Robinhood Markets Inc. Earnings Report (Q3 2021)

Robinhood’s earnings report miss the mark as revenue figures are lower than expected.
2 min read

Robinhood Markets Inc. report a weak set of earnings on Tuesday which miss expectations due to declined crypto trading activity.

Total net revenue for the company came in at $365 million (an increase of 35% year on year), however, analysts were expecting a figure of around $431.5 million. Also, this is still vastly lower than the revenue figure of $565 million in Q2 2021, due to a spike in trading cryptocurrencies. Transaction-based revenue was 32% higher than last quarter, rising to $267 million, but a mere $51 million of that figure was attributed to trading cryptocurrencies.

Losses before income tax increased significantly to $1.37 billion, with $1.01 billion attributed to share-based compensation expenses upon Robinhood’s IPO.

Net loss skyrocketed to $1.32 billion, compared to $11 million in Q3 2020. Earnings per share (EPS, diluted) came in at -$2.06 (vs -$1.37 EPS expected by analysts), compared to -$0.05 in Q3 2020.

Monthly active users increased 76% to 18.9 million, compared to 10.7 million in Q3 2020. However, the average revenue per user decreased 36% to $65, compared to $102 in Q3 2020.

The company said that declined cryptocurrency trading activity led to fewer accounts being funded and hence a significant drop in revenue generation for this quarter.

“This quarter was about developing more products and services for our customers, including crypto wallets,” said Vlad Tenev, CEO and Co-Founder of Robinhood Markets. “More than one million people have joined our crypto wallets waitlist to date. With 24/7 live phone support, we believe that Robinhood is becoming the most trusted and intuitive platform for retail and crypto investors. And looking ahead, we’re committed to delivering tax-advantaged retirement accounts to help everyone invest for the long term.”

Robinhood has its IPO at $38 per share in July. At the time of writing before the market open on Wednesday, shares tanked $3.82 (9.65%) and currently trade at $35.77.

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