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Robinhood, the popular cryptocurrency and stock trading app, released its first-quarter earnings for 2023, revealing a 30% year-on-year drop in revenue for its crypto trading business. The company reported $38 million in crypto trading revenues for Q1 2023, down from $54 million in the same period of the previous year.
Despite the decline in crypto trading revenue, Robinhood’s total revenue showed a year-on-year increase. In Q1 2023, the company generated $441 million in net revenue, compared to $299 million in the first quarter of 2022, marking a growth of approximately 47.5%. Moreover, the Q1 2023 revenue increased by 16% compared to the previous quarter.
The primary source of revenue for Robinhood during this period was interest, thanks to the recent rate hikes implemented by the United States Federal Reserve. However, the company experienced a net loss of $511 million, largely influenced by a one-time $485 million share-based compensation expense. This was attributed to the cancellation of the co-founders’ 2021 market-based restricted stock unit awards in February 2023, as explained in the accompanying press release. This loss represents the largest since Q3 2021 and signifies a 30% increase in losses year-on-year.
In terms of cryptocurrency custody, Robinhood currently holds approximately $12 billion worth of crypto assets, indicating a 50% increase over the quarter. However, this figure reflects a decline of 40% compared to the same period last year. The decrease in crypto revenue aligns with the 40% fall in market capitalization of digital assets during the same timeframe. CoinMarketCap data shows that the global market cap for crypto decreased from $2.1 trillion on March 31, 2022, to $1.2 trillion on the same date this year.
Monthly active users on Robinhood also experienced a year-on-year decline, dropping from nearly 16 million in Q1 2022 to just under 12 million in the most recent report. However, there was still an increase of 400,000 users compared to the previous quarter.
Furthermore, Robinhood announced its plan to roll out 24-hour trading for 43 of its most popular exchange-traded funds (ETFs) and stocks, including Apple, Tesla, and Amazon. The rollout will begin on May 16, with availability for all users expected in June.
While Robinhood shares closed slightly down on the day of the announcement, they saw a 3% increase in after-hours trading, according to Google Finance.
In addition to the financial results, Robinhood stated that it is in discussions to potentially purchase a majority or all of the 55 million shares from Emergent Fidelity Technologies, the offshore investment vehicle used by FTX founder Sam Bankman-Fried to acquire nearly 8% of Robinhood. The company mentioned that the share purchase is still uncertain, and the timing and likelihood of the transaction remain unknown.