Robinhood’s Revenue Up 10% in Q2, but Active Users Drop by 1M

by Solomon Oladipupo
  • The broker reported its first GAAP profitability during the quarter.
  • Robinhood's shares dropped 6.91% to $11.58 in after-market hours.
robinhood

After generating a massive net loss of $511 million during the first quarter of the year, Robinhood has returned with a net income of $25 million, according to its second-quarter results released today (Wednesday). The American commission-free online trading provider saw its revenue jump 10% to $486 million during the last quarter.

Five Consecutive Quarters of Revenue Growth

In the last quarter, which ended on June 30, the Nasdaq-listed broker’s earnings per share (EPS) rose to $0.03, compared to a negative EPS of $0.57 during the first three months of the year. However, despite recording its fifth consecutive quarter of revenue growth, Robinhood’s monthly active users (MAU) slumped 1 million to 10.8 million.

Conversely, the number of accounts funded with money climbed 70,000 to 23.2 million between April and June 2023. At the end of the first quarter, the number had grown by 120,000 to 23.1 million.

Meanwhile, Robinhood reported growth in its total net revenue for the most recent quarter despite generating lower transaction-based revenue during the period. The revenue was primarily boosted by the brokerage’s 'seasonally higher' earnings from processing proxy votes for companies.

In addition, the revenue Robinhood had generated from the interest earned on its cash and securities during the quarter shot up 13% to $234 million. This was “driven by growth in interest-earning assets, higher short-term interest rates, and increase securities lending activity,” the broker said.

On the contrary, Robinhood’s revenue from transaction-based revenues reduced 7% quarter-over-quarter to $193 million, with the firm’s revenues from options, cryptocurrency and equities trading activities trending downward 5%, 18% and 7% to $127 million, $31 million and $25 million, respectively.

Stock Declines despite First GAAP Profitability

Providing more details, Robinhood noted that it had generated its first GAAP profitability during the second quarter. This refers to total earnings calculated according to the generally accepted accounting principles (GAAP). The firm achieved the record even as its assets under custody ascended 13% QoQ to $89 billion, driven by higher equity valuations and continued net deposits.

“Reaching GAAP profitability is a testament to the work our team has done to transform the business and better position Robinhood to drive shareholder value,” Jason Warnick, Chief Financial Officer of Robinhood Markets, stated in the report. “With five consecutive quarters of revenue and Adjusted EBITDA growth, we’re continuing to drive efficiency across our operations while investing in customer experience.”

However, Google data shows that the price of the brokerage’s stock shrank 3.34% to $12.44 on Wednesday, dropping a further 6.91% in after-market hours.

Robinhood’s Revenue Up 10% in Q2, but Active Users Drop by 1M
Source: Google data

This is despite the fact that analysts believe that the broker’s performance during the last quarter was better off.

“Robinhood's strong Q2 result is another indicator that the financial services company may be starting to come out of the woods,” Jesse Cohen, a Senior Analyst at Investing.com, told Finance Magnates. “While shares of the online broker fell in post-market trading, I think a lot has to do with the negative sentiment in the market resulting from the historic US debt downgrade.”

Cohen added: “All in all, this is a solid report, but investors appear to be stepping back due to broader market conditions."

IG's share buyback; new features on Fortex; read today's news nuggets.

After generating a massive net loss of $511 million during the first quarter of the year, Robinhood has returned with a net income of $25 million, according to its second-quarter results released today (Wednesday). The American commission-free online trading provider saw its revenue jump 10% to $486 million during the last quarter.

Five Consecutive Quarters of Revenue Growth

In the last quarter, which ended on June 30, the Nasdaq-listed broker’s earnings per share (EPS) rose to $0.03, compared to a negative EPS of $0.57 during the first three months of the year. However, despite recording its fifth consecutive quarter of revenue growth, Robinhood’s monthly active users (MAU) slumped 1 million to 10.8 million.

Conversely, the number of accounts funded with money climbed 70,000 to 23.2 million between April and June 2023. At the end of the first quarter, the number had grown by 120,000 to 23.1 million.

Meanwhile, Robinhood reported growth in its total net revenue for the most recent quarter despite generating lower transaction-based revenue during the period. The revenue was primarily boosted by the brokerage’s 'seasonally higher' earnings from processing proxy votes for companies.

In addition, the revenue Robinhood had generated from the interest earned on its cash and securities during the quarter shot up 13% to $234 million. This was “driven by growth in interest-earning assets, higher short-term interest rates, and increase securities lending activity,” the broker said.

On the contrary, Robinhood’s revenue from transaction-based revenues reduced 7% quarter-over-quarter to $193 million, with the firm’s revenues from options, cryptocurrency and equities trading activities trending downward 5%, 18% and 7% to $127 million, $31 million and $25 million, respectively.

Stock Declines despite First GAAP Profitability

Providing more details, Robinhood noted that it had generated its first GAAP profitability during the second quarter. This refers to total earnings calculated according to the generally accepted accounting principles (GAAP). The firm achieved the record even as its assets under custody ascended 13% QoQ to $89 billion, driven by higher equity valuations and continued net deposits.

“Reaching GAAP profitability is a testament to the work our team has done to transform the business and better position Robinhood to drive shareholder value,” Jason Warnick, Chief Financial Officer of Robinhood Markets, stated in the report. “With five consecutive quarters of revenue and Adjusted EBITDA growth, we’re continuing to drive efficiency across our operations while investing in customer experience.”

However, Google data shows that the price of the brokerage’s stock shrank 3.34% to $12.44 on Wednesday, dropping a further 6.91% in after-market hours.

Robinhood’s Revenue Up 10% in Q2, but Active Users Drop by 1M
Source: Google data

This is despite the fact that analysts believe that the broker’s performance during the last quarter was better off.

“Robinhood's strong Q2 result is another indicator that the financial services company may be starting to come out of the woods,” Jesse Cohen, a Senior Analyst at Investing.com, told Finance Magnates. “While shares of the online broker fell in post-market trading, I think a lot has to do with the negative sentiment in the market resulting from the historic US debt downgrade.”

Cohen added: “All in all, this is a solid report, but investors appear to be stepping back due to broader market conditions."

IG's share buyback; new features on Fortex; 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
  • 33 Followers

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