Retail brokerage agency Robinhood reported a wider-than-expected loss and shrinking income for the primary quarter, displaying indicators that the small-dollar buying and selling growth that captivated Wall Avenue a 12 months in the past could have run out of steam.
Robinhood emerged as one of many key gamers in final 12 months’s meme inventory saga, with retail merchants signing up for accounts and serving to drive speedy strikes in shares like GameStop. That made for robust comparisons within the first quarter, however the slowdown in buying and selling exercise was much more dramatic than anticipated.
“Our bigger prospects are nonetheless remaining energetic, however we’re seeing extra pronounced declines from people who have decrease balances,” CEO Vlad Tenev mentioned on a convention name with buyers and analysts. “With the uncertainty out there, our prospects grew to become extra cautious with their portfolios.”
Right here’s what the corporate reported in contrast with what Wall Avenue was anticipating, based mostly on a survey of analysts by Refinitiv:
- Losses per share: 45 cents vs. 36 cents anticipated
- Income: $299 million vs. $355.Eight million anticipated
For the three months ended March 31, Robinhood mentioned its loss narrowed to $392 million, or 45 cents per share, from a lack of $1.four billion, or $6.26 per share, a 12 months in the past. Income fell 43% from a 12 months in the past to $299 million.
Robinhood mentioned its month-to-month energetic customers declined to 15.9 million, down from 17.7 million within the 12 months in the past interval and 17.three million within the earlier quarter. The corporate’s common income per person got here in at $53, down from $137 a 12 months prior and $64 within the earlier quarter.
The brokerage’s fundamental income is a observe often called cost for order circulation. Although buying and selling is free from the client’s perspective, Robinhood earns a variety on the trades that it sends to giant buying and selling homes.
In an effort to jumpstart income and person progress, Robinhood has been introducing new merchandise and options. The corporate introduced in late March that it had expanded extended trading hours.
Robinhood additionally rolled out crypto wallets to prospects earlier in April. Within the first quarter, income from crypto buying and selling declined to $54 million, however that surpassed the $36 million from equities buying and selling. These numbers had been $88 million and $133 million, respectively, a 12 months in the past.
Choices buying and selling was the largest space of income at $127 million, down from $198 million a 12 months in the past.
“This story was the story of two competing forces — our accelerating product improvement juxtaposed in opposition to a tough macroeconomic local weather,” Tenev mentioned.
Robinhood can be watching its prices. On Tuesday, Robinhood said it will cut its full-time workforce by about 9%, citing “duplicate roles and job features” for the layoffs.
The corporate mentioned Thursday it now expects working bills to extend between 2% and 5% in 2022, excluding share-based compensation. Earlier steerage referred to as for a rise of 15% to 20%.
Tenev mentioned the corporate aimed to have optimistic adjusted EBITDA — or earnings earlier than curiosity, taxes, depreciation and amortization — by the top of the 12 months. That metric confirmed a lack of $143 million within the first quarter.
Robinhood went public in July 2021 at $38 per share, however the inventory has struggled to search out traction. It closed at $10.09 per share on Thursday earlier than falling after outcomes had been launched. Shares of the corporate closed down 2.8% on Friday.