Robinhood Q3 2021 Earnings Report Recap

HOOD missed on earnings and revenue

Key Takeaways

  • Monthly active users (MAUs) came in at 19.8 million, missing 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.
  • Revenue from cryptocurrency trading was significantly down from the prior quarter, weighing down overall revenue.
Robinhood Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Miss -$2.06 -$1.16
Revenue Miss $364.9M $438.7M
Monthly Active Users Miss 18.9M 21.9M

Source: Predictions based on analysts' consensus from Visible Alpha

Robinhood (HOOD) Financial Results: Analysis

Robinhood Markets, Inc. (HOOD) reported Q3 FY 2021 earnings on Oct. 26 that missed analysts' expectations. The company posted a loss per share of $2.06 compared to a loss per share of $0.05 in the year-ago quarter. Revenue also missed expectations but was up 35.4% year over year (YOY). Monthly active users (MAUs) came in below consensus estimates.

The company's shares fell more than 8% in 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 up 3.2% from that initial opening price. By comparison, the S&P 500 is up 3.9% over the same period.

HOOD Monthly Active Users

Robinhood's MAUs grew 76% YOY to 18.9 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 it 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 the company is able to send more trades to market makers for trade execution in return for rebates.

HOOD Cryptocurrency Trading

Robinhood's transaction-based revenue from cryptocurrency trading rose 860% YOY to $51 million. However, the company said that cryptocurrency trading was down significantly compared to Q2 FY 2021. That drop adversely affected the company's overall revenue compared to the previous quarter.

HOOD Guidance

Based on the current market environment, Robinhood said it estimates that revenue in Q4 FY 2021 will be no greater than $325 million and that full-year revenue will be less than $1.8 billion. The company expects seasonal headwinds and lower retail trading to adversely affect its results, factors that also weighed on its results during the third quarter.

Robinhood Earnings Call Recap

Jason Warnick, Robinhood’s chief financial officer, said the company's future performance would fluctuate widely with the market. “Historically our growth has come in waves—the surges have come during periods of increased volatility or market events,” he said during a call after earnings were released. “Going forward, we expect to continue to see the ebb and flow of our growth with market conditions, as well as product launches.”

Robinhood's next earnings report (for Q4 FY 2021) is estimated to be released on March 2, 2022.

Article Sources
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  2. Visible Alpha. "Financial Data." Accessed Oct. 20, 2021.

  3. The Wall Street Journal. "Robinhood IPO Prices at $38 a Share." Accessed Oct. 26, 2021.

  4. Yahoo! Finance. "Robinhood Markets, Inc. (HOOD)." Accessed Oct. 26, 2021.

  5. Yahoo! Finance. "SPDR S&P 500 ETF Trust (SPY)." Accessed Oct. 26, 2021.

  6. Robinhood Markets Inc. "Robinhood Reports Third Quarter 2021 Results," Page 1. Accessed Oct. 26, 2021.

  7. Robinhood Markets Inc. "Form 10-Q for the Quarterly Period Ended June 30, 2021," Page 40. Accessed Oct. 26, 2021.

  8. Robinhood Markets Inc. "Robinhood Reports Third Quarter 2021 Results," Page 2. Accessed Oct. 26, 2021.

  9. Wall Street Journal. "Robinhood Revenue Falls on a Drop in Crypto Trading." Accessed Oct. 27, 2021.
  10. "Robinhood Markets Inc (HOOD): Financials." Accessed Oct. 26, 2021.

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