The second quarter of 2023 was the first profitable period for Robinhood Markets since the platform became public, which happened in July 2021.
The positive end of the second quarter from the point of view of the level of financial performance did not become an obstacle to the fall in the value of the shares of the company, which was at the center of the retail hype two years ago, by about 5% during off-hours. This was due to some other data contained in the income statement, which was published last Wednesday, August 2.
The company’s reporting for the second quarter in terms of the grade was overshadowed by the fact that cryptocurrency-related revenues decreased to $31 million amid a reduction in the volume of trading in stocks and options. Also, an unfavorable result was the loss of about a million active users per month. Currently, the company has a user base of 10.8 million people. For example, in the second quarter of 2022, this figure was 14 million customers.
Co-founder and CEO of Robinhood Vlad Tenev says that the market share of the company’s retailers demonstrates the dynamics of growth. He also noted that the percentage of cryptocurrency usage in the operational space continues to decline.
The company is currently at its lowest monthly user activity level in the last nine quarters. The loss of 3.2 million consumers in the second quarter triggered this historic low.
At the same time, the total number of accounts in the company’s corporate system in the second quarter increased by 70 thousand compared to the first quarter of this year. According to the results of the first half of 2023, this indicator increased by 310 thousand in terms of the ratio to the result of a year ago.
Vlad Tenev said that in the second quarter, the company achieved GAAP profitability as a public company for the first time in its history. He noted that the firm, acting on the basis of a bold roadmap, introduces innovative solutions for customers, increases the volume of assets, increases the size of its market share, and generally changes the industry for the better.
Crypto trading on the company’s retail-oriented investment platform showed an 18% decrease in the period from April to June compared to the first quarter. Vlad Tenev announced the expectation of continued investment in the digital currency.
The company’s net profit for the second quarter was fixed at $25 million. The company’s revenue for this period is equal to $486 million. Since the beginning of this year, the growth in the value of the company’s shares has exceeded 50%. But this indicator has also decreased by more than 80% compared to the record value fixed in August 2021.
The retail platform earns mainly on assets that bring interest income. Net interest income more than tripled year-on-year to $234 million. Revenue from client transactions amounted to $193 million, which indicates a decrease of 4%.
The $95 million cash deal will allow the company to offer customers access to loans. This opportunity brings the firm closer to its goal, which, according to Vlad Tenev, is to meet all the most important financial needs of the consumer.
In July, Robinhood made its 24—hour marketplace available to all categories of customers. As a result of this decision, users were able to invest in selected stocks and ETFs according to their schedules.
In the second quarter, Robinhood focused on artificial intelligence and the possibilities of its integration into its business structure. The company informed investors that in the context of the current technological era, certain circumstances have formed, within which each firm will eventually be forced to become an AI firm. At the same time, according to the results of the second quarter, Robinhood did not report any results of activities related to the use of artificial intelligence. The lack of specific technological solutions is observed against the background of active integration of AI-based tools on other platforms.
Experts say that the large-scale use of machine intelligence has created something like a new commercialization. In this case, it means the historical stage, during which AI-based chatbots optimize the process of interaction between companies and clients, providing quick responses to requests and optimizing the consumer experience by providing creative and comprehensive in term of information forms of data that satisfy text and voice requests.
According to experts, the new artificial intelligence-based tools are a revolutionary solution in the field of conversational technologies and one of the best examples of the use of fundamental large language models (LLM). Robinhood can apply these developments to the robotization of consulting services. This AI use case is one of the most discussed in the retail industry.
Vlad Tenev, in response to a question from one of the investors about plans related to artificial intelligence, did not talk about specific intentions and projects but confirmed his commitment to the belief that every company will eventually be forced to integrate AI into the structure of its activities.
As we have reported earlier, Robinhood to Buy Credit Card Startup.