Robinhood posts surprise profit on interest income boost, trading rebound
Reuters
Published Feb 13, 2024 04:14PM ET
Updated Feb 13, 2024 06:06PM ET
By Manya Saini
(Reuters) -Robinhood Markets posted a surprise profit in the fourth quarter on Tuesday, driven by higher interest income from customers paying back loans and a rebound in trading, sending shares of the online brokerage up 10% after the bell.
A higher-for-longer interest rate environment has benefited lenders across the financial spectrum, including Robinhood (NASDAQ:HOOD), with the industry capitalizing on interest payments.
"Looking at revenues, with the current macro backdrop, we're finding for strong growth in 2024, driven by continued 20-plus percent net deposit growth, increasing gold adoption, double-digit gains and trading market share," said CFO Jason Warnick in post-earnings call.
Warnick added Robinhood is aiming to deliver margin expansion and expects headcount to be roughly flat to slightly up this year.
The retail-investor focused firm reported a surprise profit of 3 cents per share in the quarter, compared with analysts' expectations of a loss of 1 cent, according to LSEG data.
The financial services platform allows eligible customers to borrow money to purchase securities and charges interest on the debt. This 'margin investing,' has been a bright spot for retail investor-focused firm.
The Menlo Park, California-based company's net interest revenue came in at $236 million versus $167 million a year earlier.
Transaction-based revenues also outperformed Wall Street expectations, growing 8% year-over-year to $200 million in the quarter, primarily driven by cryptocurrencies.
CEO Vlad Tenev in a post-earnings call with analysts said Robinhood's trading market share climbed 14% for equities and 19% for options, compared with a year earlier.
Robinhood was at the center of the 2021 retail trading frenzy, driven by mom-and-pop investors who used the company's commission-free platform to pump money into so-called "meme stocks" during the pandemic-era lockdowns.
Average revenue per user (ARPU) increased 23%, while monthly active users (MAU) declined 4% in the reported quarter versus a year earlier.
The company's revenue rose to $471 million, sailing past expectations of $456.81 million.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.