Robinhood Reports Declining Revenue, $392 Million Net Loss, Shares Drop

Robinhood (NASDAQ:HOOD), a social investment platform that marries digital assets with traditional securities, has reported Q1 earnings and they are a bit disappointing.

Robinhood said that net revenues decreased to $299 million in comparison with $522 million in the first quarter of 2021, a whopping 43% decline.

The company booked a net loss of $392 million or $0.45 a share. This compares to a net loss of $1.4 billion and a negative EPS of $6.26.

Vlad Tenev, CEO and co-Founder of Robinhood Markets, placed a positive spin on the report:

“This quarter saw our product development engine gain velocity with the rollout of some of our most requested features and capabilities. With the introduction of the Robinhood Cash Card, the release of crypto wallets to all customers, the addition of new coins to our platform, and our agreement to acquire Ziglu Limited, we’ve made huge strides against our roadmap. Looking ahead, we have a suite of new products and services slated for release that we believe will excite and delight our customers.”

Jason Warnick, Chief Financial Officer of Robinhood Markets, explained that they are seeing customers affected by the macroeconomic environment:

“At the same time, we’ve also made progress on our long-term plans and continue to pursue them aggressively.”

Transaction-based revenues declined by 48% to $218 million, compared with $420 million in the first quarter of 2021.

Options decreased 36% to $127 million, compared with $198 million in the first quarter of 2021. Crypto trading dropped by 39% to $54 million, compared to $88 million in the first quarter of 2021. Equities declined as well dropping by 73% to $36 million, compared with $133 million in the first quarter of 2021.

Other data points shared include:

  • Adjusted EBITDA (non-GAAP) was negative $143 million, compared with positive $115 million in the first quarter of 2021.
  • Net Cumulative Funded Accounts increased 27% to 22.8 million as of March 31, 2022, compared with 18.0 million as of March 31, 2021 as we added 7.1 million new funded accounts primarily driven by large customer interest in cryptocurrencies during the second quarter of 2021, and 0.7 million resurrected accounts, partially offset by 3.0 million churned accounts. On a sequential basis, Net Cumulative Funded Accounts increased slightly compared with 22.7 million as of December 31, 2021. Churn continues to improve and as a percentage of Net Cumulative Funded Accounts has reached one of the lowest quarterly rates we have seen in years.
  • Monthly Active Users (MAU) decreased 10% to 15.9 million for March 2022, compared with 17.7 million for March 2021 during which we experienced high trading volumes and account sign-ups as well as high market volatility, particularly in certain sectors. On a sequential basis, MAU decreased 8% compared with 17.3 million for December 2021. The sequential decline was primarily attributable to users with lower balances, who are engaging less in the current market environment.
  • Assets Under Custody (AUC) increased 15% to $93.1 billion as of March 31, 2022, compared with $80.9 billion as of March 31, 2021, as result of the growth in our user base. On a sequential basis, AUC decreased 5% compared with $98.0 billion as of December 31, 2021, primarily due to decreasing asset values in this market environment, partially offset by an increase in net deposits of 30%.
  • Average Revenues Per User (ARPU) decreased 62% to $53, compared with $137 in the first quarter of 2021. On a sequential basis, ARPU decreased 18% compared with $64 in the fourth quarter of 2021. The decreases were primarily related to lower transaction-based revenue driven by the current market environment, which had a negative impact on the number of traders and notional trading volumes in all asset classes.
    Cash and cash equivalents at March 31, 2022, totaled $6.2 billion, compared with $6.3 billion at March 31, 2021.

In after-hours trading shares in Robinhood dropped by about 8%, trolling its 52-week low. Robinhood went public in July 2021 at $38 a share and thus have experienced dramatic value destruction.

Earlier this week, Robinhood announced that it would be cutting employee headcount by about 9%.

The earnings call will take place at 5PM ET today.

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