Robinhood Q1 2022 Earnings Report Recap

HOOD missed on earnings and on revenue

Key Takeaways

  • Monthly active users (MAUs) came in at 15.9 million, well below analysts' consensus estimates.
  • The MAU metric is a useful indicator of user engagement and is positively correlated with the company's revenue performance and other key metrics.
  • Robinhood plans to let go about 9% of its full-time employees.
Robinhood Earnings Results
Metric  Beat/Miss/Match Reported Value Analysts' Prediction
EPS  Miss -$0.45 -$0.36
Revenue Miss $299M $358.9M
Montly Active Users Miss 15.9M 18.4M

Source: Predictions based on analysts' consensus from Visible Alpha

Robinhood (HOOD) Financial Results: Analysis

Robinhood Markets, Inc. (HOOD) reported Q1 FY 2022 earnings on April 28 that missed analysts' expectations by a wide margin. The company posted a loss per share of $0.45 compared to a loss per share of $6.26 in the year-ago quarter. Revenue also came in below expectations, falling 42.7% year over year (YOY). Monthly active users (MAUs) also missed consensus estimates.

The company's shares were down more than 7% at one point during extended trading. Robinhood's shares began trading on the Nasdaq at a price of $38 per share on July 29, 2021, after the company completed its initial public offering (IPO). The shares are down 73.4% from that initial opening price. By comparison, the S&P 500 is down 2.7% over the same period.

HOOD Monthly Active Users

Robinhood's MAUs fell 10.2% YOY to 15.9 million. The company defines MAU as a unique user who performs any one of the following actions during the relevant month being measured: makes a debit card transaction; transitions between two different screens on a mobile device; or loads a page in a web browser while logged into their account.

Robinhood considers MAUs a useful indicator of user engagement, and the number of MAUs is positively correlated with the company's revenue performance and other key metrics. Robinhood generates the majority of its revenue through payment for order flow (PFOF). More users trading means that the company is able to send more trades to market makers for trade execution in return for rebates.

Robinhood said that its platform experienced high trading volumes and account sign-ups in March 2021. The company's MAUs grew 105.9% in the year-ago quarter. That's a stark contrast from the most recent three months, in which MAUs declined both on a YOY and a sequential basis. Robinhood said that users are engaging less in the current market environment.

HOOD Cost Reduction

Robinhood announced earlier this week that it was shedding 9% of its full-time workforce, which was largely built up during a year-and-a-half period of hyper growth that started in early 2020. The company said that this reduction in its workforce along with other cost-reduction initiatives should significantly lower its operating expenses and share-based compensation for FY 2022.

Robinhood's next earnings report (for Q2 FY 2022) is estimated to be released on Aug. 17, 2022.

Article Sources

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  2. Robinhood Markets Inc. "Robinhood Reports First Quarter 2022 Results," Page 1.

  3. Visible Alpha. "Financial Data."

  4. The Wall Street Journal. "Robinhood IPO Prices at $38 a Share."

  5. Yahoo! Finance. "Robinhood Markets, Inc. (HOOD): Historical Data."

  6. Yahoo! Finance. "SPDR S&P 500 ETF Trust (SPY): Historical Data."

  7. Robinhood Markets Inc. "Form 10-K for the Fiscal Year Ended December 31, 2021," Page 68.

  8. Robinhood Markets Inc. "A Message From our CEO and Co-Founder Vlad Tenev."

  9. Robinhood Markets Inc. "Robinhood Reports First Quarter 2022 Results," Page 3.

  10. Investing.com. "Robinhood Markets Inc (HOOD): Financials—Earnings."

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