Cryptocurrency business "soars": Robinhood Q1 turns losses into profits year-on-year

Zhitong
2024.05.09 00:33
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Robinhood achieved profitability for the second consecutive quarter, with Q1 revenue reaching $618 million, a 40% year-on-year increase. Net profit reached $157 million, compared to a loss of $511 million in the same period last year. Earnings per share were $0.18, exceeding market expectations of $0.06. Robinhood expressed disappointment as its cryptocurrency business may face regulatory action. Meanwhile, over 1 million customers have joined the waiting list for the 3% cash back credit card. Robinhood's credit card business aims to expand its personal finance business

According to information from the Zhitong Finance and Economics APP, Robinhood (HOOD.US) achieved profitability for the second consecutive quarter due to rising interest rates and cryptocurrency trading driving revenue growth.

The financial report shows that Robinhood's revenue for the first quarter was $618 million, a year-on-year increase of 40%, exceeding market expectations; net profit was $157 million, compared to a loss of $511 million in the same period last year; earnings per share were $0.18, surpassing market expectations of $0.06, with a loss of $0.57 per share in the same period last year.

"We achieved significant revenue growth and margin expansion," said Robinhood's Chief Financial Officer Jason Warnick in a statement. "Despite increasing our marketing and growth investments, our quarterly revenue, net profit, and earnings per share all set records."

The financial report shows that transaction-based revenue increased by 59% year-on-year to $329 million, mainly due to a 232% surge in cryptocurrency revenue to $126 million.

Driven by growth in interest-earning assets and rising short-term interest rates, net interest income increased by 22% year-on-year to $254 million.

After the financial report was released, Robinhood's stock rose by 6.5% to $19.01 in after-hours trading. The stock has surged by 40% so far this year.

Earlier this week, Robinhood disclosed that it had received a "Wells notice" from the staff of the U.S. Securities and Exchange Commission (SEC), indicating that its cryptocurrency business faces enforcement action. U.S. regulators believe that most tokens are subject to SEC rules, and trading platforms should be registered with the agency. Robinhood expressed disappointment with this and stated that the assets listed on its platform are not securities.

Robinhood also stated in the announcement that over 1 million customers have joined the waiting list for the 3% cashback credit card announced in March. The credit card is only available to subscribers of the Robinhood Gold program, with no annual fee or foreign transaction fees. Robinhood's credit card business aims to expand its personal finance business and seeks to become a more diversified financial services company

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