Retail trading app Robinhood (HOOD) reported third quarter-earnings Wednesday showing the company beat revenue and earnings estimates thanks to higher interest earned from rising rates.
But the platform fell short on maintaining monthly active users at consensus expectations. It lost 1.8 million monthly active users for the period, a quarterly decrease of 12.8% to 12.2 million, the lowest level since it listed as a publicly traded company.
Shares of HOOD, which have sold off more than 33% year to date, were up 4% in after hours trading at $11.75, erasing much of Wednesday's sell-off of 4.3%.
"In the third quarter, we achieved our goal of reaching adjusted EBITDA profitability, a quarter earlier than planned,” Vlad Tenev, CEO and cofounder of Robinhood said in its earnings statement.
Here's a summary of the company's results:
Revenue: $361 million versus expectations of $357.7 million
Net loss: ($175 million) or ($0.20) diluted earnings per share versus expectations of ($0.27) diluted earnings per share
Quarter’s Monthly Active Users: 12.2 million versus expectations for 13.74 million
Options trading brought in $124 million of Robinhood's revenue. Stock trading accounted for $31 million, a 7% improvement over the previous quarter. Meanwhile, revenue from cryptocurrency transactions decreased by 12% to $51 million from Q2's $58 million as crypto trading volumes dropped globally during the quarter.
"We delivered on top feature requests for customers including advanced charts, options in cash accounts, instant withdrawals and our self-custody, web3 wallet," Tenev said. "In the next week, we are raising the yield on uninvested cash for Gold members — making it one of the best rates in the industry."
Over the past year, Robinhood's transaction revenue has waned from $266 million in Q3 2021 to $202 million last quarter. This quarter, transaction revenue came in at $208 million, below expectations of $211.45 million, according to Bloomberg.
Like many high-growth peers that serve retail investors, the company has made heavy expense cuts to reach profitability.
The same day it released its second-quarter earnings results, the company announced it had laid off more than 1,000 employees after shuttering two offices earlier this year.
The Menlo Park, California-based brokerage's silver lining was net interest revenue, which increased by 73% to $128 million, thanks to rising interest rates through the third quarter.
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David Hollerith is a senior reporter at Yahoo Finance covering the cryptocurrency and stock markets. Follow him on Twitter at @DsHollers
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