Stock trading platform Robinhood Robinhood Markets Inc said on Tuesday it was slashing 23 percent of its staff as it posted a 44-percent decline in revenue on slumping trading activity, in an earnings announcement that came a day earlier than scheduled and beat analyst expectations.
The Menlo Park, California-based brokerage posted net
revenue for the second quarter ended June 30 of $318 million as revenue from
equity, options and crypto trading more than halved, compared with $565 million
a year earlier, according to a filing with the U.S. Securities and Exchange
Commission.
The company said it would commence another round of layoffs
affecting 780 employees, on top of the 9 percent of full-time staff laid off
earlier this year. It will also change its organizational structure to drive
greater cost discipline.
Robinhood’s total operating expenses for the second quarter
rose 22 percent on the same period last year. The reorganization will cost the
firm between $30 million to $40 million, Robinhood said.
The company posted a net loss of $295 million. Stripping out
the restructuring charges, Robinhood reported a loss of 32 cents per share
versus analyst estimates of a loss of 37 cents per share, according to
Refinitiv IBES data.
It was originally scheduled to report earnings on Aug. 3,
but released them a day early after publishing a blog post about the job cuts
and reorganization.
Robinhood’s shares were down nearly 1 percent at $9.15 in
after-hours trading.
Robinhood’s easy-to-use interface made it a hit among young
investors trading from home on cryptocurrencies and stocks such as GameStop
Corp during the COVID-19 pandemic.
But its customer base has been spooked by decades-high
inflation and rising interest rates, which have sucked liquidity out of global
markets and sent cryptocurrencies slumping.
Robinhood is one of many fintech upstarts that have started
slashing jobs ahead of an expected recession, along with crypto exchange
Coinbase Global Inc., buy-now-pay-later company Klarna and NFT platform
OpenSea, while a handful of crypto companies including Celsius Network and
Voyager Digital collapsed amid the broader crypto crash.
Robinhood chief executive officer Vlad Tenev said in a blog
post Tuesday that staff cuts earlier this year had not gone far enough.
“As CEO, I approved and took responsibility for our
ambitious staffing trajectory – this is on me,” Tenev said.
Transaction-based revenues across Robinhood’s three main
business lines of options, equities and cryptocurrencies fell 55 percent , with
crypto transaction revenue, which had buffered the company’s results last year,
falling 75 percent year-on-year.
Robinhood’s monthly active users also appeared to fall by
roughly a third, at 14 million for June 2022 compared with 21.3 million in the
second quarter of 2021.
Fintech stocks bore the brunt of a broader market decline as
a risk-off environment coupled with higher funding costs and sluggish
e-commerce growth led to traders pull back from high-growth tech so far this
year.
Shares of Robinhood, which were sold at $38 a share in its
initial public offering last year, were also caught in the crosshairs of the
crypto meltdown and have shed nearly 88 percent.
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