Robinhood (HOOD) third-quarter earnings 2021

Stock investing app Robinhood described Tuesday a enormous revenue overlook for the third quarter, as cryptocurrency trading dropped off.

Robinhood said that, barring any modify in the industry ecosystem, the headwinds that dragged down previous quarter — like decreased retail buying and selling action — will persist into year-stop.

Shares of the newly general public organization tanked by 8% in after-hrs investing.

For the 3rd quarter, overall net revenue arrived in at $365 million, lacking a Refinitiv estimate of $431.5 million. Revenues enhanced 35% year around yr but were very well under the second quarter’s profits of $565 million, which was bolstered by a huge surge in crypto buying and selling.

3rd-quarter transaction primarily based profits totaled $267 million, with only $51 million coming from cryptocurrency buying and selling. Profits from crypto buying and selling totaled $233 million in the 2nd quarter, served by curiosity in meme-impressed dogecoin.

Vlad Tenev, co-founder and CEO of Robinhood rings the opening bell at the Nasdaq on July 29th, 2021.

Supply: The Nasdaq

“Q2 was form of just one of people idiosyncratic marketplace events where there is certainly this large fascination particularly in doge,” Robinhood CFO Jason Warnick told CNBC. “We adore it when those times transpire. It is a excellent way to deliver a lot of new clients onto the system. But we’re seriously wondering about investing in crypto around the lengthy term. And so it truly is you know, frankly, it’s gonna be difficult for us to properly predict … earnings on a quarter-to-quarter basis.”

Options trading contributed $164 million, and equities buying and selling included $50 million to transaction-centered revenue.

Internet cumulative accounts dropped to 22.4 million in the third quarter from 22.5 million in the second quarter. Month to month active end users totaled 18.9 million, down from 21.3 million in the second quarter.

Normal revenue per consumer lessened by 36% to $65 yr more than yr from $102.

Robinhood described a net reduction of $1.32 billion, or $2.06 per share. Wall Street was anticipating a decline of $1.37 per share, in accordance to Refinitiv. Share-primarily based compensation expense totaled $1.24 billion in the third quarter of 2021.

“This quarter was about building much more products and solutions for our shoppers, which include crypto wallets,” explained Vlad Tenev, CEO and co-founder of Robinhood Markets. “More than just one million people have joined our crypto wallets waitlist to day.”

On the lookout ahead, Robinhood explained it expects fourth-quarter earnings no larger than $325 million. The firm sees account growth in line with the 660,000 opened in the third quarter of 2021.

“For the 3 months ending December 31, 2021, we foresee that many of the variables that impacted our third-quarter final results, these as seasonal headwinds and decreased retail investing exercise, may persist,” the company claimed in a push release.

Robinhood strike the public marketplaces in July, opening at $38 for each share. The inventory shut at $39.57 for every share Tuesday.

— with reporting from CNBC’s Kate Rooney.

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