Crypto’s surge and meme stocks helped propel Robinhood past Wall Street estimates — and yet those same tailwinds might turn into headwinds.
And amid the continued volatility of the markets and cryptos, Robinhood’s churned accounts grew year over year and quarter over quarter, the company said in its first quarterly report as a publicly traded company.
To that end, in terms of the high-level metrics, the company said that revenues in the second quarter were more than double — surging to $565 million, better than the $560 million expected. Drilling down a bit, as noted in the earnings presentation materials that accompanied the Q2 earnings release on Wednesday (Aug. 18), crypto-related revenues surged to $233 million of the total $451 million in the transaction-related top line, a marked increase from the $5 million in crypto transaction-related sales seen a year ago.
In the quarter, total assets under custody came to $102 billion, up from $33 billion a year ago.
Net Funded Accounts Rise
At the end of the period, monthly active users stood at 21.3 million, up from the 17.7 million in the first quarter of this year and leagues above the 10.2 million a year ago. Net cumulative funded accounts were 22.5 million, compared to 9.8 million last year.
The company said that its churned accounts in the period were about 900,000, up from 600,000 in the first quarter. The company has said in its earnings release that churned accounts are defined as those where “their accounts were previously funded accounts and their account balance (which is measured as the fair value of assets in the user’s account less the amount due from the user) drops to or below zero dollars.”
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The company warned that moving ahead, “for the three months ended September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than in the prior quarter,” the company said.
Management said on the conference call to discuss earnings that 62 percent of crypto trading in the quarter was tied to Dogecoin — up from 34 percent in the first quarter of the year. Management projected that moving forward, there should be more diversification in its revenue streams. With a bit more granular detail, 63 percent of funded accounts traded crypto, up from 11 percent last year.
Management also said on the call that there has been a “ton of enthusiasm” from the crypto community and Dogecoin traders in particular for access to crypto wallets — and that this is something that the company will look to roll out over the near term, in addition to withdrawal and deposit functionality. The commentary also revealed that enthusiasm for cash management offerings has been growing; that offering now has more than five million customers.
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