Robinhood’s Q2 revenue doubles on crypto trading boom; warns of headwind in Q3

Highlights

  • Online trading app Robinhood reported 131% year-on-year rise in revenue to US$565 million in Q2 FY21.
  • Revenue from crypto trading spiked to US$233 million, from US$5 million in Q2 FY20.
  • The transactional revenue from equities dropped 26% year-on-year to US$52 million.
  • The company reported a net loss of US$502 million, or US$2.16 per diluted share, during the June quarter of 2021.
  • Average revenues per user dropped to US$112, as against US$115 in the June quarter of 2020.

Online crypto trading platform Robinhood (NASDAQ: HOOD) saw its revenue more than doubling in the second quarter ended June 30, 2021, driven by surge in crypto trading, especially dogecoin. The company generated 62% of crypto revenue from meme-inspired digital coin dogecoin, which originally started as a joke.

In its first earnings report since its initial public offering (IPO) last month, the millennial-favoured trading app, which claims to have 22.5 million users, reported 131% growth in total revenue to US$565 million in Q2 FY21, compared to US$244 million in the same period last year.

During the quarter under review, the transaction-based revenues jumped 141% to US$451 million as against US$187 million in the second quarter of 2020. The revenue from cryptocurrency trading zoomed to US$233 million, from US$5 million in Q2 FY20, contributing more than 50% of the transactional revenue.

It was interesting to note that the transactional revenue from equities dropped 26% to US$52 million, compared with US$71 million in the June quarter of 2020. While transaction-based revenue from options, a trading of contract that allows buyers to buy or sell a specific security on a specific date at a specific price, rose 48% year-on-year to US$165 million.

Commenting on Q2 earnings, CEO and Co-Founder, Vlad Tenev said, “We’re encouraged by the number of people who are accessing the financial system for the first time through Robinhood.”

“We’re happy to expand access through products like commission-free crypto trading, which saw strong growth this quarter among women investors in particular, and IPO Access, which gives customers an opportunity to invest in companies at their IPO price,” Tenev added.

Here are key takeaways from Robinhood’s Q2 earnings:

For April-June period of 2021, Robinhood reported net loss of US$502 million, or US$2.16 per diluted share. The company had posted net income of US$58 million, or US$0.09 per diluted share in the corresponding period last fiscal.

Loss before tax stood at US$464 million in Q2 FY21, compared with income before taxes of US$58 million in Q2 FY20. Costs associated with the change in fair value of convertible notes and warrant liability stood at US$528 million during the current quarter.

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) increased to US$90 million, from US$63 million in the second quarter of 2020.

Average revenues per user (ARPU), a measure of revenue from active users divided by the total number of customers, dropped to US$112, as against US$115 in the June quarter of 2020. However, monthly active users (MAU) surged 109% to 21.3 million in Q2 FY21, compared with 10.2 million in the same period a year ago.

 Assets under custody (AUC) soared 205% to US$102 billion in the second quarter of 2021, compared with US$33 billion in the year ago period.

Outlook for Q3 FY21

Going forward, Robinhood expects its revenue to drop in the September quarter of 2021, while it sees “considerably fewer new funded accounts due to seasonal headwinds and lower trading activity”.

Robinhood Markets Inc, the owner of the trading app, said that the company will continue to invest in key areas to boost its platform capabilities, drive product innovation and improve customer support, as well as build upon its regulatory and compliance functions.

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