Stock trading app Robinhood reported Tuesday a huge revenue miss for the third quarter, as cryptocurrency trading dropped off.
Robinhood said that, barring any change in the market environment, the headwinds that dragged down last quarter — like lower retail trading activity — will persist into year-end.
Shares of the newly public company tanked by 8% in after-hours trading.
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For the third quarter, total net revenue came in at $365 million, missing a Refinitiv estimate of $431.5 million. Revenues increased 35% year over year but were well below the second quarter's revenue of $565 million, which was bolstered by a massive surge in crypto trading.
Third-quarter transaction based revenue totaled $267 million, with only $51 million coming from cryptocurrency trading. Revenue from crypto trading totaled $233 million in the second quarter, helped by interest in meme-inspired dogecoin.
"Q2 was kind of one of those idiosyncratic market events where there's this massive interest specifically in doge," Robinhood CFO Jason Warnick told CNBC. "We love it when those moments happen. It's a great way to bring a lot of new customers onto the platform. But we're really thinking about investing in crypto over the long term. And so it's you know, frankly, it's gonna be impossible for us to accurately predict ... revenue on a quarter-to-quarter basis."
Options trading contributed $164 million, and equities trading added $50 million to transaction-based revenue.
Net cumulative accounts dropped to 22.4 million in the third quarter from 22.5 million in the second quarter. Monthly active users totaled 18.9 million, down from 21.3 million in the second quarter.
Average revenue per user decreased by 36% to $65 year over year from $102.
Robinhood reported a net loss of $1.32 billion, or $2.06 per share. Wall Street was expecting a loss of $1.37 per share, according to Refinitiv. Share-based compensation expense totaled $1.24 billion in the third quarter of 2021.
"This quarter was about developing more products and services for our customers, including crypto wallets," said Vlad Tenev, CEO and co-founder of Robinhood Markets. "More than one million people have joined our crypto wallets waitlist to date."
Looking ahead, Robinhood said it expects fourth-quarter revenue no greater than $325 million. The company sees account growth in line with the 660,000 opened in the third quarter of 2021.
"For the three months ending December 31, 2021, we anticipate that many of the factors that impacted our third-quarter results, such as seasonal headwinds and lower retail trading activity, may persist," the company said in a press release.
Robinhood hit the public markets in July, opening at $38 per share. The stock closed at $39.57 per share Tuesday.
— with reporting from CNBC's Kate Rooney.
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