Robinhood's quarterly revenue disappoints on crypto slowdown, shares fall

By Ateev Bhandari

Feb 10 (Reuters) - Robinhood's HOOD.O fourth-quarter revenue missed Wall Street expectations on Tuesday as a turbulent quarter for digital assets weighed on the company's crypto trading revenue, sending the retail brokerage's shares down 6.3% in after-hours trading.

The Menlo Park, California-based company reported record revenue of $1.28 billion during the three months ended December 31, missing the analysts' consensus estimate of $1.34 billion, according to estimates compiled by LSEG.

Individual investors have become a major force supporting equities markets, snapping up stocks during selloffs driven by AI bubble fears and geopolitical turmoil.

However, not all asset classes benefit from persistent volatility.

Robinhood's transaction-based revenue rose 15% to $776 million in the quarter, led by a 54% rise in equities revenue, while options climbed 41%.

Quarterly revenue from crypto trading came in at $221 million, missing analysts' expectations of $248 million. The volatile sector has now struggled for months since a crash last October sent bitcoin nearly halving from its October 6 peak as leveraged positions were washed out.

U.S. spot-bitcoin ETFs witnessed outflows of about $2 billion in December and $7 billion in November, Deutsche Bank analysts said in a note to clients.

"For those customers that trade a lot, they're on the lower tier," Robinhood's finance chief Shiv Verma told Reuters in an interview, referring to the brokerage's pricing structure for crypto trading.

"The active traders were still really active," said Verma, who took the top finance job last week, adding that those traders are the "lowest tier of pricing."

"Because of that, the rebate rate that we got was a little bit lower relative to what folks were expecting."

The results come amid a selloff across U.S. brokerages as AI-fueled disruption fears transcend software and IT stocks to financials.

Brokerages, such as Robinhood and rival Public, have been making headway into the sector via their low-cost and tech-enabled offerings.

Robinhood offers its Gold subscribers an AI-powered investing assistant that allows users to chat through trading ideas and enact orders.

Gold subscribers increased 58% to 4.2 million in the quarter from the previous year.

Robinhood's fourth-quarter profit came in at 66 cents per share, beating Wall Street estimates of 63 cents.