Shares of Robinhood HOOD gained 2.5% in after-hours trading in response to better-than-expected second-quarter 2024 results. Earnings per share of 21 cents handily surpassed the Zacks Consensus Estimate of 15 cents. Also, the figure compared favorably with 3 cents earned in the prior-year quarter.
Results benefited substantially from the crypto-trading boom, higher net interest income and a jump in Gold subscribers. Also, the company witnessed improvement in Monthly Active Users (MAU). However, a rise in expenses was a headwind.
Net income was $188 million, recording a massive jump from $25 million in the year-ago quarter.
Revenues Jump, Expenses Rise
Total net revenues surged 40% year over year to $682 million. The top line also beat the Zacks Consensus Estimate of $631.2 million.
During the quarter, Average Revenue Per User (ARPU) increased 35% year over year to $113.
Transaction-based revenues were $327 million, surging 69% year over year. This was primarily driven by improvement in cryptocurrencies revenues.
Net interest revenues grew 22% to $285 million. The rise was mainly attributable to higher interest-earning assets balance, increased securities lending activity and high interest rates.
Other revenues increased 19% to $70 million, primarily due to a rise in Gold subscription revenues. During the reported quarter, its Gold subscribers increased 61% year over year to 1.98 million.
Total operating expenses were $493 million, up 6%. The rise was primarily due to increased marketing and growth investments. Adjusted operating expenses increased 14% to $407 million.
During the reported quarter, adjusted EBITDA jumped 99% year over year to $301 million.
Other Business Activities
As of Jun 30, 2024, total assets under custody (AUC) jumped 57% year over year to $139.7 billion. The rise was driven by continued net deposits and higher equity and cryptocurrency valuations.
During the quarter, Equity Notional Trading Volumes increased 57% to $243.6 billion. Likewise, Options Contracts Traded rose 38% to 389.7 million, while Crypto Notional Trading Volumes surged 137% to $21.5 billion.
Further, the company reported MAU of 11.8 million, up 9% year over year.
Our View
The solid trading performance driven by strong client activity and trading volume will continue to support Robinhood’s financials. Further, the company’s strategic expansion initiatives (including the buyout of Pluto and the planned acquisition of Bitstamp) are steps in the right direction to diversify revenues.
Robinhood Markets, Inc. Price, Consensus and EPS Surprise
Robinhood Markets, Inc. price-consensus-eps-surprise-chart | Robinhood Markets, Inc. Quote
At present, HOOD carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Brokerages
Charles Schwab’s SCHW second-quarter 2024 adjusted earnings of 73 cents per share met the Zacks Consensus Estimate. The bottom line, however, declined 3% from the prior-year quarter.
SCHW’s results benefited from the solid performance of the asset management business, which drove the revenues. The absence of fee waivers and solid brokerage account numbers acted as tailwinds during the quarter. However, higher funding costs posed a major headwind. The company also recorded a rise in adjusted expenses.
Interactive Brokers Group’s IBKR second-quarter 2024 adjusted earnings per share of $1.76 beat the Zacks Consensus Estimate of $1.69. Also, the bottom line reflects a rise of 33.3% from the prior-year quarter.
Notably, in the reported quarter, IBKR recognized a loss of $48 million on positions taken over as customer accommodation due to a technical issue at the NYSE on Jun 3, 2024.
Results were primarily aided by an increase in revenues. The company recorded growth in customer accounts during the quarter, which, along with a rise in daily average revenue trades, was another tailwind. However, marginally higher expenses hurt IBKR’s results to some extent.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
