Robinhood Reports a Profit, But Shares Sink

Robinhood (NASDAQ:HOOD) posted Q2 2023 earnings yesterday reporting its first quarterly profit. Yet, shares declined on the news as investors wondered about other metrics, including a decline in users.

Robinhood said that total net revenues increased 10% sequentially during the quarter to $486 million, primarily due to s”easonally higher proxy revenue and higher net interest revenues.”

Net income was $25 million or an earnings per share of $0.03. This compares favorably to Q1 2023 when Robinhood booked a $511 million loss or an EPS of ($0.57).

Founder and CEO Vlad Tenev said they had reached an important milestone of GAAP profitability – a company first.

“Guided by our bold product roadmap we’re continuing to innovate for our customers, grow assets, gain market share, and change the industry for the better.”

Jason Warnick, Chief Financial Officer of Robinhood Markets, said they are now better positioned to drive shareholder value.

“With five consecutive quarters of revenue and Adjusted EBITDA growth, we’re continuing to drive efficiency across our operations while investing in customer experience. Looking ahead, we remain focused on delivering for customers and growing our business.”

Several metrics declined during the quarter including crypto revenue down 18% or $31 million and equities down 7% or $25 million.

While net funded accounts increased by 70,000 to 23.2 million, monthly active users dipped by one million or to 10.8 million. In Q2 of 2021, monthly active users stood at 21.3 million so the trend has been in the wrong direction.

Average revenue per user increased to $84 from $77 in Q1.

Robinhood said its Retirement product neared $1 billion in assets.

Robinhood expects to launch in the UK in the coming months.

Robinhood did not receive any market love following the profit and contineus to trade lower today during a down market. In the past year, Robinhood has traded in a range from $7.50 to $13.20 – far below its all time high of over $44/share. Several analysts held steady following the earnings report with a neutral or underweight rate.

The earnings presentation is availble here.



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