By Hannah Lang
(Reuters) -Robinhood Markets Inc reported higher second-quarter revenue on Wednesday as interest rates continued to buoy the online brokerage’s interest income, achieving profitability for the first time as a public company even as it saw fewer users.
Shares of the company, which was at the center of 2021’s retail trading frenzy, were last down 4% in extended trading as investors scrutinized the platform’s decline in monthly active users.
Net interest revenue soared 243% to $442 million in the second quarter compared to a year earlier, as the brokerage’s margin investing business benefited from the U.S. central bank’s monetary policy tightening campaign to combat decades-high inflation.
Taking some of the shine off gains from higher rates, retail traders — who had used Robinhood’s platform through most of 2021 to pump money into so-called meme stocks — pulled back amid volatile market conditions.
As a result, transaction-based revenue declined 5% in the second quarter. Monthly active users also decreased to 10.8 million, one million fewer compared to the previous quarter and 3.2 million fewer than the year prior.
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Earnings per share in the second quarter were $0.03, beating analysts’ average estimate of a loss of $0.01, according to Refinitiv data.
“We’ve been talking about for the last several quarters how we want to be lean and scrappy from a cost perspective, and we’ve been keeping our eye on that very closely,” Jason Warnick, Robinhood’s chief financial officer, told reporters.
In June, the Menlo Park, California-based company announced was buying financial technology firm X1 Inc for about $95 million in cash as it looks for new revenue streams to counter weakness in its mainstay trading unit. The company also said it was cutting some of its full-time jobs, as it looks to offset costs amid slowing demand for its services.
(Reporting by Hannah Lang in Washington; Editing by Susan Heavey)