Robinhood beats profit estimates on interest income strength
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The company reported a profit of $157 million or 18 cents per share for the three months ended March 31, compared with expectations of 6 cents per share, according to LSEG.
Monthly Active Users climbed 16% to 13.7 million in the quarter.
The company, which has been trying to register with the U.S. Securities and Exchange Commission for nearly two years, received an enforcement action notice from the regulator over crypto tokens traded on its platform earlier this week.
Robinhood Crypto enables customers to deposit and withdraw cryptocurrencies to and from its custodial platform and also routes customer orders to liquidity providers based on the lowest price.
Policy tightening by the Federal Reserve has allowed companies to earn more from their cash deposits and their portfolio of bond investments.
Brokers like Robinhood, which allows traders to borrow against their investments, can charge higher interest on such loans.
The company’s net interest revenue jumped 22% to $254 million.
Robinhood was at the center of the 2021 retail trading frenzy, driven by mom-and-pop investors who used the company’s commission-free platform to pump money into so-called “meme stocks” during the pandemic-era lockdowns.
Hopes of a soft landing encouraged retail traders to wade back into the market, allowing the Menlo Park, California-based company to rake in 59% higher transaction-based revenue.