Casey Wagner

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.&nbsp;



The platform reported a net loss of $175 million, compared to a $295 million net loss in the <a href="https://cms.blockworks.co/robinhood-layoff-costs-q2-losses-wont-delay-crypto-product-launches/" target="_blank" rel="noreferrer noopener">second quarter</a> 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.&nbsp;



“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 <a href="https://edge.media-server.com/mmc/p/ryk4andt" target="_blank" rel="noreferrer noopener">earnings call</a>. 



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&#8217;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.



<a href="https://cms.blockworks.co/tag/robinhood/" target="_blank" rel="noreferrer noopener">Robinhood</a>, 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 <a href="https://cms.blockworks.co/robinhood-lays-off-23-of-staff-a-day-before-earnings-report/">23%</a> 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.&nbsp;



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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earnings

Robinhood Posts Surprising Revenue Increase Fueled by Interest Payments

<div id="highlights-block_63331874263dc" class="highlights">
 <ul>
 <li>Robinhood’s Web3 wallet enters beta testing with 10,000 users</li>
 <li>Polygon is currently the exclusive blockchain, but Robinhood expects the product to be multichain going forward</li>
 </ul>
 
</div>



Trading app Robinhood has rolled out a new Web3 self-custody wallet for select iOS customers, the company announced Tuesday.&nbsp;



Ten thousand Robinhood users who joined the waitlist in May will be able to beta test the product, the company said. The new product, called Robinhood Wallet, will support Polygon’s proof-of-stake chain as its first blockchain.&nbsp;



“We chose Polygon due to its scalability, speed, low network fees, and robust developer ecosystem to provide one of the best trading experiences for customers,” Robinhood wrote in a Tuesday <a href="https://blog.robinhood.com/news/robinhood-wallet-beta-now-live" target="_blank" rel="noreferrer noopener">blog post</a>. 



Polygon also became the first Ethereum-compatible blockchain, after Ethereum itself, to be <a href="https://twitter.com/Blockworks_/status/1540067145270398978" target="_blank" rel="noreferrer noopener">supported by Coinbase</a> for withdrawals and deposits of ether, Polygon’s native token MATIC, and the USDC stablecoin, in June.



Robinhood plans to eventually make its wallet a multichain product, the company added, and open the wallet to more users.



<h3 class="wp-block-heading">Robinhood’s crypto ambitions</h3>



The news comes shortly after Robinhood announced a roughly 23% decrease in its staff after a <a href="https://blog.robinhood.com/news/robinhood-wallet-beta-now-live" target="_blank" rel="noreferrer noopener">round of layoffs</a> in August. At the time, the stock and crypto trading platform said it estimates its total 2022 operating expenses to be roughly $1.7 billion, a nearly 10% decrease from the year prior. 



The headcount reduction did not slow the company’s crypto expansion plans, but deteriorating market conditions have dampened investor interest in digital asset investments.&nbsp;



In April, Robinhood agreed to purchase UK-based crypto exchange Ziglu for $170 million, before reducing its offer to $72.5 million in August.&nbsp;



“The board has spent significant time in discussion with Robinhood’s CEO and executive team negotiating and improving the terms of their revised offer,” Ziglu founder Mark Hipperson wrote in a letter to shareholders at the time. “Based on these discussions and other considerations, we believe the revised proposal&#8230;is the best and only reasonable path forward for the company.”&nbsp;



Robinhood, which has offered cryptocurrency trading since 2018, first announced its Robinhood Wallet plans in May. As of the second quarter of 2022, Robinhood currently has 14 million active monthly users, a 1.9 million decrease from the quarter prior, according to its latest <a href="https://investors.robinhood.com/news/news-details/2022/Robinhood-Reports-Second-Quarter-2022-Results/default.aspx#:~:text=(%E2%80%9CRobinhood%E2%80%9D)%20(NASDAQ,11%25%20sequentially%20to%20%24113%20million." target="_blank" rel="noreferrer noopener">earnings report</a>.



The platform did not reveal how many customers trade crypto, but it noted that cryptocurrency transaction-based revenue increased 7% from the first to second quarter.&nbsp;&nbsp;



Co-founder and CEO of Robinhood Vlad Tenev said the goal of the product was to simplify the often “clunky” and “cumbersome” design featured in decentralized finance, Web3 and&nbsp;



non-custodial wallets, during Blockwork’s Permissionless event in West Palm Beach, Florida following the announcement.&nbsp;



“There’s got to be a way to get all the security and privacy benefits of self custody with the low-cost simplicity and mobile-first design that you’re accustomed to with TradFi products,” Tenev added. 



Robinhood is still accepting users to the Wallet <a href="https://robinhood.com/web3-wallet/?utm_source=twitter" target="_blank" rel="noreferrer noopener">waitlist</a>, the company said on <a href="https://twitter.com/RobinhoodApp/status/1574745820573966336?s=20&amp;t=aSh98I7bPG1abrDmLOh5Wg" target="_blank" rel="noreferrer noopener">Twitter</a>, but did not reveal when the program will become widely available.



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Polygon

Robinhood Beta Tests New Web3 Wallet With Polygon as First Blockchain

Ben Strack

<div id="highlights-block_62eaf8910ee02" class="highlights">
 <ul>
 <li>Robinhood’s 23% headcount reduction announcement came a day before it reported a net loss of $295 million in the second quarter Wednesday</li>
 <li>Company estimates a nearly 10% decrease in expenses in 2022 from the prior year despite restructuring costs from two rounds of layoffs</li>
 </ul>
 
</div>



Though Robinhood is set to take a hit on its latest round of layoffs — a sum of $45 million to $60 million — executives said the cuts would not impact the rollout of additional cryptocurrency trading products. 



Such charges from Robinhood’s first round of layoffs in April amounted to $17 million. Even still, the stock and crypto trading platform expects its total 2022 operating expenses to be roughly $1.7 billion, a nearly 10% decrease from the year prior.&nbsp;



Robinhood CEO Vlad Tenev wrote in a <a href="https://blog.robinhood.com/news/2022/8/2/a-message-from-our-ceo-and-co-founder-vlad-tenev" target="_blank" rel="noreferrer noopener">blog</a> post Tuesday that the company would be <a href="https://cms.blockworks.co/robinhood-lays-off-23-of-staff-a-day-before-earnings-report/" target="_blank" rel="noreferrer noopener">reducing the company’s headcount</a> by 23% in the wake of reduced customer trading activity and assets under custody. The changes are particularly concentrated in Robinhood’s operations, marketing and program management divisions.



The layoffs are set to decrease Robinhood’s workforce to 2,600 staffers.



“At this new level, we believe we are appropriately staffed to be cost-efficient, while continuing to deliver great service and innovation for our customers,” Chief Financial Officer Jason Warnick said during the company’s Wednesday earnings call.&nbsp;&nbsp;



Though Tenev said the company would move to a structure in which general managers will assume broad responsibility for Robinhood’s individual businesses, he did not share details.



A Robinhood spokesperson declined to comment on how the restructuring will impact the company’s nascent crypto business.



Sam Wellalage, founder of <a href="https://workincrypto.global/" target="_blank" rel="noreferrer noopener">WorkInCrypto.Global</a>, said he expects about a third of the layoffs to stem from digital asset-focused roles.



“Most people who are losing jobs in crypto are snapped up by fintech and TradFi [companies],” Wellalage told Blockworks. “We also see a lot of hyper-growth startups snapping up these candidates.”



Robinhood’s declaration of another round of layoffs came the same day the New York State Department of Financial Services (NYFDS) <a href="https://cms.blockworks.co/regulators-ring-up-robinhood-for-30m-fine/" target="_blank" rel="noreferrer noopener">imposed a $30 million penalty</a> on Robinhood’s cryptocurrency division due to purported violations of anti-money laundering, cybersecurity and investor protection regulations.



<h3 class="wp-block-heading">Results and product plans</h3>



While transaction-based revenues for options and equities decreased by 11% and 19% quarter over quarter, respectively, digital assets proceeds increased by 7% to $58 million.



The company booked a net loss of $295 million in the second quarter after tallying a net loss of $392 million during the first three months of the year.



Monthly active users in June decreased 1.9 million from the previous month to 14 million. Assets under custody were down 31% quarter over quarter to $64.2 billion, primarily driven by lower asset valuations.



The price of Robinhood stock closed Wednesday at $10.31 — up 11.7% during the day’s trading session. The stock is down 44% so far in 2022 — but up nearly 23% from one month ago.



The company <a href="https://cms.blockworks.co/robinhood-opens-crypto-wallet-service-to-2-million-more-users/" target="_blank" rel="noreferrer noopener">opened up its crypto wallet</a> product in April to two million more eligible users. It also revealed during the quarter its plan to introduce a non-custodial wallet later this year. The standalone app is set to allow customers to trade and swap crypto, with no transaction fees, while maintaining full custody.



Executives added on Wednesday’s call that Robinhood is looking to introduce additional cryptocurrencies in a “deliberate” way as the company vies to compete with crypto-native incumbents such as <a href="https://cms.blockworks.co/tag/coinbase/" target="_blank" rel="noreferrer noopener">Coinbase</a> and <a href="https://cms.blockworks.co/tag/ftx/" target="_blank" rel="noreferrer noopener">FTX</a>. 



Asked whether Robinhood <a href="https://cms.blockworks.co/ftx-denies-claims-to-acquire-robinhood/" target="_blank" rel="noreferrer noopener">could be acquired</a>, Tenev said, “In one word, no.”



Added Tenev: “We actually see opportunities, particularly in this market environment, to leverage the balance sheet that we have — that’s about $6 billion — to acquire companies to accelerate our roadmap.”



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Robinhood Layoff Costs, Q2 Losses Won’t Delay Crypto Product Launches

<div id="highlights-block_62e989d7d5c51" class="highlights">
 <ul>
 <li>Laid off employees will have the option to stay until Oct. 1, 2022 with full pay and benefits</li>
 <li>HOOD was trading about 4.5% lower in after-hours trading Tuesday</li>
 </ul>
 
</div>



Robinhood has shed 23% of its staffers, the company said Tuesday — one day ahead of its second-quarter earnings call.&nbsp;



The cuts are mostly concentrated to the operations, marketing, and program management teams, Robinhood CEO <a href="https://blog.robinhood.com/news/2022/8/2/a-message-from-our-ceo-and-co-founder-vlad-tenev" target="_blank" rel="noreferrer noopener">Vlad Tenev</a> wrote in a <a href="https://blog.robinhood.com/news/2022/8/2/a-message-from-our-ceo-and-co-founder-vlad-tenev" target="_blank" rel="noreferrer noopener">blog</a> post. The move comes shortly after the company announced a 9% reduction in headcount in April 2022, citing a decrease in growth.&nbsp;


[stock_market_widget type=&#8221;accordion&#8221; template=&#8221;chart&#8221; color=&#8221;#7C2AD5&#8243; assets=&#8221;HOOD&#8221; start_expanded=&#8221;true&#8221; display_currency_symbol=&#8221;true&#8221; api=&#8221;yf&#8221; chart_range=&#8221;6mo&#8221; chart_interval=&#8221;1wk&#8221;]



The impact on the company’s crypto trading business isn’t clear. A spokesperson for the division did not immediately return a request for comment.&nbsp;



The initial round of cuts “did not go far enough,” <a href="https://blog.robinhood.com/news/2022/8/2/a-message-from-our-ceo-and-co-founder-vlad-tenev" target="_blank" rel="noreferrer noopener">Tenev</a> wrote.&nbsp;



Macro conditions and increasing inflation have contributed to decreased trading activity — leading to lower fee revenue — Tenev said. Additionally, the crypto market’s recent crash has negatively impacted trading volumes and related assets.



“Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the COVID era would persist into 2022,” Tenev said. “In this new environment, we are operating with more staffing than appropriate.”



Laid off employees will receive an email and Slack message, the blog said. Departing staff will have the option to remain employed through Oct. 1, 2022 with full pay and benefits.&nbsp;



Analysts had already estimated that <a href="https://cms.blockworks.co/tag/robinhood/" target="_blank" rel="noreferrer noopener">Robinhood</a>, which went public in 2021 after pioneering a zero-fee trading structure for equities, would miss Wall Street’s consensus growth metrics — before the layoffs were made public.&nbsp;



The company’s stock traded about 4.5% lower in Tuesday’s after-hours session.



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