Robinhood reveals $565 million in Q2 revenue and $502 million quarterly loss

abdelaziz Fathi

Shares of Robinhood Financial jumped 6.7% to $49.80 on Wednesday after the popular trading app disclosed a slew of financials for the first time ever as a public company.

In its first regulatory filing since the company’s initial public offering, Robinhood revealed a $502 million second-quarter loss, or $2.16 per share. The net loss came despite a massive growth in revenues fueled by frenzied cryptocurrency trading and all-time market highs during the pandemic.

The no-commission platform reported revenue of $565 million in the second quarter, more than 131% above sales or $244 million pulled in the same period last year.

Transaction-based revenues increased to $451 million in the second quarter of 2021, up 141% compared with $187 million in Q2 2020. Out of this figure, cryptocurrencies trading generated $233 million in revenues compared to only $5 million in the second quarter of 2020.

Despite the stunning growth in Q2 revenues, the company warned its investors of a slowdown in trading activity that could hit revenues in the third quarter.

“For the three months ended September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than in the prior quarter,” the company said in the earnings release.

Options revenues also increased nearly 50% to $165 million from $111 million in the second quarter of 2020.

The buzzy online brokerage was also concerned about the less-volatile crypto markets, particularly as the hype around Dogecoin normalizes. The “meme” altcoin gained traction when Elon Musk started tweeting about it and now emerges as the 7th most valuable cryptocurrency.

“If demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected,” Robinhood said in a 10Q released after the bell.

Robinhood reported 21.3 million cumulative funded accounts and active monthly users in the second quarter, up from 18 million users the company claimed in the first quarter.

Equities revenue, however, decreased 26% to $52 million in the April-June quarter, compared with $71 million the year earlier.

All told, Robinhood says its customers hold nearly $102 billion in assets under custody (AUC), up from $80 billion in the first quarter and $33 billion in the second quarter of 2020.

Robinhood, which started its NASDAQ listing earlier this month under the ticker HOOD, had a meme-stock moment last week after news suggested that existing shareholders will sell up to 98 million shares over time. The surprising share sale announcement knocked the stock down by 30%, but it recouped losses after Robinhood clarified that these sales would not start right away.

Robinhood was one of the most anticipated IPOs of the year even as the upstart brokerage firm faces regulatory scrutiny on multiple fronts. Most recently, its billionaire cofounders, Vladimir Tenev and Baiju Bhatt, came under the regulators’ hammer as they are not licensed by the Financial Industry Regulatory Authority (FINRA).

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