Retail app Robinhood (HOOD) reported third-quarter results on Wednesday that showed the company beat sales and earnings estimates thanks to higher interest rates from rising interest rates.
But the platform failed to keep monthly active users at consensus expectations. It lost 1.8 million monthly active users during that period, a 12.8% quarterly decline to 12.2 million, the lowest since it was listed as a public company.
HOOD shares sold more than 33% year-to-date they are up 4% in after-hours trading to $11.75, erasing much of Wednesday’s 4.3% sell-off.
“In the third quarter, we achieved our target of achieving Adjusted EBITDA profitability a quarter ahead of plan,” said Vlad Tenev, CEO and co-founder of Robinhood, in his earnings statement.
Here is a summary of the company’s results:
Revenue: $361 million versus expectations of $357.7 million
net loss: ($175 million) or ($0.20) diluted earnings per share versus expectations of ($0.27) diluted earnings per share
Quarterly Monthly Active Users: 12.2 million versus expectations for 13.74 million
INDIA – 2022/07/17: In this photo illustration a Robinhood logo displayed on an Android mobile phone. (Photo illustration by Avishek Das/SOPA Images/LightRocket via Getty Images)
Options trading netted Robinhood $124 million. Share trading was $31 million, a 7% improvement sequentially. Meanwhile, revenue from cryptocurrency transactions fell 12% to $51 million from $58 million in the second quarter as crypto trading volume fell globally during the quarter.
“We’ve fulfilled customers’ top feature requests, including advanced charts, options in cash accounts, instant withdrawals, and our self-custodial Web3 wallet,” said Tenev. “Over the next week, we’re increasing the return on uninvested cash for Gold members – making it one of the best rates in the industry.”
Over the past year, Robinhood’s transaction revenue has declined from $266 million in the third quarter of 2021 to $202 million in the most recent quarter. Transaction revenue for the quarter was $208 million, below expectations of $211.45 million, according to Bloomberg.
The story goes on
Like many high-growth peers that serve retail investors, the company has made significant spending cuts to reach profitability.
On the same day it released its second-quarter results, the company said it had laid off more than 1,000 employees after closing two offices earlier this year.
The Menlo Park, Calif.-based brokerage firm’s silver lining was net interest income, which rose 73% to $128 million in the third quarter, thanks to rising interest rates.
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David Hollerith is a senior reporter at Yahoo Finance covering cryptocurrencies and stock markets. Follow him on Twitter at @DsHollers
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