Robinhood Markets Inc is slashing practically 1 / 4 of its employees as a pandemic buying and selling growth has slumped.
The app-based brokerage dismissed 23 p.c of its employees because it posted a 44 p.c decline in income on slumping buying and selling exercise, in an earnings announcement on Tuesday that got here a day sooner than scheduled and beat analyst expectations.
The Menlo Park, California-based brokerage posted web income for the second quarter ended June 30 of $318m as income from fairness, choices and crypto buying and selling greater than halved, in contrast with $565m a 12 months earlier, in line with a submitting with the US Securities and Alternate Fee.
The corporate stated it might start one other spherical of layoffs affecting 780 workers, on prime of the 9 p.c of full-time employees laid off earlier this 12 months. It would additionally change its organisational construction to drive higher value self-discipline.
Robinhood’s complete working bills for the second quarter rose 22 p.c on the identical interval final 12 months. The reorganisation will value the agency between $30m to $40m, Robinhood stated.
The corporate posted a web lack of $295m. Stripping out the restructuring fees, Robinhood reported a lack of 32 cents per share versus analyst estimates of a lack of 37 cents per share, in line with Refinitiv IBES information.
It was initially scheduled to report earnings on August 3, however launched them a day early after publishing a weblog submit concerning the job cuts and reorganisation.
Robinhood’s shares had been down practically 1 p.c at $9.15 in after-hours buying and selling.
Robinhood’s easy-to-use interface made it a success amongst younger traders buying and selling from dwelling on cryptocurrencies and shares corresponding to GameStop Corp throughout the COVID-19 pandemic.
However its buyer base has been spooked by decades-high inflation and rising rates of interest, which have sucked liquidity out of worldwide markets and despatched cryptocurrencies slumping.
Robinhood is one in every of many fintech upstarts which have began slashing jobs forward of an anticipated recession, together with crypto change Coinbase International Inc, buy-now-pay-later firm Klarna and NFT platform OpenSea, whereas a handful of crypto firms together with Celsius Community and Voyager Digital collapsed amid the broader crypto crash.
Robinhood Chief Govt Officer Vlad Tenev stated in a weblog submit on Tuesday that employees cuts earlier this 12 months had not gone far sufficient.
“As CEO, I permitted and took accountability for our formidable staffing trajectory – that is on me,” Tenev stated.
Tenev, who based the corporate in 2013 with Stanford College roommate Baiju Bhatt, informed workers they might obtain a Slack message about their standing. Those that are shedding their jobs will likely be allowed to stick with the agency till October 1.
Transaction-based revenues throughout Robinhood’s three principal enterprise strains of choices, equities and cryptocurrencies fell 55 p.c, with crypto transaction income, which had buffered the corporate’s outcomes final 12 months, falling 75 p.c year-on-year.
Robinhood’s month-to-month lively customers additionally appeared to fall by roughly a 3rd, at 14 million for June 2022 in contrast with 21.3 million within the second quarter of 2021.
Fintech shares bore the brunt of a broader market decline as a risk-off surroundings coupled with larger funding prices and sluggish e-commerce progress led to merchants pull again from high-growth tech to date this 12 months.
Shares of Robinhood, which had been bought at $38 a share in its preliminary public providing final 12 months, had been additionally caught within the crosshairs of the crypto meltdown and have shed practically 88 p.c.