Coinbase Global, Inc. Q1 FY2022 Earnings Call

Good afternoon. My name is Gino, and I will be your conference operator today. I would like to welcome everyone to the Coinbase First Quarter 2022 Earnings Call. I will now turn the conference over to your speaker, Anil Gupta, Vice President of Investor Relations. You may begin.

Good afternoon, and welcome to the Coinbase First Quarter 2022 Earnings Call. Joining me on today's call are Brian Armstrong, Co-Founder and CEO; Emilie Choi, President and CEO; and Alesia Haas, CFO. I hope you've all had the opportunity to read our shareholder letter, which was published on our IR site 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 discussion 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, but not as a substitute for GAAP measures. We are once again using the Say Technologies platform to enable our shareholders to post questions. In addition, we'll take some live questions from our research analysts. With that, I'll turn it over to Brian and Alesia for some opening comments.

Thank you, Anil. Before we discuss our results for this quarter, I want to acknowledge that the broader markets are experiencing a downturn. Growth tech stocks and risk assets, including Coinbase and crypto, are not immune to this trend. However, as a crypto company, we have navigated various cycles in this space, including significant downturns, which equips us to operate effectively in this environment. Reflecting on the past decade in crypto, during the growth phases, our focus has primarily been on scaling operations due to the influx of customers. The downturns provide a welcome shift, allowing us to concentrate on building the next wave of innovation that will benefit us in future cycles. We view these down markets as substantial opportunities, seizing the chance to attract top talent while others may become distracted or disheartened. Surprisingly, I am more optimistic than ever about our company’s position. It is crucial to distinguish our performance and progress towards our objectives from the overall market conditions. Regarding our execution, I see many positive indicators. For example, this quarter, we achieved positive EBITDA despite the market decline, which highlights the resilience of our business. We are in a strong position financially, with over $7 billion in cash and crypto on our balance sheet, providing us with numerous opportunities. As mentioned, we continue to attract top talent and acquire companies. Now, 54% of our active users engage in activities beyond just trading; they utilize crypto in various ways. Our strategy to evolve from merely a trading platform to a central financial account for the crypto economy is proving successful. Our trading operations are also performing well. Although macroeconomic conditions led to a 44% decline in preferred trading volumes, we experienced a similar decrease. However, within the core assets we support, like Bitcoin and Ethereum, we actually gained market share. There has been concern about fee compression, but the last few quarters have shown that is not the case; our take rate has increased slightly. We have several emerging revenue streams, such as staking and our subscription services, which grew 169% year-over-year. We are executing effectively towards our goals. I’d like to reference a quote from our S-1 from about a year ago, which anticipated this downturn: 'You can expect volatility in our financials due to the price cycles of the cryptocurrency industry. This doesn't concern us because we maintain a long-term perspective on crypto adoption. We may profit when revenues are high and incur losses when revenues are low. Our aim is to manage the company toward breakeven over time. Currently, we are seeking long-term investors who trust our mission and will endure through price fluctuations.' These are the early stages of this industry, and we will keep investing. As the sector matures, we are poised to become a very profitable company with consistent profitability. For now, regardless of market conditions, we will continue building. The key is to change our perspective on downturns from fear to opportunity, and that’s exactly our plan moving forward. Alesia, do you have anything to add?

Thanks, Brian. I just want to reiterate that the good news is that we have a decade of experience in managing to this type of volatility, and we expected Q1 to be down from Q4 of last year. Our approach to planning is very deliberate and considers how we would manage through all types of market conditions. This is definitely within the range of market positions considered in our 2022 plan. I want to switch over and talk about our Q2 outlook. We note in our letter that the softness we saw towards the tail end of Q1 has continued into April, with both crypto market cap and volatility down compared to Q1. Volatility in particular was at its lowest level observed since mid-2020. Our April monthly transacting users average around 8.9 million. Our trading volume is approximately $74 billion, and as a result, we expect Q2 to have both lower transaction volumes and lower monthly transacting users than the Q1 levels. In terms of our subscription and services, we anticipate this being similar to modestly lower than Q1 levels. On the expense side, we anticipate transaction expenses to be in the low 20s, driven primarily by the growth of our blockchain rewards revenue. Sales and marketing to be in the mid- to high teens as a percent of net revenue, and tech and development and G&A will range between $1.1 billion and $1.3 billion. We recognize that we are navigating through certain volatile markets, and plan to continue to invest prudently to drive long-term growth. Our outlook for 2022 is largely unchanged, and I want to reiterate that we aim to manage to a maximum of $500 million adjusted EBITDA loss, even if we are in a prolonged market downturn. We historically planned our spending under a conservative assumption of a multiyear period of low volatility. We believe with our balance sheet and resources, we are well capitalized to assist in our operations and ensure that we continue to focus on building great product experiences, building our user base and preparing for the return of the market. So with that, Anil, let's go to questions.

Great. Thank you both. So before we get into Q&A, I wanted to reiterate our Q&A principles. First, we'll answer the most upvoted questions determined by the number of shares, and we might group some questions together that touch on the same themes. Second, we don't plan to answer questions related to the potential listing of new assets. And third, we'll avoid questions we've answered in the past if there are no updates. For example, we still don't plan to issue a dividend. So the first question here, we're combining two questions. The top question is about M&A. George R. asked if we see a strategic advantage in acquiring or merging with Robinhood. Noah P. asked about ventures and how we think about exiting or monetizing the investments made there.

This is Emilie. Thanks for the question. We don't comment on rumors or speculation on any specific M&A transactions. The question was more about the strategic advantage of owning a traditional securities platform. We are a crypto company; crypto is in our DNA. Everything we do is in service of building the crypto economy and increasing economic freedom. We don't plan to offer traditional securities, unless this somehow would help us massively accelerate crypto adoption. I also think this is a great opportunity to talk about our invest and acquire strategy more broadly. On the venture side, we are one of the most active corporate investors in the world and we've made more than 300 investments to date. We take minority positions in tons of companies that we think will have great potential, including OpenSea, Alchemy, Dapper Labs, TaxBit, Uniswap, and Compound, and we're very proud to be in these companies and support their growth. The goal of ventures is to grow the overall crypto economy and to support the ecosystem and gain differentiated insights. We look for the best teams and products to invest in and spend substantial time working with protocols, Web3 infrastructure, DeFi, CeFi, NFTs, and the metaverse. We also care about ROI, and we're satisfied with the returns generated since 2018. For the most part, we don't have an intention of selling or monetizing those stakes because we're just long in the whole crypto sector. To me, it would be like Facebook or Google having bet on a large portfolio of the most promising tech companies back in the day and then just holding them through long periods. This leads me to the second pillar which is Corp Dev, and we focus on acquiring great companies that can supplement or accelerate our plans. A secondary goal of ventures is M&A pipeline and/or partnership. An example is Bison Trails; we invested early through Coinbase Ventures, and they turned out to be a great company, so we acquired them as the foundation of Coinbase Cloud. We've also acquired companies like Xapo and Tagomi, which helped us become the #1 crypto custodian in the space as well as the foundation for our prime offering. Another benefit of all of this is that we have incredible entrepreneurial teams in place running important parts of the business.

Sorry, I was on mute. The second question is about our NFT marketplace. Have we been pleased with their activity thus far on the platform? Any metrics we can share for investors to get a sense of the progress?

Yes. Happy to share an update. I’ve been really pleased with the results so far. We’ve received positive feedback from customers. There’s a lot of inventory being listed on the site for sale, and customers are engaging with our social-first approach to NFTs, which opens up some really interesting strategic opportunities in the future. In terms of adoption, we’ve been slowly rolling out invites from our waitlist for a while, and we recently opened to the public beta. We haven’t connected the NFT product into our main distribution channel yet, which is through our main retail app and, of course, the Coinbase Wallet. We’ll be looking to do that soon. We don’t share metrics about our venture bets or new initiatives, but there’s a lot to build, and the opportunity in the NFT space is enormous. We have many features planned, including the ability for people to do NFT drops, mint their own NFT tokens, create token-gated communities, and even the option to buy pieces directly with their credit card or funds in their Coinbase account. We also want to support more chains over time, as people are minting NFTs across various chains. We want to continue to decentralize the NFT experience and embrace on-chain native protocols to ensure NFTs don’t become a centralized experience. Overall, I’m very happy with how it’s going; this is the beginning of a long journey. We are still at a small fraction of what we’re going to achieve in the NFT space. I think it’s important to remember that NFTs are not just artwork or collectibles. They will play a big role in gaming, music, the metaverse, decentralized identity, and even real-world items like tickets, proof of attendance, and potentially digitizing real estate. There’s much to do in the NFT space, and content NFTs are really exciting, and we will keep investing in it.

Our next question comes from Tom W, who asks, how can we do a better job clarifying Coinbase's vision to investors and the general public? He observes the major narratives as a) competition is growing; b) trading fees are therefore shrinking; and c) Coinbase has no other meaningful revenue. How would you respond to that? Relatedly, Patrick N. also asked what our biggest competitive moat is versus competitors?

This is a big question. Let me start off and then I'll turn it over to Alesia. Zooming out, our vision for Coinbase, well, we use a different word; we use mission. Our mission is to increase economic freedom in the world. I believe that cryptocurrency is a unique technology that can be used to create good financial infrastructure for people globally and enable a more Internet-native, fair, and free global economy. That’s our vision. In that world, Coinbase will be the primary financial account and the main way that people access the crypto economy. It will help them to buy and sell crypto as a brokerage, but also to store crypto and use it in novel ways. As I mentioned earlier, we’re already seeing this trend play out; 54% of our active users are now doing something other than trading crypto. Regarding what they’re doing: they’re earning money with crypto, spending it with merchants using the Coinbase card, earning yield on their assets, and engaging in borrowing and lending opportunities. There’s now a substantial ecosystem of third-party applications or DApps—probably over 1,000—where people are creating new use cases with games, social apps, art, music, and more. This feels a bit like the early days of the Internet, where e-commerce began in the late '90s or early 2000s. Fast forward 20 years, e-commerce constitutes about 15% of global GDP. Fast forward another 20 years, I believe the crypto economy will similarly represent a significant portion of global GDP. Coinbase can help make that vision a reality. In terms of our competitive moat, there are a couple of significant factors. Trust and ease of use are crucial moats for us. Trust is about compliance; we make concerted efforts to work with policymakers globally. It also relates to cybersecurity, where we store crypto securely for our customers. When people enter a new industry, they typically want to choose the provider that has been around the longest and is trusted by the most people. Coinbase is the only public crypto company in this environment, and we store a substantial amount of crypto, which I believe creates a defensible position. The other piece is ease of use. Crypto remains complicated, and we aim to bring it to a billion people, and eventually, to the majority of the world’s population. Therefore, most people may not understand private keys, but they can benefit from technologies built to make it accessible. Coinbase is truly a multiproduct company and a platform in a way. Our products are well integrated and will improve integration over time. If you purchase crypto with us, start with us, and then it's easy to use services like Coinbase NFT, which makes us unique as a company. Alesia, let me turn it over to you to discuss the narratives related to competitive pressures, trading fees, and other revenue sources.

Thanks, Brian. I want to underscore that we are a platform and we're building suites of products and services around our user bases: retail, institutions, and developers. While we have increasing competition, which we welcome, as we want crypto adopted by every business and person, the competition is largely for point solutions. No one else competes against the breadth of our platform offering. For instance, our Coinbase Prime offering provides an integrated suite of products for institutions including custody, trading, and the ability to route orders through our broker to over ten different liquidity venues, ensuring the best price for trades on our platform. This differentiates us, as we have other companies competing on custody solutions or individual exchanges. In our retail offerings, our app provides a simple experience for purchasing and selling crypto, which is not common. Many platforms offer exposure to crypto, but our users want to utilize their crypto, and they can benefit by that utility. So on Coinbase, we deliver various transactional experiences on a single platform in an easy-to-use manner. Now 54% of our users are earning yields, spending on a credit card, and receiving loans against assets. We observe users transferring assets into wallets and engaging beyond just investing. Our focus is to bring all this together over time into one simple platform, which we believe will set us apart from point solutions. Now turning to trading fees, our blended fee rate is actually up over the last two quarters. Yes, our transaction revenues dropped in Q1, reflecting broader weaknesses in the market during this volatile cycle, which is not surprising. However, we are not seeing that competition is driving fee reductions. We're experimenting with different pricing structures; we announced a subscription product, Coinbase One, and we are eager to continue serving users and modeling pricing that aligns with their increasing use of our various products. We are actively diversifying our revenue streams. Subscription and services revenues accounted for over $150 million in Q1, or about 13% of total net revenue, which increased 169% year-over-year. As noted earlier, 54% of our users are engaged with additional products. The largest growth driver is staking, which will continue to add new assets, having just introduced Cardano staking in April. We are excited about the NFT Beta launch, which opened to the general audience, and we expect this to be a growth driver as well. In conclusion, we are a platform aiming to add more assets and products to enable new user engagement, competing by being a trusted, easy-to-use platform.

Our next question is from several shareholders who would like to know what we see as the biggest opportunities to drive shareholder value over the next years. Emilie?

Sure. We often receive questions from investors about how we think about resource allocation, our expense base, and how we will drive revenue growth in the long-term. Let me take a moment to discuss our investment pillars. We invest in four pillars: crypto as an investment, crypto as a new financial system, and crypto as a new type of platform. We map roughly 70% of our budget to core activities around the first two pillars, focusing on trading, custody, and international expansion. This includes listing more assets and expanding payment rails. Another 20% goes to strategic products like wallets and staking, for example: we made Cardano staking available for retail users in Q1, expecting to see a revenue impact in future quarters. Wallet is the gateway to Web3 and should drive long-term growth in user engagement and monetization. Lastly, we allocate around 10% of our budget to longer-term bets, like the NFT marketplace. We listen to our customers and the market to understand which products and features are most important, focusing on those products. Custody, for example, was identified as a crucial institutional product we began building years ago and acquired Xapo during the last crypto winter. This acquisition has positioned us as the largest regulated crypto custodian. This points out that Coinbase has been public for just over a year, so for many of you, this might be the first real crypto market slowdown you’re experiencing. I signed my offer letter with Coinbase in December 2017— right at the peak of the last cycle—and witnessed the market fall shortly after. It was an incredible lesson in thinking about long-term crypto cycles and learning to remain focused during downturns. Our executive team is dedicated to strategy and execution, building great products, onboarding users, and growing our business, without making short-term decisions that jeopardize future growth vectors. We must maintain foresight and conviction in our product strategy while building in flexibility around headcount or other fixed resources. We believe if we handle these aspects well, the rest will take care of itself. Alesia, anything you want to add?

Thanks, Emilie. I agree with everything you've said, but it’s also important to discuss profitability and unit economics. Our core products have strong unit economics, and we've demonstrated that Coinbase can be profitable. For example, we delivered over $4 billion of adjusted EBITDA in 2021. We are highly confident we could choose profitability over reinvesting in the business. However, we chose investment. As shared last quarter, we’ve decided to make 2022 an investment year because we believe investing now is key to our goal of becoming a multiproduct platform serving a diverse customer base. This year, we focus on big bets in NFTs, derivatives, international growth, and enhancing Coinbase Wallet functionality. We could opt for a more conservative sequential approach and focus on profitability, but we have the resources and the discipline to manage through market fluctuations, empowering us to invest now for future diversification and increased engagement and revenue opportunities as market conditions evolve. It's critical for investors to understand we can achieve profitability but we opted for growth now.

Our next question regards India. Some shareholders are curious about recent developments in India. Can you explain the halting of UPI transfers there? What impact will that have on your expansion plans in the market? Brian?

Yes, sure. For those who may have missed the news, we launched in India on April 7, providing ramps into the crypto economy. There is significant interest in crypto among people there. We integrated with UPI, which exemplifies our international strategy. However, shortly after launching, we disabled UPI due to informal pressure from the Reserve Bank of India, which is akin to the Treasury equivalent there. India is unique; the Supreme Court ruled they cannot ban crypto, but the Reserve Bank of India and other government elements do not share the same positive view. They've applied what is referred to in the press as a 'shadow ban,' creating informal pressure to disable payments through UPI. We are concerned they may be violating the Supreme Court ruling, which will be interesting to explore if it escalates. Our preference is to collaborate with them and focus on relaunching. We have several pathways to reintroduce other payment methods there, and that will be our default approach moving forward. My hope is that we will soon be back in India, just as in many other countries where we are pursuing international expansion. One theory is action produces information. It's not always clear how to proceed in different countries, each with varying levels of understanding of crypto. We must engage with policymakers globally to educate them on issues like AML capabilities and the benefits of crypto. Overall, people in these countries generally want crypto, so I believe that crypto will eventually be regulated and legal in most democracies, although it takes time for institutions to become comfortable with it. We aim to promote conversation and engagement in these matters through our actions by launching services, which generates discussions within the press, leading to important meetings that will help us advance the conversation.

Our next question concerns Coinbase Cloud. What updates can we provide to shareholders there? Are there any principal hurdles to growth, education, functionality, or anything else? Brian?

Yes, I'm really excited about Coinbase Cloud. If you zoom out, crypto is a new market, meaning numerous startups are focusing on building applications in this space. Not just startups, but existing fintech companies, neobanks, and traditional financial service firms are considering how they can integrate crypto, as their customers demand it. Even non-financial companies wish to accept crypto payments or incorporate it into their services. I believe that just as most companies now use the Internet, we will see most companies integrate crypto in some form in the future. They won't want to reinvent the wheel; Coinbase has spent a decade developing core technologies for securely storing crypto, keeping blockchain connections synced, ensuring compliance, trading, staking, minting NFTs, and managing metadata. This is akin to supplying 'picks and shovels' during a gold rush, helping companies access crypto without needing to have fundraising or development teams of their own. Of course, we first need to make sure our product functionality is accessible to everyone, which is a timely step. We're sponsoring hackathons and engaging the developer community in various countries, which is generating a lot of excitement and interest. By some indications, AI and crypto have become the most popular elective areas in computer science. As more crypto companies develop and existing businesses integrate crypto, we're simply providing the necessary infrastructure to help others.

Great. Okay. Let’s switch gears and take some live questions from our analysts. Operator, can you start up, please?

Your first question comes from the line of Pete Christiansen from Citi.

I was hoping you could qualitatively give some color on how funded account retention is looking, in terms of the cost of acquisition. Just generally, what trends are you seeing now year-to-date, and perhaps how they differ from last year? Looking at your balance sheet, it appears cash is more than one-third of your market cap. I know there's a lot of reserved firepower there, but is there a point where Coinbase would consider repurchasing its stock?

Thanks for the questions, Pete. We don't provide specific metrics on funded accounts, but a good way to assess this is to look at our assets on the platform. We ended Q2 with $256 billion of assets on our platform, $123 billion from retail and $134 billion from institutional clients. While this is down from Q4's $278 billion, it remains roughly flat compared to Q3. Retail funded accounts grew between Q3 2021 and Q1 2022, along with significantly higher figures from earlier in 2021 and beyond. In terms of your second question regarding cash on the balance sheet, we use our cash for four main buckets: funding our operating needs, self-insurance against potential platform risks, deploying some to facilitate lending in our crypto borrow-lending market, and supporting trades on margin while providing loans to retail users backed by crypto. This represents a growth vector for us. At this time, we have not committed to return capital to shareholders in either forms of dividends or share buybacks.

All right. Next one on the queue is Ken Worthington from JPMorgan.

I would love to follow up on the earlier question regarding the NFT platform, perhaps extending it to the network effect. Success can be measured by building users and gaining inventory. Could you share how you are marketing the platform to attract more users? We’ve seen emails to existing customers and commission-free trades; can you elaborate on the social strategy? Regarding inventory, you mentioned minting as part of your strategy. What steps are being taken to attract major projects to list on your platform, perhaps even securing exclusivity? I would also like to discuss the network effects of developing crypto trading with Wallet and the NFT platform as part of a common platform that engages users globally.

Yes, thanks for the question. I’ll start off, then Alesia, feel free to add anything. You're correct that there is a network effect, both in the traditional sense, as we added social features to NFTs. Users are interacting, discussing, liking content, and we’ve implemented a ranking algorithm that recommends NFT content customers may want to see based on their previous activity and available on-chain data. There’s certainly a network effect at play here. You’re also right about vertical integration; Coinbase has many customers storing crypto here, making it much easier for them to purchase an NFT directly within the platform rather than transferring to another wallet and using a third-party app. We haven’t fully leveraged our existing distribution yet, but it’s on our roadmap. If we could integrate the NFT app into our current products, it would simplify the purchasing process and add a lot of value. As for marketing, we've executed some impressive product ads during events like the Olympics. I think that we’ve executed well around our launch; I’m very pleased with it. There’s much more we can do with marketing, especially as the product matures. The best marketing would be leveraging our current user base, which will be really powerful. Emilie, Alesia, anything to add?

No, I think that’s all said.

Yes.

Next, we have Lisa Ellis from MoffettNathanson.

As painful as this downturn is, Coinbase seems to be sitting in a unique competitive position, stronger than many other players in the market, given the cash on the balance sheet and talent, etc. Can you discuss how you anticipate emerging from this downturn in a stronger competitive position?

Yes. I’ll start off, then feel free to chime in. We’ve been through enough of these cycles where people can be irrationally exuberant during uptrends and irrationally pessimistic during downturns. Remember, we just had one quarter where the market declined. If it continues for four quarters, there may be more severe implications. Our cash balance gives us a big advantage, allowing us to invest. We’ve seen numerous companies pivot away from their focus during downturns, which generally proves to be misguided. During down periods, our long-term focus and capital allocation rigor help us pull ahead. Coaching our team to adopt this mindset is important, as many recently have only known upmarkets. Alesia?

I just want to add that this market scenario was within the range of conditions we previously planned for. We are committed to our product roadmap and will continue to build great products regardless of market conditions. We are building strategically in this environment, allowing us to pursue strategic acquisitions. We also understand that with downturns, there are opportunities for companies needing exits, as we did in the last crypto winter with Xapo. We plan to position ourselves strongly to expand both organically and through acquisitions.

Lastly, I want to highlight that there’s a significant discrepancy between our revenue multiples as a public company and those in private market crypto investments. This gap will eventually close. We should see corrections materialize over the next year in private markets, which could affect our future M&A outlook.

Next question comes from Will Nance from Goldman Sachs.

I appreciate all the insights regarding managing the business in this macroenvironment. I have a question regarding your hiring. The figure of 1,200 new employees added stood out in this quarter. Emilie earlier mentioned your 70-20-10 investment strategy, which is helpful. I’m curious what these 1,200 new hires are focused on? Allocating such a large number relative to your original team must have been part of the plan. Can you provide more color on those investments? Regarding your guidance for a maximum of $500 million in EBITDA losses for the year, it appears the exit run rate for the quarter on ARPU was around $25 million. Any color on the urgency of taking actions to mitigate these losses, and where those actions would come from for the remainder of the year?

I’ll begin, then Brian and Alesia can weigh in. When hiring, we align our resource allocation with product goals, amplifying them through additional headcount. Roughly 50% of our headcount focuses on product engineering and design, as we are primarily a technology company. We aim to enhance our services efficiently. For example, we want our trading services to power both our retail and institutional trading with one layer of service. As we discussed earlier, the 70-20-10 allocation reflects how we map these 1,200 positions against those components. Additionally, building the right infrastructure as we scale is vital to meet increasing requirements for reliability and scalability. Compliance also requires significant investment due to its importance for solidifying relationships with customers and regulators, which reflects in headcount as well. Alesia?

In response to your ARPU inquiry, you are correct; we’re approaching the high twenties as we discussed in our shareholder letter on Page 15. The data indicates month-to-month volatility, but it has remained stable—averaging between the 30s and 40s over the years, except for the peaks seen in 2021. While ARPU has trended down, it hasn’t altered significantly from 2019 stats. We have multiple levers at our disposal, including slowing the hiring pace and managing high expenses related to customer experience outsourcing, which were elevated in Q4 due to volume spikes; these costs will decrease as volumes level off. We also have other variable cost measures to control to meet the $500 million EBITDA cap if necessary.

Operator, we have time for one more question.

Our final question will be from Owen Lau from Oppenheimer.

I have two quick questions. First, how will Coinbase participate in the adoption of the Lightning Network and the progress of integrating the exchange into it? Secondly, regarding Coinbase Wallet, can you discuss its penetration, success measures, and potential next steps?

I’ll start. For those not familiar, Lightning Network is a layer 2 solution for Bitcoin that enhances payment capabilities with lower fees—an important innovation we want to support. Several layer 2 solutions are emerging across different blockchains, including Ethereum. We see increased customer interest in these solutions; they offer application capabilities similar to moving from dial-up to broadband, which excites us. We are working to integrate every layer 2 solution our customers want, including Lightning Network, although I can’t provide a specific timeline. Regarding Coinbase Wallet, we track similar metrics to the rest of our business: monthly transacting users (MTUs), crypto held in Coinbase Wallet, and revenues. We are enhancing Coinbase Wallet’s functionality; it now includes a Chrome extension linking to mobile wallets and supporting new blockchains. We’re facilitating connections to third-party applications both on mobile and web browsers to allow people to engage with an expansive array of services. The goal is to simplify the buying process, connect users securely, and maintain functionality comparable to our retail app even in emerging markets with less clarity on regulations. I believe Coinbase Wallet will enable self-custodial wallets and access to the latest features in crypto, aligning with core focuses of trust and ease. We anticipate this will enhance our MTUs over time. Emilie, any additions?

The only point I want to make is that we truly believe Wallet will be the gateway to Web3, and thus investing in its development is strategically vital for the long term.

Great. Thank you all for joining us today, and we look forward to speaking to you again on our next call.

This concludes today's conference call. You may now disconnect.