Robinhood Inc posted a smaller-than-expected quarterly loss because the brokerage’s margin buying and selling enterprise benefited from rising rates of interest, whereas elevated volatility within the markets helped its fairness and choices segments.
Web curiosity income doubled to $128 million for the third quarter as annual margin rates of interest jumped to five.75% for Robinhood Gold clients and 9.75% for non-Gold clients.
Robinhood Gold is the corporate’s subscription service, which supplies traders entry to premium options.
“We anticipate This autumn internet curiosity revenues shall be up by roughly $25 million from Q3,” Chief Monetary Officer Jason Warnick stated on a post-earnings name.
Buying and selling in choices rose 10%, whereas that in equities was up 7% sequentially as traders repositioned their portfolios to reap the benefits of rising rates of interest.
These elements helped the corporate submit income of $361 million within the three months ended September, comfortably beating estimates of $355 million, whereas narrowing its internet loss to $175 million from $1.32 billion a yr earlier.
Stripping off one-time objects, Robinhood reported a lack of 20 cents a share, narrower than 31 cents estimated by analysts, based on knowledge from Refinitiv IBES.
Buying and selling in cryptocurrencies, nonetheless, fell 12% sequentially to $51 million as a rout within the broader market pressured traders to shun different speculative belongings. It had surged 860% to $51 million a yr earlier.
“That is higher than their competitor Coinbase, which Robinhood has taken market share from this yr,” stated Michael Ganian, analyst at analysis agency YipitData.
The commission-free brokerage additionally noticed month-to-month energetic customers fall to 12.2 million, sequentially.
A yr in the past, it reported 18.9 million customers when Robinhood’s easy-to-use interface made it a success amongst younger traders buying and selling from dwelling on cryptocurrencies and shares equivalent to GameStop Corp amid the Covid-19 pandemic.