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 Road 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 fast strikes in shares like GameStop. That made for powerful comparisons within the first quarter, however the slowdown in buying and selling exercise was much more dramatic than anticipated.
“Our bigger clients are nonetheless remaining energetic, however we’re seeing extra pronounced declines from those who have decrease balances,” CEO Vlad Tenev stated on a convention name with buyers and analysts. “With the uncertainty out there, our clients grew to become extra cautious with their portfolios.”
Right here’s what the corporate reported in contrast with what Wall Road was anticipating, primarily based on a survey of analysts by Refinitiv:
- Losses per share: 45 cents vs. 36 cents anticipated
- Income: $299 million vs. $355.8 million anticipated
For the three months ended March 31, Robinhood stated its loss narrowed to $392 million, or 45 cents per share, from a lack of $1.4 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 stated its month-to-month energetic customers declined to fifteen.9 million, down from 17.7 million within the 12 months in the past interval and 17.3 million within the earlier quarter. The corporate’s common income per consumer got here in at $53, down from $137 a 12 months prior and $64 within the earlier quarter.
The brokerage’s essential income is a observe generally known as fee for order stream. Although buying and selling is free from the client’s perspective, Robinhood earns a ramification on the trades that it sends to massive buying and selling homes.
In an effort to jumpstart income and consumer progress, Robinhood has been introducing new merchandise and options. The corporate introduced in late March that it had expanded prolonged buying and selling hours.
Robinhood additionally rolled out crypto wallets to clients 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 most important 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 growth juxtaposed in opposition to a tough macroeconomic local weather,” Tenev stated.
Robinhood can be watching its prices. On Tuesday, Robinhood stated it would reduce its full-time workforce by about 9%, citing “duplicate roles and job features” for the layoffs.
The corporate stated 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 twenty%.
Tenev stated the corporate aimed to have optimistic adjusted EBITDA — or earnings earlier than curiosity, taxes, depreciation and amortization — by the tip 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.
Learn the total press launch right here.