Robinhood’s Q1 Crypto Revenue Dropped 30% Over Prior Year

First-quarter earnings for cryptocurrency and stock trading app Robinhood are in, and the company reports a 30% year-over-year revenue reduction for its crypto trading division.

Robinhood’s Q1 2023 earnings, released on May 10, reported $38 million in crypto trading sales, down from $54 million in Q1 2022.

In contrast, Robinhood’s total revenue rose year-over-year, with Q1 2023 bringing in $441 million, compared to $299 million in the first quarter of 2022 – up 47.5%.

Its sales in the first quarter of 2023 increased 16% compared to the previous quarter. Due to the recent and rapid increase in interest rates by the United States Federal Reserve, interest is a company’s biggest earner.

The trading platform currently has over $12 billion in cryptocurrency, up 50% over the previous quarter but down 40% over the same time last year.

The decline in the trading app’s crypto revenue corresponds to a 40% drop in digital asset market cap over the same time period. According to CoinGecko data, the world market cap for cryptocurrencies was $2.1 trillion as of March 31, 2022, up from $1.2 trillion on the same date this year.

Monthly active users on Robinhood have also declined year-over-year, dropping from nearly 16 million in the first quarter of 2022 to just under 12 million in the most recent revenue report. However, this is an increase of 400,000 from the previous quarter. In all, Robinhood lost $511 million, which was impacted by “a $485 million one-time share-based compensation fee” as a result of its co-founder “voiding its 2021 market-based restricted stock unit award in February 2023,” according to an accompanying news release.

The loss was Robinhood’s highest since Q3 2021, and it represents a 30% year-over-year increase in losses. The company also stated that it “continues to pursue a purchase of most or all” of the 55 million shares held in Emergent Fidelity Technologies, the offshore investment vehicle used by FTX founder Sam Bankman-Fried to acquire approximately 8% of Robinhood.

“Discussions are ongoing with related parties,” he said. “We can’t say when or if the buyout will happen.” The same day, Robinhood said it would begin offering 24-hour trading for 43 of its most popular exchange-traded funds (ETFs) and stocks, including Apple, Tesla, and Amazon. Deployment will begin on May 16, with full user availability scheduled for June. According to Google Finance, Robinhood shares closed slightly lower for the day but were up 3% in after-hours trading.