Robinhood earnings: What to watch
Robinhood expects to report a quarterly net loss between $487M and $537M and revenue between $546M and $574M
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Robinhood Markets will report second quarter earnings for 2021 after the bell on Wednesday. The announcement will mark the first report since the commission-free trading app made its highly anticipated debut on the Nasdaq last month.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HOOD | ROBINHOOD MARKETS INC. | 35.09 | -0.99 | -2.74% |
Although its financial performance will be watched by investors closely, Robinhood has already detailed its second quarter projections in its amended S-1 prospectus on July 19.
For the three months ending June 30, 2021, Robinhood expects to report a net loss between $487 million and $537 million, compared to net income of $58 million a year ago, and revenue between $546 million and $574 million, compared to $244 million a year ago.
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As for its customer growth, Robinhood expects to report 22.5 million net cumulative funded accounts, up 130% from 9.8 million funded accounts a year ago, and monthly active users of 21.3 million, up 109% from 10.2 million monthly active users a year ago.
While the company's trading activity surged to new records earlier this year due to the short squeeze on stocks like GameStop and AMC Entertainment and increasing popularity of cryptocurrencies, Robinhood says its trading levels are "returning to levels more in line with prior periods during the last few weeks of the quarter" and have "remained at similar levels into the early part of the third quarter."
Robinhood expects third quarter revenue to be lower than the second quarter due to "decreased levels of trading activity relative to the record highs in trading activity, particularly in cryptocurrencies, during the three months ended June 30, 2021, and expected seasonality."
An important metric for investors that has not yet been revealed will be Robinhood's payment for order flow (PFOF), a practice in which discount brokers sell their customers' buy and sell orders to market makers like Citadel Securities and Virtu Financial. Payment for order flow accounted for 75% and 81% of Robinhood's total revenue, respectively, in its fourth quarter of 2020 and first quarter of 2021.
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Robinhood executives will discuss the quarterly financial results further on a conference call at 5 p.m., where the company will take questions directly from retail investors through Say Technologies.
The top three questions on retail investors minds are whether Robinhood will pay out a dividend in the future, get a crypto wallet, and what its plans are regarding IRA, 401(k) and HSA accounts.
Shares are up more than 4% during Wednesday's trading session ahead of the announcement.