Robinhood Markets Inc. showcased a resilient performance in the first quarter of 2024. It has transitioned from a significant loss last year to posting its second consecutive quarterly profit.
The company announced on Wednesday that its net income reached $157 million. This achievement marks a stark turnaround from a net loss of $511 million in the same quarter the previous year.
Robinhood’s Performance in Q1 Exceeded Expectations
In its latest quarterly report, Robinhood announced a 40% increase in net revenues, reaching $618 million. Transaction-based revenues increased by 59%, with crypto transactions playing a big part. Specifically, revenue from crypto transactions surged by 232%, amounting to $126 million.
Additionally, Robinhood reported a substantial increase in crypto assets under custody, which stood at $26 billion by the end of March. This represents a 78% rise from the end of 2023.
Robinhood’s Assets Under Custody (AUC). Source: Robinhood’s Q1 2024 Earnings Presentation
Robinhood also achieved all-time highs in both net deposits and Gold subscribers. Furthermore, the quarter saw Robinhood making significant strides in user engagement and product offerings. Jason Warnick, Robinhood’s Chief Financial Officer (CFO), expressed satisfaction with the results.
“We delivered significant revenue growth and margin expansion in Q1 as we remain focused on driving another year of profitable growth in 2024,” Warnick stated.
The results significantly exceeded Wall Street expectations. The earnings per share were 18 cents, far above the anticipated 6 cents. Meanwhile, the net revenue surpassed forecasts of $549 million.
Following the company’s growth and strong financial performance, Robinhood (HOOD) shares experienced a surge. During after-hours trading, the shares advanced by 6.3%, reaching $19.01.
HOOD Price Performance. Source: Google Finance
However, Robinhood now faces increased scrutiny from the US Securities and Exchange Commission (SEC). The SEC recently issued a Wells notice for potential violations concerning Robinhood’s crypto practices.
The concerns involve the platform’s crypto listings, custody, and operational procedures. This could result in various enforcement actions.
Robinhood’s Chief Executive Officer, Vlad Tenev, expressed frustration over the SEC’s actions on his X (Twitter) account. Tenev criticized the regulatory body for what he considers an excessive and damaging focus on crypto. He articulated a strong commitment to defending Robinhood’s business.
“While we strive to maintain positive and productive relationships with our regulators, if necessary we will use our resources to contest this matter in the courts, with the intent of both defending our crypto business and establishing regulatory clarity in the United States for the benefit of our customers,” Tenev affirmed.
This tension between Robinhood and the SEC is part of a broader regulatory tightening across the crypto sector. SEC Chairman – Gary Gensler has made clear his aim to enforce stringent regulations to safeguard investors and ensure comprehensive disclosures by crypto platforms.
With the industry facing potential regulatory adjustments, the outcomes could significantly influence both Robinhood’s operations and the wider market environment.
