Robinhood’s Q1 Loss Plunges over 200% despite Growth in Revenue

Wednesday, 10/05/2023 | 22:28 GMT by Solomon Oladipupo
  • Net loss came in at $511M, beating $441M quarterly revenue.
  • Robinhood eyes UK launch, to float 24-hour market next week.
robinhood

Robinhood released data from its first quarter 2023 financial performance on Wednesday, reporting a decrease of 208% in net loss, swallowing the 16% increase in total net revenue. The loss reached $511 million during the period, beating the $441 million quarterly revenue.

During the last quarter of 2022, Robinhood’s total net revenue stood at $380 million with a net loss of $166 million. Compared to Q1 2022, the revenue surged 47% from $299 million. On the contrary, the net loss plunged 30% from $392 million in the prior period.

In the latest report, Robinhood said its earnings per share declined $345 million or $0.38 per share, compared to the last quarter of 2022. The online brokerage attributed the loss to a one-time share-based compensation (SBC) expense of $485 million related to its Co-Founders’ cancellation of their 2021 market-based restricted stock unit awards in February.

“Operating expenses increased by $416 million sequentially to $950 million, primarily due to the 2021 Founders Award Cancellation,” Robinhood explained. “Operating expenses prior to SBC decreased 6% sequentially to $352 million.”

Revenue Beats Expectation despite Huge Loss

However, despite the huge net loss on its record, Robinhood’s $441 million quarterly revenue beats market expectations as analysts projected $424.53 million, according to Refinitiv IBES data. In addition, the California-based firm, which provides platforms for commission-free trading of stocks, exchange-traded funds and cryptocurrencies , reported an increase of 11% quarter-over-quarter (QoQ) in its transaction-based revenues.

The revenues reached $207 million during the first quarter, pushed by an increase of 7% in options trading and 29% in equities . Both asset classes generated $133 million and $27 million in transactions-based revenues, respectively. On the contrary, revenues from cryptocurrencies shrank 1% to $38 million.

Furthermore, Robinhood reported an increase of 25% QoQ in its net interest revenue as the American financial services company’s return from its borrowings to customers, such as for securities purchase, reached $208 million. The revenue beats $167 million from the prior quarter and $55 million a year earlier, propped by the US Federal Reserve's rapid rate hikes.

Robinhood Eyes UK Launch, to Open 24-Hour Market

Meanwhile, Robinhood in the report noted that it will launch a 24-hour market next week to enable its customers to trade individual stocks all-day-long for five days a week.

“We had a great start to the year in Q1, which is a testament to our relentless pursuit of innovation – and the launch of 24-Hour Market next week shows we're not slowing down," said Vlad Tenev, the CEO and Co-Founder of Robinhood Markets.

In another development, Robinhood in February shelved its planned acquisition of Ziglu, a cryptocurrency portfolio investment platform, after first announcing the plan in April last year in its bid to re-enter the UK. Giving an update on this in the latest financial report, the firm said it is about to set sail for the UK.

“With an experienced team leading and an existing license in place, we believe we’re on track for our ambitious goal of launching brokerage services in the UK by the end of the year,” Robinhood explained.

News Nuggets Special: highlights from FMAS 23; read today's news nuggets.

Robinhood released data from its first quarter 2023 financial performance on Wednesday, reporting a decrease of 208% in net loss, swallowing the 16% increase in total net revenue. The loss reached $511 million during the period, beating the $441 million quarterly revenue.

During the last quarter of 2022, Robinhood’s total net revenue stood at $380 million with a net loss of $166 million. Compared to Q1 2022, the revenue surged 47% from $299 million. On the contrary, the net loss plunged 30% from $392 million in the prior period.

In the latest report, Robinhood said its earnings per share declined $345 million or $0.38 per share, compared to the last quarter of 2022. The online brokerage attributed the loss to a one-time share-based compensation (SBC) expense of $485 million related to its Co-Founders’ cancellation of their 2021 market-based restricted stock unit awards in February.

“Operating expenses increased by $416 million sequentially to $950 million, primarily due to the 2021 Founders Award Cancellation,” Robinhood explained. “Operating expenses prior to SBC decreased 6% sequentially to $352 million.”

Revenue Beats Expectation despite Huge Loss

However, despite the huge net loss on its record, Robinhood’s $441 million quarterly revenue beats market expectations as analysts projected $424.53 million, according to Refinitiv IBES data. In addition, the California-based firm, which provides platforms for commission-free trading of stocks, exchange-traded funds and cryptocurrencies , reported an increase of 11% quarter-over-quarter (QoQ) in its transaction-based revenues.

The revenues reached $207 million during the first quarter, pushed by an increase of 7% in options trading and 29% in equities . Both asset classes generated $133 million and $27 million in transactions-based revenues, respectively. On the contrary, revenues from cryptocurrencies shrank 1% to $38 million.

Furthermore, Robinhood reported an increase of 25% QoQ in its net interest revenue as the American financial services company’s return from its borrowings to customers, such as for securities purchase, reached $208 million. The revenue beats $167 million from the prior quarter and $55 million a year earlier, propped by the US Federal Reserve's rapid rate hikes.

Robinhood Eyes UK Launch, to Open 24-Hour Market

Meanwhile, Robinhood in the report noted that it will launch a 24-hour market next week to enable its customers to trade individual stocks all-day-long for five days a week.

“We had a great start to the year in Q1, which is a testament to our relentless pursuit of innovation – and the launch of 24-Hour Market next week shows we're not slowing down," said Vlad Tenev, the CEO and Co-Founder of Robinhood Markets.

In another development, Robinhood in February shelved its planned acquisition of Ziglu, a cryptocurrency portfolio investment platform, after first announcing the plan in April last year in its bid to re-enter the UK. Giving an update on this in the latest financial report, the firm said it is about to set sail for the UK.

“With an experienced team leading and an existing license in place, we believe we’re on track for our ambitious goal of launching brokerage services in the UK by the end of the year,” Robinhood explained.

News Nuggets Special: highlights from FMAS 23; read today's news nuggets.

About the Author: Solomon Oladipupo
Solomon Oladipupo
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About the Author: Solomon Oladipupo
Solomon Oladipupo is a journalist and editor from Nigeria that covers the tech, FX, fintech and cryptocurrency industries. He is a former assistant editor at AgroNigeria Magazine where he covered the agribusiness industry. Solomon holds a first-class degree in Journalism & Mass Communication from the University of Lagos where he graduated top of his class.
  • 1050 Articles
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