Bitpanda's Revenue Plummets by 80%, Reports Over €100 Million Loss

Published 8 months ago

The unfavorable market environment has significantly impacted the business figures of Bitpanda, the largest cryptocurrency exchange in the German-speaking region. The company’s 2022 revenue dropped from €477 million to €90 million, marking an 80% decrease.

A Rapid Fall Following a Successful Year

Bitpanda, the Viennese cryptocurrency exchange, was once celebrated as a rising star among European fintechs, consistently growing and making profits year after year. In the booming year of 2021, the company’s revenue surged by a whopping 764% to €477.9 million, leaving a profit of €37.5 million. These figures were possibly the best among German-speaking fintechs in 2021.

However, the negative sentiment in the crypto market in the following year severely hit the company’s business figures. The net revenue fell by 80% to €90 million. An unplanned write-off of €33 million further dragged down the results.

The Impact of Expansion and Layoffs

Bitpanda significantly expanded its team in the meantime. The fintech company averaged 600 full-time positions in the past year, up from 400 in 2021. During the year, founders Eric Demuth and Paul Klanschek took countermeasures and laid off about 270 employees. Despite the reduction in personnel costs reflected in the business figures, the company ended up with a loss of around €116 million, exceeding the company’s net revenue.

Greater Fall Than Major Competitor Coinbase

The business figures illustrate the challenges of an exchange: In good times, providers have an operational lever - fixed costs do not increase as significantly as revenues. The business generates profits. But in bad times, this effect is also strongly noticeable. If people do not trade, revenues also collapse - and fixed costs still have to be covered. Bitpanda felt this impact as the fintech was building its team during its record year. As countermeasures, the company scaled back marketing and imposed a hiring freeze.

Plans for a Return to Profitability

Bitpanda CEO, Eric Demuth, emphasized that the company is now using this time to further develop its product. Bitpanda also operates as a tech service provider for other companies such as N26 or Coinbase and has expanded its trading offer for professional traders. “In every crypto cycle, the market consolidates, and those companies that invest and constantly improve their product grow five to ten times in the next cycle,” says Demuth.

The company also received a license from the financial regulator Bafin and can now advertise in the German market. Demuth plans to further expand the business with stocks and ETFs to become less dependent on crypto cycles. By the end of the year, Bitpanda customers held stocks and ETFs worth around €100 million. The company counts four million customers, and all efforts have led to “a significant increase in our operating result” this year, which will “ultimately lead to the company’s return to the profit zone.”

A Possible Downgrade?

The annual financial statement also contains sensitive details about the company’s valuation. Bitpanda was once valued at around €3.3 billion by notable investors like Peter Thiel’s Valar Ventures and Hedosophia. But fintech valuations are currently under pressure.

In the part of the report dealing with the employee participation program, it states: “Based on the company valuation of around €1.3 billion (2021: €3.3 billion; company value 2021 derived from the Series C funding round), the provision was adjusted in the fiscal year.” This suggests that the auditors reduced the company value they used as a basis for calculating provisions. However, the company clarified that this was merely an accounting valuation according to Austrian accounting standards for the provisions for the employee program, necessitated by a change in the company structure. Nevertheless, the revaluation is not likely a positive sign.

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