Robinhood Markets, the online brokerage firm, surprised investors in the second quarter by reporting a profit of $25 million, or 3 cents a share. This marks a significant turnaround from a loss of $295 million, or 34 cents a share, in the same quarter last year. Analysts had anticipated a loss of $19 million, or one cent a share, according to FactSet.
Increase in Revenue
The company's revenue also experienced a significant boost, reaching $486 million compared to $318 million in the previous year. This surpassed analyst forecasts of $473 million.
Key Observations
Decline in Active Users
While Robinhood's sales increased, there was a more substantial decline in their active user count than expected. The company's monthly active user count dropped by 1 million from the previous quarter, resulting in a total of 10.8 million users. Analysts had projected a smaller decline to 11.3 million users.
Growth in Interest Revenue
Despite the decline in active users, Robinhood witnessed a 13% rise in net interest revenue, totaling $234 million. This increase was driven by growth in interest-earning assets, higher securities lending activity, and increased short-term interest rates.
Decrease in Crypto Revenue
One area of concern for Robinhood was the decline in cryptocurrency revenue, which fell by 18% to $31 million. This drop contributed to decreases in three areas of transaction-based revenue during the quarter.
Market Reaction
Following the earnings announcement, Robinhood's shares saw a decline of 5.2%, reaching $11.75 during after-hours trading.
