Robinhood's crypto trading revenue dips 24% in Q4, along with most everything else

Quick Take

  • Robinhood’s crypto transaction revenue decreased 24% to $39 million compared with the estimate for $51 million.
  • The firm said it wants to buy back most or all of the 55 million shares purchased in May 2022 by Sam Bankman-Fried’s Emergent Fidelity Technologies.
  • Robinhood’s co-founders will cancel nearly $500M of their share-based compensation in an effort to reduce the firm’s operating expenses.

Robinhood saw transaction revenue fall in the fourth quarter from the previous period, including a 24% decline in cryptocurrencies, while a slew of other numbers also took a turn lower. The firm also said it was looking to buy back Sam Bankman-Fried's shares in the company.

Crypto transaction revenue dropped to $39 million in the fourth quarter, missing the $51 million estimate of analysts compiled by FactSet. The company posted a net loss of $166 million, which was wider than the estimate for a $131 million loss.

Robinhood said that it will attempt to buy back most or all of the 55 million shares purchased in May 2022 by Sam Bankman-Fried's Emergent Fidelity Technologies. The agreement is subject to final approval from the firm's Board of Directors, who have tentatively authorized the move.

"Since there is limited precedent for this type of situation, we cannot predict when, or if, the share purchase will take place," the company said in a statement.  "We will provide updates as appropriate." 

Robinhood's co-founders also said they will cancel nearly $500 million of their share-based compensation in an effort to reduce the firm's operating expenses. Shares whipsawed in after hours trading, jumping as much as 7% before giving back gains.

Users Decline

The platform's monthly active users dropped 800,000 in December to 11.4 million, compared to 12.5 million in the prior month, while net revenue rose 5% to $380 million, versus the estimated $396 million.

The online brokerage platform's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $82 million, compared to the average analysts' estimate of $49 million. 

Overall, Robinhood's transaction revenue was down 11% from the third quarter to $186 million, compared with $208 million in the third quarter. 

Revenue increased this quarter despite falling transaction-based revenue because of a rise in interest-based revenue that totaled $167 million versus the expected $160 million.

Crypto may have dropped from the spotlight for Robinhood, but 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.

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.

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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