Robinhood's third-quarter earnings beat estimates, shares rise after hours

Robinhood’s third-quarter earnings beat estimates, shares rise after hours

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Retail app Robinhood (HOOD) released its third-quarter results on Wednesday, showing the company beat its revenue and profit estimates on the back of higher interest generated by rising rates.

But the platform failed to keep monthly active users up to consensus expectations. It lost 1.8 million monthly active users for the period, a quarterly decline of 12.8% to 12.2 million, the lowest level since listing as a publicly traded company.

Shares of HOOD, which sold over 33% year-to-date, rose 4% in after-hours trading to $11.75, erasing much of Wednesday’s 4.3% selloff.

“In the third quarter, we achieved our goal of achieving Adjusted EBITDA profitability, a quarter ahead of schedule,” Robinhood CEO and co-founder Vlad Tenev said in its income statement.

Here is a summary of the company’s results:

  • Revenue: $361 million against expectations of $357.7 million

  • Net loss: ($175 million) Where (Diluted earnings per share of $0.20 versus diluted earnings per share expectations of ($0.27)

  • Monthly active users for the quarter: 12.2 million against 13.74 million expected

INDIA – 2022/07/17: In this photo illustration a Robinhood logo seen displayed on an Android mobile phone. (Photo Illustration by Avishek Das/SOPA Images/LightRocket via Getty Images)

Options trading contributed $124 million to Robinhood’s revenue. Equity trading was $31 million, a 7% improvement over the prior quarter. Meanwhile, cryptocurrency trading revenue fell 12% to $51 million from $58 million in the second quarter as crypto trading volumes fell globally in the quarter. .

“We’ve responded to top customer feature requests including advanced charting, cash account options, instant withdrawals and our self-custodial Web3 wallet,” Tenev said. “Over the next week, we will be increasing the yield on uninvested cash for Gold members, making it one of the best rates in the industry.”

Over the past year, Robinhood’s transaction revenue has grown from $266 million in the third quarter of 2021 to $202 million in the last quarter. This quarter, transaction revenue was $208 million, below expectations of $211.45 million, according to Bloomberg.

Like many high-growth peers that serve retail investors, the company has made steep spending cuts to achieve profitability.

The same day it released its second quarter results, the company announced that it had laid off more than 1,000 employees after closing two offices earlier this year.

The silver lining for the Menlo Park, Calif.-based brokerage firm was net interest income, which rose 73% to $128 million, helped by higher interest rates in the third quarter. .

David Hollerith is a senior reporter at Yahoo Finance covering cryptocurrency and stock markets. Follow him on Twitter at @DsHollers

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