Robinhood loses $392 million in Q1, crypto revenue halved YoY

abdelaziz Fathi

Commission-free brokerage Robinhood Markets gave weaker-than-expected revenue guidance for the second quarter of 2022 after posting a bigger-than-feared loss for the Q1 as the number of its active users fell.

In the last three months, the disruptive stock-broking app posted a $392 million net loss, or a 45 cent loss per diluted share. Robinhood reported total revenue of $299 million for the fourth quarter, down 43 percent from $522 million a year earlier. The figure was also down from $363 million in the fourth quarter.

Monthly active users fell 10 percent to 15.9 million last quarter from 17.7 million in the three months through March 2021 and 17.3 million in the Q4. The sequential decline was primarily attributed to users with lower balances, who are engaging less in the current market environment.

Transaction-based revenues for the quarter decreased 48 percent to $218 million, compared with $420 million in the first quarter of 2021.

Meanwhile, crypto activity declined from record highs in the prior year, the company said. As a result, Robinhood sees revenue from crypto of no more than $54 million in the Jan-Mar quarter, down from $88 million in the first quarter of 2021. The crypto revenue was, however, slightly better than the $51 million it reported in the Q4, though both metrics were well below a record of $233 million in the second quarter of 2021.

Options and equities revenues were also lower by 36 percent and 73 percent, respectively, coming in at $127 million and $36 million.

The newly public brokerage reported 22.8 million cumulative funded accounts in the first quarter, virtually unchanged from the prior quarter but was up from 18.0 million users the company claimed in the Q1 2021. As a result, assets under custody (AUC) increased 15 percent to $93.1 billion as of March 31, 2022, compared with $80.9 billion a year earlier.

Robinhood makes strides in crypto business

Robinhood’s Average Revenues Per User (or ARPU) declined 62 percent to $53, compared with $137 in the first quarter of 2021. The decreases were primarily related to lower transaction-based revenue driven by the current market environment, which had a negative impact on the number of traders and their turnover.

Commenting on the results, Vlad Tenev, CEO and Co-Founder of Robinhood Markets, said: “This quarter saw our product development engine gain velocity with the rollout of some of our most requested features and capabilities. With the introduction of the Robinhood Cash Card, the release of crypto wallets to all customers, the addition of new coins to our platform, and our agreement to acquire Ziglu Limited, we’ve made huge strides against our roadmap. Looking ahead, we have a suite of new products and services slated for release that we believe will excite and delight our customers.”

At the beginning of April, Robinhood rolled out crypto wallets to the approximately two million customers on its waitlist and just this week completed the full roll-out to all customers. In addition, the app recently added four new coins and the company expects to add additional assets over time.

Crypto customers will also benefit from Robinhood’s planned integration with the Lightning Network, which will power near-instantaneous Bitcoin transfers globally. Eventually, this technology, once fully integrated, is expected to help accelerate Robinhood’s ability to serve Bitcoin remittances on a global scale – at virtually no cost – and will be important for international expansion.

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