Robinhood Beats Q3 Estimates, Stock Gains

Robinhood Earnings Outcomes
Metric Beat/Miss/Match Reported Worth Analysts’ Prediction
Earnings Per Share ($) Beat -0.20 -0.31
Income ($M) Beat 361 353.2
Sept. Month-to-month Lively Customers (M) Miss 12.2 13.7

Supply: Predictions primarily based on analysts’ consensus from Seen Alpha, information reviews

Robinhood Monetary Outcomes: Evaluation

Robinhood Markets, Inc. (HOOD) shares rose 4% on Nov. 2 in after-hours buying and selling, after the brokerage in style with younger retail traders topped analysts’ Q3 earnings and income estimates even because the variety of lively customers continued to say no amid what Robinhood known as “the risky market atmosphere.”

Robinhood posted a Q3 web lack of $0.20 per share, whereas analysts anticipated a lack of $0.31 per share in line with information reviews citing Capital IQ and FactSet. Income slipped 1% 12 months over 12 months however rose 14% sequentially over Q2. The corporate mentioned it had reached its objective of reaching profitability 1 / 4 sooner than deliberate primarily based on adjusted EBITDA, a non-GAAP measure that excludes a spread of money and non-cash prices. Robinhood reported adjusted EBITDA of $47 million for the quarter, a $127 million enchancment from Q2.

Robinhood has tried to stem purple ink by reducing prices, shedding 23% of its workforce in August after reducing 9% earlier within the 12 months. Working bills declined 12% sequentially in consequence, regardless of $90 million in restructuring prices tied to the August layoffs.

Web curiosity income representing curiosity earned on margin and securities lending, company money, and shopper accounts, continued to rise with rates of interest, up 73% sequentially to $128 million. Robinoood nonetheless derives most of its income from funds for order movement (PFOF) it receives from market makers for letting them execute purchase and promote orders from its clients.

Web cumulative funded accounts—these with constructive balances—elevated by about 60,000 to 22.9 million, the corporate mentioned. Regardless of the bear markets in shares, bonds, and cryptocurrencies, Robinhood’s clients made $2.7 billion of web deposits into their accounts throughout the quarter and have added $18 billion over the previous 12 months, representing a 19% annualized development price.

Robinhood’s Outlook and Convention Name

Robinhood mentioned that it expects to scale back working bills for FY 2022 by 31% to 32% from final 12 months’s, steeper than the minimize of 25% to 29% it projected three months in the past.

“We’ll have a mindset of being lean and scrappy, nevertheless it does not imply we’re not going to make investments to drive development,” CEO Vlad Tenev mentioned throughout the earnings convention.

The corporate is projecting a $25 million sequential enhance in web curiosity income in This autumn, executives mentioned on the convention name. Requested why curiosity income will not enhance much more in gentle of the rises in rates of interest throughout the quarter, firm officers cited a drop in margin balances, softness in securities lending, and the current enhance to three% of the yield on uninvested account balances for “Gold” clients prepared to pay a $5 month-to-month charge.

Robinhood’s subsequent earnings report (for This autumn FY 2022) is predicted to be launched on Jan. 26, 2023.

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