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Robinhood’s (HOOD) Q1 Crypto Trading Volume Rises as SEC Action Looms
Robinhood (HOOD) recorded a Q1 notional crypto trading volume of $36 billion, a 224% increase from year-ago levels.
This led to a 232% increase in crypto-related revenue to $126 million, a primary factor, said the companywhile increasing overall Q1 transaction-based revenue by 59% year-over-year to $329 million.
Robinhood had $26.2 billion worth of users’ cryptocurrencies in custody as of March 31, a 78% jump from the end of 2023.
The higher transaction revenue due to crypto trading is not surprising as another publicly traded crypto pair, Coinbase (COIN), also reported “explosive” Q1 numbers due to improving crypto market conditions.
Robinhood also handily beat its sales and earnings estimates for the first quarter. The company reported revenue of $618 million in the quarter, above analyst estimates of $552.7 million, according to data from FactSet. First-quarter earnings were $0.18 per share, beating analysts’ average expectation of $0.06.
Robinhood shares rose about 7% in after-market trading on Wednesday, while Coinbase shares fell slightly. HOOD shares are up about 40% year to date, while COIN has gained 22%.
The company announced last week receipt of a well notice from the U.S. Securities and Exchange Commission for its cryptographic unit.
Robinhood CFO Jason Warnick said during an earnings call that “we are, of course, disappointed to have received the notice.” However, he noted that the Well Notice has no impact on customer accounts and that it is “business as usual” for the company’s crypto arm.
“We have been very conservative in our approach in terms of locations listed and services offered. And we are a highly regulated company and apply the same legal and compliance standards that we use for our brokerage to how we manage our crypto. It’s disappointing to see more regulation through enforcement,” Warnick added.
UPDATE (May 8, 21:27 UTC): Updates to add CFO comments from earnings call.