Robinhood Reports Loss of $175m in Q3 2022, Crypto Revenue Declines

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Robinhood, a major US commission-free stock trading and investing app, reported a net loss of $175 million during the third quarter of 2022. Although the company's transaction-based revenues increased slightly, the cryptocurrency sector generated a substantial decrease.

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According to the popular no-fee trading app's quarterly report, total net revenues stood at $361 million, which is an increase of 14% compared to the previous quarter. Robinhood rose its transaction-based revenues within equities and options asset classes, while cryptocurrencies lost 12% to $51 million.

Overall, Robinhood reported a net loss of $175 million ($0.20 per share). While this value is certainly not optimistic, it is a significant improvement over the previous quarter when the company showed a net loss of $295 million ($0.34 per share).

“In the third quarter, we achieved our goal of reaching adjusted EBITDA profitability, a quarter earlier than planned. We delivered on top feature requests for customers including advanced charts, options in cash accounts, instant withdrawals and our self-custody, web3 wallet. In the next week, we are raising the yield on uninvested cash for Gold members – making it one of the best rates in the industry,” Vlad Tenev, the CEO and Co-Founder of Robinhood Markets, said.

Volatile Market Cuts Robinhood User Base and Staff

In August 2022, Robinhood announced that it was cutting its workforce by almost 25% due to the continued decline in its user base. Earlier in the year, the company slashed 9% of its staff due to the same issues.

According to the newest release, a volatile market environment, risk aversion and long-term declines are the main reason for the continued slump in monthly active users (MAU). In the third quarter, the Robinhood user base contracted to 12.1 million from 14 million reported in the second quarter. MAUs last peaked back in Q2 2021, when they stood at 21.3 million.

Adding to the current problems with the cryptocurrency division, the New York State Department of Financial Services (NYDFS) has imposed a $30 million penalty for consumer protection, cybersecurity and anti-money laundering violations.