a phone interview. “The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.”
Cryptocurrencies have suffered alongside technology stocks as investors flee riskier assets amid a broader economic downturn. Bitcoin is down 58% in the past year, while Coinbase shares are off by more than 83%.
“Every company in Silicon Valley felt like we were just focused on growth, growth, growth, and people were almost using their headcount number as a symbol of how much progress they were making,” Armstrong said. “The focus now is on operational efficiency — it’s a healthy thing for the ecosystem and the industry to focus more on those things.”
“If you look at the internet era, the best companies got even stronger by having rigorous cost management,” he said. “That’s what’s going to happen here.”