MENLO PARK, Calif. - Robinhood (NASDAQ:HOOD) Markets, Inc. (NASDAQ:HOOD) saw its shares drop more than 10% in premarket trading Thursday as the company's third-quarter results fell short of analyst expectations, despite showing strong year-over-year growth.
The financial technology company reported adjusted earnings per share of $0.17 for the quarter ended September 30, missing the consensus estimate of $0.18. Revenue came in at $637 million, up 36% YoY but below the $653.35 million analysts were expecting.
"We view this quarter as somewhat of a seasonal deceleration in the business after a robust 1H24 with record net deposit growth and benefits from a peak environment," JPMorgan analysts said in a note.
"As such, we are not surprised by the significant, negative stock reaction post-market as HOOD shares have already run +121% YTD."
Robinhood's total net revenues increased 36% YoY to $637 million, driven by a 72% jump in transaction-based revenues to $319 million. Options revenue surged 63% to $202 million, while cryptocurrency revenue more than doubled to $61 million. Net interest revenues grew 9% to $274 million.
"I'm really proud of our Q3 results and how smoothly our product engine is humming," said Vlad Tenev, CEO and Co-Founder of Robinhood. "We have a ton of momentum, and we're just getting started."
The company reported net income of $150 million, or $0.17 per diluted share, compared to a net loss of $85 million, or -$0.09 per share, in the same quarter last year. Total operating expenses decreased 10% YoY to $486 million.
Robinhood's Assets Under Custody (AUC) increased 76% YoY to $152.2 billion, while Net Deposits were $10.0 billion for the quarter. The company added 1 million Funded Customers YoY, bringing the total to 24.3 million.
Looking ahead, Robinhood maintained its full-year 2024 outlook for Non-GAAP combined Adjusted Operating Expenses and SBC at $1.85 billion to $1.95 billion.
Despite the earnings miss, Robinhood highlighted its product innovations, including the recent launch of Robinhood Legend, a new desktop trading platform, and plans to introduce index options and futures in the coming months.
Despite near-term challenges, Piper Sandler analysts said they continue to see HOOD as well positioned "to win across many areas of its business in the coming years."
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