Robinhood Markets Inc is cutting nearly a quarter of its staff as the pandemic outbreak plunges trading.
The app-based brokerage laid off 23% of its staff as it announced a 44% drop in revenue due to plunging trading activity, in an earnings announcement on Tuesday, which came a day earlier than expected and beat analysts’ expectations.
The Menlo Park, California-based brokerage posted net sales for the second quarter ended June 30 of $318 million as revenue from equity, options, and currency trading. electronics more than halved, from $565 the year before, according to filings with US Securities and Exchange Commissions.
The company said it would begin another round of layoffs affecting 780 employees, above 9% of full-time employees laid off earlier this year. It will also change the organizational structure to promote higher cost discipline.
Robinhood’s total operating expenses in the second quarter increased 22% year over year. The reorganization will cost the company between $30 million and $40 million, Robinhood said.
The company posted a net loss of $295 million. According to Refinitiv IBES data, Robinhood reported a loss of 32 cents per share versus analyst estimates of a loss of 37 cents per share.
It was originally scheduled to report earnings on August 3, but released them a day early after publishing a blog post about job cuts and reorganization.
Shares of Robinhood were down nearly 1% at $9.15 in after-hours trading.
But its customer base was astounded by Decade high inflation and rising interest rates, sucking liquidity out of global markets and sending cryptocurrencies plunging.
Robinhood is one of many emerging fintech companies that began cutting jobs ahead of the expected recession, along with Cryptocurrency exchange Coinbase Global Inccompany buy now Klarna and NFT OpenSea platform, while several crypto companies including C Network and Voyager Digital collapsed amid Crypto Crash.
Robinhood’s CEO, Vlad Tenev, said in a blog post Tuesday that the layoffs earlier this year haven’t gone far enough.
“As CEO, I approved and took responsibility for our ambitious HR trajectory – this is on me,” said Tenev.
Tenev, who founded the company in 2013 with Stanford University roommate Baiju Bhatt, told employees that they would receive Slack messages about their status. Those who lost their jobs will be allowed to stay at the company until October 1.
Transaction-based revenue across Robinhood’s three core businesses of options, stocks and cryptocurrencies fell 55%, with crypto trading revenue, which lifted the company’s results in 2018. last year, down 75% from the same period last year.
Robinhood’s monthly active users also appear to be down about a third, at 14 million in June 2022 compared to 21.3 million in Q2 2021.
Fintech stocks bear the brunt of the broader market decline as a risk-on environment coupled with higher funding costs and sluggish e-commerce growth has prompted traders to retreat from the sector. High growth technology so far this year.
Shares of Robinhood, which sold for $38 a share in an initial public offering last year, have also been caught in the crossfire of the crypto crisis and have dropped nearly 88%.