Robinhood expected to report record revenue despite sour markets: Preview

Quick Take

  • Robinhood is slated to deliver its fourth-quarter earnings report after the close on Feb. 8. 
  • Revenue is expected to come in above $396 million, its highest quarterly figure to date, up from $363 million a year earlier. 

Robinhood will report its fourth quarter results on Wednesday, with the company expected to hit its highest quarterly revenue figure to date.  

The online brokerage, which gained popularity during the meme-stock era as a leading venue for buying and selling crypto, is expected to report revenue of $396 million for the fourth quarter, according to the average estimate compiled by FactSet. That compares to $363 million recorded a year earlier. 

Although the firm’s monthly active users (MAU) are expected to have declined with transaction-based revenue remaining flat, overall revenue is expected to have increased due to a significant rise in interest-based revenue that should come in at $160 million, down from $128 million in the previous quarter. Most of that revenue comes from interest that Robinhood charges its customers for securities lending and margin accounts.  

The company is expected to report a net loss of $131 million for the quarter, compared to a loss of $175 million in the previous one. The lower figure is mostly anticipated because of cost-cutting measures taken by the firm, which shaved its headcount by approximately 23% over the summer, and 9% in the spring. 

Crypto-based transaction revenue is expected to have fallen to $50 million, down slightly from $51 million in the previous quarter.

"Crypto is becoming less important"

While crypto became critical for Robinhood's growth during the peak of the meme-stock era, . Dan Dolev, senior analyst at Mizuho Securities, thinks that it's "kind of over now."

Robinhood, he said, is "much less volatile or susceptible to crypto movements than it was twelve months ago." 

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Other products that are exciting include its retirement account, its equities and options trading platform, and its brokerage cash sweep program, Dolev said, nothing that it's "becoming a bank, basically."

Still, customers continue to flock to the firm's crypto-based products. In September, for example, Robinhood launched its crypto wallet to a waitlist of 10,000 users.

And in December, CEO Vlad Tenev said that his firm had gained from the collapse of crypto exchange FTX. “These events weed out the weaker companies that have invested less in risk management and compliance,” he said at the time, adding that the firm had “no direct exposure.” 

Robinhood has a buy recommendation from Dolev, who said that in his eyes crypto products are a "necessary evil."

"There'll be ups and downs," Dolev said, "but I think overall their trajectory is very good."

 


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