Robinhood’s Q1 Crypto Revenue Drops 30% From the Previous Year

The first quarter earnings for cryptocurrency and stock trading app Robinhood are in, and the company reports a 30% year-on-year reduction in revenue for its crypto trading division.

Robinhood’s Q1 2023 earnings, released on May 10, reported $38 million in crypto trading sales, down from $54 million in Q1 2022.

Robinhood’s total revenue, on the other hand, climbed year on year, with Q1 2023 bringing in $441 million, compared to $299 million in the first quarter of 2022 – a 47.5% rise.

Its sales in the first quarter of 2023 increased by 16% over the previous quarter. Because of the recent and quick rate hikes by the United States Federal Reserve, interest was the company’s largest earner.

The trading platform presently has over $12 billion in cryptocurrency, a 50% rise over the previous quarter but a 40% decrease compared to the same time last year.

The trading app’s decline in crypto revenue corresponds to a 40% drop in digital asset market capitalization during the same time period. According to CoinGecko data, the worldwide market cap for cryptocurrency was $2.1 trillion on March 31, 2022, up from $1.2 trillion on the same date this year.

Monthly active users on Robinhood have also decreased year on year, falling from almost 16 million in the first quarter of 2022 to just under 12 million in the most recent earnings report. However, this is a 400,000 increase over the prior quarter. Overall, Robinhood lost $511 million, which was influenced by “a one-time $485 million share-based compensation expense” as a result of its co-founders “canceling their 2021 market-based restricted stock unit awards in February 2023,” according to an accompanying news release.

The loss was Robinhood’s highest since Q3 2021, and it represented a 30% year-on-year increase in losses. The company also stated that it “continues to pursue purchasing most or all” of the 55 million shares held by Emergent Fidelity Technologies, the offshore investment vehicle used by FTX founder Sam Bankman-Fried to acquire a roughly 8% interest in Robinhood.

“Discussions are ongoing with the related parties,” it stated. “We can’t say when or if the share purchase will happen.” On the same day, Robinhood said that it will begin offering 24-hour trading for 43 of its most popular exchange-traded funds (ETFs) and stocks, including Apple, Tesla, and Amazon. The deployment will begin on May 16, with full user availability scheduled for June. According to Google Finance, Robinhood shares closed marginally lower on the day but were up 3% in after-hours trade.