With sales down 43% in the first quarter, Robinhood cuts losses

The number of monthly active users on the site has decreased by 10%.

It just announced the layoff of 9% of its workforce.

Robinhood (Nasdaq: HOOD) reported a 43 percent loss in overall net revenue for the first quarter of 2022 due to a downturn in retail trading demand. The quarterly sales number was $299 million, compared to $522 million in the prior year's first quarter.

By delivering commission-free services, the American broker revolutionized the retail brokerage business. However, between January and March, its transaction-based revenue fell by 48 percent to $218 million.

Even though options trading generated the majority of income ($127 million), its demand fell by 36%. Furthermore, bitcoin trading fell by 39% to $54 million, while stocks trading fell by 73% to $36 million, a 73 percent decrease year on year.

The broker reported a net loss of $392 million, or $0.45 per diluted share, for the quarter. On the other side, it dramatically reduced its losses: it posted a $1.4 billion loss in the first quarter of 2021, compared to $423 million in Q4.

However, adjusted EBITDA for the most recent quarter was minus $143 million, compared to a positive $115 million in Q1 of 2021.

Inadequate Client Metrics

Furthermore, Robinhood saw a significant drop in key customer metrics. When compared to the previous year, the number of monthly active users on the site fell by 10% to 15.9 million at the end of March. Furthermore, the number is expected to fall by 8% by the end of December 2021. The broker attributed the reduction to declining market volatility and the absence of customers with modest deposits.

Furthermore, the average revenue per user fell by 62% to $53.

The number of nets cumulatively funded accounts and assets under custody, on the other hand, climbed by 27% and 15%, respectively. These values, in absolute terms, were 22.8 million and $93.1 billion, respectively.

“We're seeing our clients impacted by the macroeconomic situation, which is evident in our performance this quarter,” said Jason Warnick, Chief Financial Officer of Robinhood. “At the same time, we've made headway on our long-term ambitions, which we're pursuing fiercely.”

The broker released its quarterly financials only days after announcing the layoff of 9% of its workforce. Furthermore, since its initial public offering (IPO) last year, the company's shares have been trading around an all-time low.

Meanwhile, Robinhood has continued to grow its international reach, most recently acquiring Ziglu, a UK-licensed cryptocurrency startup.