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Robinhood outlined its 2024 expense plan, which includes investments in new products such as a professional trader offering on its website, index options, and futures.
Robinhood Markets Inc, a leading online trading platform based in the United States, experienced a significant surge in its stock price, which rose more than 10% in after-hours trading on Tuesday.
The surge followed the company’s announcement of a quarterly profit and revenue that exceeded Wall Street’s expectations, driven by a rise in crypto deposits and an increase in monthly users.
Outperforming Analysts’ Expectations
In the fourth quarter of 2023, Robinhood reported a profit of $30 million, or 3 cents per share, a significant improvement from a loss of $166 million, or 19 cents per share, in the same quarter of the previous year.
Revenue also saw a substantial increase, rising 24% to reach $471 million for the quarter ending December 31, 2023. This figure represents a record of $1.9 billion in revenue over the last twelve months. The company attributed the growth in part to an 8% increase in transaction-based revenue, reaching $200 million primarily from cryptocurrencies.
Additionally, in the fourth quarter, the Average Revenue Per User (ARPU) was recorded at $81. For net interest revenues, the company also saw significant growth, rising by 41% year-over-year to $236 million in Q4.
Robinhood said its adjusted operating expenses increased by 14% year-over-year to $364 million in Q4. Furthermore, the company’s diluted share count decreased by nearly 5% in 2023, and it anticipates a dilution of 2% or less in 2024.
According to FactSet, market analysts had anticipated the online stock market to report a loss of a penny per share on revenue of $455 million but the company ended up outperforming their prediction.
Robinhood ended the quarter with 10.9 million monthly active users, up from 10.3 million in September. Furthermore, the company reported assets under custody (AUC) of $103 billion in the final quarter of 2023, marking a substantial 65% increase year-over-year from the previous year. The online trading platform attributed the growth to strong net deposits and higher equity valuations.
Financial Outlook for 2024
Looking ahead, Robinhood outlined its 2024 expense plan, which includes investments in new products such as a professional trader offering on its website, index options, and futures. Part of its 2024 plan also includes introducing new features and international expansion.
The online trading platform has set its sights on the UK market and other parts of the European markets. For the UK, Robinhood plans to offer brokerage services to customers in the region while it provides crypto services to other parts of the EU.
The company projected operating expenses to be in the range of $1.85 billion to $1.95 billion for the year.
CEO Vlad Tenev expressed optimism about the company’s performance, stating that they had already surpassed their Q4 2023 numbers in terms of funded customers and net deposits in the first half of Q1 2024. He emphasized the company’s growth in trading market share and its global expansion efforts.
“2023 was a strong year as our product velocity continued to accelerate, our trading market share increased, and we started to expand globally. And we’re off to an even better start in 2024, as we’ve already brought in more Funded Customers and Net Deposits through the first half of Q1 than we did in all of Q4 2023,” he said.
