Trading platform Robinhood reports 55% decline in crypto revenue

Category: Blockchain Crypto
Posted by Content Team

In Q3 2023, Robinhood reported that its earnings from crypto transactions decreased to $23 million, marking a 55 percent drop from the prior quarter.

The Q3 decline continued a trend seen throughout 2023. During the first three months of 2023, the company’s income from crypto trading decreased by one percent to $38 million. This figure dropped to $31 million during Q3.

Robinhood’s revenue decline was more notable in its cryptocurrency segment than in others. The company reported that its earnings from stock transactions decreased by 13 percent in the third quarter.

In the Q3 2023 report, Robinhood disclosed a significant 29 percent increase in revenues compared to the previous year, totaling $467 million.

This boost was mainly because their interest revenues grew impressively by 96 percent to reach $251 million. However, the money they made from transactions decreased by 11 percent to $185 million.

Even with these ups and downs, the company mentioned a net loss of $85 million, which included a -$0.11 per-share impact due to setting aside $104 million for regulatory expenses.

Its operating costs dropped by one percent to $540 million compared to the previous year, while the adjusted operating costs, a non-standard measure, increased by five percent to $353 million year-over-year.

Robinhood’s adjusted EBITDA unexpectedly increased by 191 percent compared to last year, reaching $137 million. The total number of actively funded accounts also jumped by 360 thousand from the previous year to 23.3 million.

The total value of assets under custody (AUC) increased by 34 percent, reaching $87 billion due to continuous deposits and higher stock values. Net deposits were $4 billion, with an 18 percent growth rate compared to the previous quarter.

The financial company also saw a 16 percent year-over-year decrease in Monthly Active Users (MAU), now at 10.3 million.

Focusing on customers

Robinhood CEO Vlad Tenev mentioned during the company’s earnings call on Tuesday that the company would focus on improving the user experience for crypto investors.

“We’re going to continue to innovate and improve the offering in this space. I think there are lots of promising signs and lots of people spending time building the industry. We’re going to continue to be a leader there,” said Tenev.

“Crypto benefits from a relatively clear regulatory framework in the EU and we’re excited to bring our capabilities across the pond to better serve that market,”

Vlad Tenev

Focusing on growth, Robinhood eyes expansion in the U.K. and plans to introduce crypto trading across the European Union.

The platform has enriched its services, enabling all-day trading for 95 stocks and providing a one percent match for Individual Retirement Account (IRA) deposits, extending to three percent for gold members. Chief Financial Officer Jason Warnick notes the benefits of clearer cryptocurrency rules for fostering innovation.

Robinhood then expresses its commitment to cryptocurrency by announcing the upcoming introduction of cryptocurrency trading in the European Union. This move aligns with its support for regulatory clarity in the EU market.

In August, Robinhood allowed users of their self-custody Web3 wallet to use the Bitcoin and Dogecoin networks to store, send, and receive cryptocurrencies.

Widespread phenomenon in the industry

Robinhood is not the only company that experienced a decrease in cryptocurrency trading. Coinbase also witnessed a 12 percent decline in total transaction revenue during the third quarter compared to the previous three months.

The exchange attributed this decrease to low volatility and adverse conditions in the broader economic landscape, impacting spot market trading volumes, as mentioned in its recent shareholder letter.

In February 2018, Robinhood started allowing people to trade cryptocurrencies like Bitcoin and Ether without charging fees.

However, in June, the company stopped supporting Cardano (ADA), Polygon (MATIC), and Solana (SOL). This happened after the U.S. Securities and Exchange Commission (SEC) sued Binance and Coinbase, claiming that some cryptocurrencies were not properly registered as securities.