Robinhood: Monthly active users decline for 6th-straight quarter

Online trading platform Robinhood (HOOD) reported a decline in monthly active users for the sixth-straight quarter on Wednesday as the retail investment boom fade continues to weigh on the company.

Robinhood also reported revenues that missed expectations as net income fell more than forecast. The company's adjusted loss per share, however, came in in-line with expectations. Robinhood shares were up as much as 2.5% in after hours trade on Wednesday.

Here are the key figures from the company's fourth quarter earnings, compared to estimates compiled by Bloomberg:

  • Revenue: $380 million vs. $389.7 million

  • Net income: ($166 million) vs. ($138 million)

  • Adjusted EPS: ($0.11) vs. ($0.11)

  • Monthly Active Users: 11.4 million vs. 12.2 million

“Looking back over the past year, I’m incredibly proud of the tremendous execution of our team on our 2022 product roadmap. We’re now starting to see meaningful traction on a number of the products we launched, which gives us confidence they can grow into significant business lines over time,” said Vlad Tenev, Robinhood co-founder and CEO.

During the pandemic, Robinhood rode the retail trading boom as a younger class of investors flocked to the stock and crypto bull markets with monthly active users growing to north of 21 million at the company's peak in early 2021.

In the fourth quarter, Robinhood's revenue increased 5% while transaction revenues for options trading were unchanged. Revenues tied to equities and cryptocurrencies decreased by 32% and 24%, respectively.

Total assets under custody decreased 4% to $62 billion.

With retail investor activity muted, interest revenue continued to act as Robinhood’s essential financial buffer, up 30% from last quarter to $167 million.

The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company's IPO in New York City, U.S., July 29, 2021.  REUTERS/Andrew Kelly
The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company's IPO in New York City, U.S., July 29, 2021. REUTERS/Andrew Kelly

As the Federal Reserve raised interest rates last year, Robinhood's growth went south with the market. The company has since laid off an estimated 1,000 workers, including 9% last April and another 23% in August.

In early December, Robinhood released an IRA account program that matches up to 1%. Last week, it also bumped its Gold customer cash accounts yields to 4.15%, 18 times the national average interest rate on savings accounts.

“We stayed focused in the fourth quarter on serving customers, growing our business, and driving long-term shareholder value," said Robinhood’s CFO Jason Warnick.

"On the capital management front, our Board authorized us to pursue purchasing most or all of our shares that Emergent Fidelity Technologies bought in May 2022. The proposed share purchase underscores the confidence the Board of Directors and management team have in our business.”

Emergent Fidelity Technologies is the shell corporation spun up by FTX’s former CEO Sam Bankman-Fried, which was used to purchase 55 million shares of HOOD. The business filed for bankruptcy over the weekend and its stash of HOOD shares is being fought over by various parties including FTX and crypto lender BlockFi.

In its release, the company added: "Since there is limited precedent for this type of situation, we cannot predict when, or if, the share purchase will take place. We will provide updates as appropriate."

Tenev also said that he and co-founder Baiju Bhatt have "cancelled nearly $500 million of our share-based compensation to ensure the company has as many resources as possible to deliver value to customers and shareholders.”

The decision lowers Robinhood's operating costs by up to $50 million per quarter starting in Q2, the company said. Share based compensation for the full year of 2022 accounted for 27% of company's total $2.37 billion in operating costs.

Robinhood shares have gained about 28% so far this year; still, the stock is off about 25% from a year ago.

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