Robinhood Reports a 30% Drop in Crypto Revenue from Q1 2022
- Robinhood announced a 30% revenue drop for its crypto trading business, while overall Q1 2023 revenues were up 16% since last quarter.
- The net revenue for the crypto business rose year-on-year, with Q1 2023 bringing in $441 million compared to $299 million in Q1 2022.
- The biggest earner for the company were the interest revenues due to the US Federal Reserve’s recent and rapid rate hikes.
- The total assets under custody (AUC) increased 26% to $78 billion.
- Robinhood also debuted the new 24-Hour Market for its customers.
The season for the first quarter of the year is underway, as many crypto companies have started rolling out their results for Q1. Interestingly, popular crypto and stock investment platform Robinhood Markets has announced its financial results for Q1, 2023. The commission-free investing platform revealed that it has witnessed a 30% revenue drop for its crypto trading business, which might be reflected in the stock performance of the company in the near future.
The Q1 financial performance report for Robinhood was released on May 10, with over $38 million in crypto trading revenues over the period. On the other hand, the revenue for the same period in Q1 2022 was around $54 million. This marks a decline of almost 30% for the company’s crypto business.
The crypto business of Robinhood seems to have been affected by the recent slump in the market and it seems that despite the collapse of multiple crypto exchanges recently, the platform has not been able to attract additional customers and boost its trading volume and the revenue generated from it.
On the other hand, the total net revenue for the crypto business increased year-on-year, with Q1 2023 bringing in $441 million compared to 2022’s first quarter net revenues of $299 million. This confirms an increase of around 47.5% in the net revenue for Robinhood. The company also added that the transaction-based revenue for the exchange was $207 million, up 11% sequentially, “driven by higher options, equity, and other transaction revenues.”
The overall Q1 2023 revenues were up 16% since last quarter. Furthermore, the biggest earner for the company were the interest revenues due to the United States Federal Reserve’s recent and rapid rate hikes. According to Robinhood, the company has around $12 billion worth of crypto under its custody, a 50% increase over the quarter but a 40% decline compared to the same time last year.
Overall, the total assets under custody (AUC) increased 26% to $78 billion, “primarily due to higher valuations of growth stocks and continued net deposits.”
Interestingly, the drop in the trading application’s crypto revenue aligns with the 40% fall in market capitalization for digital assets over the same period due to the crypto market winter. As of March 31, 2022, the global market cap for crypto stood at $2.1 trillion, while the market was worth $1.2 trillion on the same date this year.
Robinhood Debuts ‘24-Hour Market’
It is crucial to note that on the very same day, Robinhood announced a new venture termed the “24 hour market,” which will allow investors to place limit orders to buy whole shares of 43 of the most traded ETFs and individual stocks, “24 hours a day, five days a week.” The company revealed that the 24-Hour Market “will be released for a subset of customers next week and will be available to everyone in June.”
In a press release accompanying the financial statement, Vlad Tenev, the CEO and co-founder of Robinhood, stated that the company aims to continue to “ship aggressively, increase customer satisfaction, and deliver strong financial performance on the path to GAAP profitability.”
“We grew revenues four quarters in a row while getting to a leaner operating model. At the same time, we delivered new products and features that led to outsized improvements in customer satisfaction. Going forward, we remain focused on serving customers, growing our business, and driving long-term shareholder value,” said Jason Warnick, Chief Financial Officer of Robinhood Markets.
As reported earlier by Bitnation, Robinhood announced a Web3 wallet launched in beta in September 2022, and also the support for Ethereum and the Polygon network. The platform now also supports Ethereum and 50+ ERC tokens and offers the ability to transfer tokens like COMP, MATIC, SHIB, SOL, UNI, USDC, and many more.