Robinhood turns profitable in Q2, but crypto revenue declines

Robinhood released its second-quarter results, achieving profitability for the first time since becoming a public company, despite a drop in revenue in the second quarter of 2023. 

According to its quarterly report released on Aug. 2, Robinhood’s revenue from cryptocurrency transactions shrank by 18% to $31 million. Other transaction-based revenues dropped as well, including options, which decreased 5% to $127 million, and equities, which declined 7% to $25 million. Over the past year, its revenue has decreased by 4% from $202 million in June last year to $193 million.

In spite of the decline in revenue, the company recorded a net income of $25 million, or earnings per share (EPS) of $0.03, compared with a net loss of $511 million, or EPS of -$0.57, in the first quarter of the year. The result is attributable to improvements in total operating expenses over the past few months, with a midpoint decrease of $45 million.

<em>Robinhood&#8217;s Q2 2023 results. Source: Robinhood</em>

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 31% sequentially to $151 million, with its margin gaining five points to 31%. EBITDA is often used by analysts, investors and financial professionals to compare the operational performance of companies in the same industry.

The total assets under custody increased 13% to $89 billion last quarter, driven by “higher equity valuations and continued net deposits.” Taking the first half of 2023 into account, Robinhood slightly increased its crypto assets under custody from $8.431 billion in December 2022 to $11.503 billion in June 2023.

“In Q2, we reached a significant milestone by achieving GAAP profitability for the first time as a public company,” said Vlad Tenev, CEO and co-founder of Robinhood Markets.“ Generally accepted accounting principles (GAAP) refers to the standard accounting principles and guidelines that companies use to prepare their financial statements.

Robinhood’s net deposit was $4.1 billion in the quarter, which translates to an annualized growth rate of 21% relative to assets under custody in the first quarter of 2023. Over the past 12 months, net deposits were $16.1 billion, indicating a growth rate of 25% over a year.

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