Robinhood, the popular trading app, has released its second-quarter results, and it comes with a mix of both positive and negative news. Despite facing a drop in revenue in the second quarter of 2023, the company achieved profitability for the first time since going public.
The quarterly report, which was made public on August 2, revealed that Robinhood’s revenue from cryptocurrency transactions experienced an 18% decline, shrinking to $31 million. The drop in revenue was not limited to cryptocurrencies alone; other transaction-based revenues also faced reductions. Options revenue decreased by 5% to $127 million, while Equities revenue declined by 7% to $25 million. Over the past year, the company’s revenue has witnessed a 4% decrease, falling from $202 million in June of the previous year to $193 million.
In contrast to the decline in revenue, Robinhood managed to record a net income of $25 million for the second quarter, translating to earnings per share (EPS) of $0.03. This is a significant turnaround from the first quarter of the year when the company reported a net loss of $511 million, or EPS of -$0.57. The improved financial performance can be attributed to the company’s efforts in optimizing its total operating expenses, with a midpoint decrease of $45 million.
Robinhood Q2 report
The metric Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), which is often used by analysts and investors to compare the operational performance of companies within the same industry, saw an impressive 31% sequential increase to $151 million. Additionally, the EBITDA margin increased by 5 points to 31%.
Robinhood also experienced growth in its total assets under custody, which rose by 13% to $89 billion during the last quarter. This growth was primarily driven by higher equity valuations and continued net deposits. Notably, the company’s crypto assets under custody also saw an increase, rising from $8,431 million in December 2022 to $11,503 million in June 2023.
CEO and Co-Founder of Robinhood Markets, Vlad Tenev, expressed satisfaction with the company’s second-quarter performance. He stated, “In Q2, we reached a significant milestone by achieving GAAP profitability for the first time as a public company.” GAAP stands for Generally Accepted Accounting Principles, which refers to the standard accounting principles and guidelines used by companies to prepare their financial statements.
One positive aspect in the report was the net deposit figure, which stood at $4.1 billion for the quarter, representing an annualized growth rate of 21% relative to assets under custody in the first quarter of 2023. Looking at the past twelve months, net deposits totaled $16.1 billion, indicating a growth rate of 25% over the year.
