Robinhood, an American financial services company known for pioneering commission-free trades of stocks and exchange-traded funds, released its second-quarter results which revealed some interesting facts.
According to the results, approximately 52% of Robinhood’s transaction-based revenues came from offering cryptocurrencies and of the revenues generated from cryptocurrencies, Dogecoin accounted for 62%.
The company, in the second quarter of 2021, generated net revenue of $565 million, a 131% increase compared to the second quarter of 2020.
Its cryptocurrency revenue grew by over 4500% in the second quarter of 2021 compared to the second quarter of 2020, from $5 million to $233 million. The report stated that more than 60% of funded Robinhood accounts traded digital assets during Q2 2021.
A massive 62% of Robinhood’s crypto revenue which is approximately $145 million, was derived from Dogecoin trades.
Its transaction-based revenue which increased by 141% comparing the two quarters, accounted for approximately 80% of its total net revenue which represents approximately $451 million. This is attributed to an exponential increase in monthly active users by 109% year-over-year (YoY) from 10.2 million to 21.3 million, while funded accounts increased by 130% over the same period. This caused the value of assets in Robinhood’s custody to triple YoY to currently stand at $102 billion.
Despite the surging crypto revenue, Robinhood reported an overall loss of $502 million for Q2. However, the losses are attributed to accounting adjustments pertaining to the fluctuating warrants and notes held by the company.
What they are saying
During the company’s earnings call, Vlad Teev, co-founder and CEO of Robinhood stated, “I’m especially pleased by the progress we’ve made with our crypto services in Q2, making them more resilient to surges in trading volume… We’re encouraged by the number of people who are accessing the financial system for the first time through Robinhood.”
Jason Warnick, the Chief Financial Officer, had this to say during the company’s earnings call, “Transaction-based revenues were $451 million in Q2, up 141% year-over-year, driven by the growth in our user base and strong interest in crypto during the quarter. In Q2, we saw the number of active crypto traders increased significantly versus the previous quarter. At the same time, we saw a decline in equity activity as our customers’ interest rotated from equities to crypto. Crypto revenues increased to $233 million in Q2, up from just $5 million last year. Robinhood is now clearly on the map for crypto trading.”
On the net loss the company made, Jason stated, “Now for measures of profitability, net loss for Q2 was $502 million compared to net income of $58 million in the prior year. Included in Q2 was a $528 charge related to the change in fair value of our convertible notes and related warrant liability. We will record a final charge of approximately $25 million for these notes and warrants in Q3. Adjusted EBITDA was $90 million in the quarter, up from $63 million in the prior year.”
Bottomline
On the 28th of July 2021, Robinhood went public with a stock quote titled “HOOD.” HOOD so far is up 43% Year-to-Date, currently trading $49.80 as of the time of this writing. HOOD had previously peeked out at $70.39 before retracing. Pre-market, the stock is down 11.55% as of the time of this writing.
