Coinbase is topping earnings forecasts. The stock went up.

Net revenue increased 5% sequentially, driven by a 34% increase in subscriptions and services revenue. However, transaction revenue, which includes fees investors pay for trading, fell 12%.

The company reported a net loss of $124 million, based on adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, which is a slightly mixed forecast. Earnings per share came in at a loss of $2.46, ahead of consensus forecasts for a loss of $2.52.

Coinbase shares, which were down 4.8% at the close, were choppy after hours, rising 3.4% to $64.20 around 5 p.m.

Operating and profitability losses were expected. The token market collapsed in the fourth quarter, spurred in part by the collapse of rival Coinbase FTX in November. Coinbase said in January that it would lay off about a fifth of its workforce. In a report on Tuesday, Coinbase said it expects restructuring expenses to be around $150 million and that it will cut costs from technology, development, sales and marketing, and general and administrative expenses by more than 30%.

The trading platform in January also reiterated guidance that it expected its losses for the full year, before taxes, depreciation and amortization, to fall below $500 million. In a report on Tuesday, Coinbase said the loss amounted to $371 million.

The report failed to impress some analysts. Dan Dolev, managing director of Mizuho Corporation, described the company’s revenue outperformance as being driven by “empty calories” in a note, noting that it came in part from interest income which rose by $80 million quarter-on-quarter.

“This is unlikely to be sustainable and not essential to counterinsurgency, from our point of view,” he wrote. More importantly, he added, fees from retailers continued to fall as establishment sizes became “a bigger piece of the pie.”

He also noted that Ebitda’s improved guidance “doesn’t necessarily mean profitability.” He maintained an underperforming rating and a target of $30 per share, saying, “We remain cautious.”

Coinbase also faces a tougher regulatory climate in the wake of the FTX collapse and signs that the SEC is cracking down on a potentially large and lucrative service: staking.

The SEC earlier this month reached a $30 million settlement with Coinbase competitor Kraken over its staking product, which the SEC said represented an unregistered security. Kraken has agreed to stop offering it in the United States

Coinbase said its staking service, which offers investors a return on tokens in exchange for “staking” them in the blockchain, is fundamentally different.

Write to Joe Light at [email protected] and Jack Denton at [email protected]