Robinhood Posts Surprising Revenue Increase Fueled by Interest Payments

Robinhood was trading 4% higher after hours

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Photo by Lauren Sopourn for Blockworks

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Robinhood posted a 14% increase in total revenue for the third quarter of 2022, thanks to the trading app’s saving grace: interest payments — which saw a 73% increase. 

The platform reported a net loss of $175 million, compared to a $295 million net loss in the second quarter of 2022. 

Robinhood allows select users to borrow money for trades and charges interest on the debt. Margin trading is not a new feature for the app, but it has been steadily bringing in more income for the past two quarters as interest rates have increased.

Net interest income increased 35% to $74 million in the second quarter of 2022, up from $55 million in the quarter prior.

The platform is eager to dive deeper into the crypto space after launching the beta version of its self-custody wallet in September. 

“We want everyone to have safe, easy and low cost access to the power of the decentralized web,” Robinhood CEO Vlad Tenev said Wednesday during the company’s earnings call

The company hopes to roll out the wallet to international users in 2023.

Total monthly active users fell to 12.2 million, coming in lower than the expected 13.7 million. It’s the lowest monthly active user figure since the last quarter of 2020. Transaction revenues still saw a 3% increase in the third quarter of the year, largely driven by options, which rose 10%. Cryptocurrency transaction revenue posted a 12% loss.

Robinhood, which went public in 2021 after pioneering a zero-fee trading structure for equities, ended the trading session Wednesday 4.4% lower but was trading 3.8% higher in after-hours trading at time of publication. Shares are down nearly 40% year to date. 

Midway through the third quarter of 2022, the trading app announced it was laying off 23% of its staff, accounting for an estimated 10% decrease in expenses for 2022. Departing staff had the option to remain employed through Oct. 1, 2022 with full pay and benefits. 

It was the second round of layoffs for the company this year: The trading platform let 9% of its staff go in April.


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