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Does the trade boom of 2020 and 2021 slowdown?
That’s a question The Exchange has had in mind since Robinhood released its last IPO filing. The popular investment app focused on U.S. consumers told investors in the document that it expects third-quarter revenue to decline compared to its second-quarter performance. The company has highlighted historically high crypto volumes in previous quarters, which is part of the reason for the expected decline in revenues.
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Naturally, we thought of Coinbase.
It’s probably fair to say that Coinbase and Robinhood are bullish enough about the cryptocurrency market to not be bothered by short-term changes in crypto trading volumes. Coinbase discussed the growing and waning consumer interest in trading cryptos in its own IPO deposits, for example.
The now public unicorn has been through crypto ups and downs. A decline in consumer interest over the next few months or quarters isn’t a big deal, assuming one keeps the outlook long enough and the crypto-infused future that one’s fans are waiting for comes true.
The surge in demand for cryptocurrencies among U.S. consumers has lifted many boats in recent quarters. Coinbase performed incredibly well at the start of 2021 thanks to a rise in cryptocurrency prices that resulted in retail interest and trading fees. Robinhood has also seen a rush in demand for crypto, something TechCrunch has explored here. And Square itself has seen crypto revenues explode.
Of course, equity interest and the demand for options also increased the fortunes of many mainstream fintechs during the COVID-19 savings and investment boom. But crypto revenue has had a big role to play. Let’s take a look at both situations through the lens of Robinhood’s latest.
Robinhood Market Notes
There are some 316 mentions of “cryptocurrency” in Robinhood’s latest IPO filing. We’re going to stick with the ones we think are most important.
As a background, Robinhood shared preliminary second quarter data. We’ve discussed that here if you want to dig deeper into the aggregate numbers. But after its release of concrete numbers, Robinhood had some interesting notes on the current quarter (TechCrunch emphasis):
Trading activity was particularly strong in the first two months of the 2021 period, returning to levels more in line with previous periods in the final weeks of the quarter ended June 30, 2021, and remained at levels similar to beginning of the third trimester. We expect our revenues for the quarter ended September 30, 2021 to be lower than the quarter ended June 30, 2021, due to lower levels of trading activity from record levels of trading activity, especially in cryptocurrencies, during the quarter ended June 30, 2021, and the expected seasonality.
And in a discussion of other performance metrics, including funded accounts and the like, Robinhood had this to say (TechCrunch focus):
We expect the growth rate of these KPIs to be lower for the period ended September 30, 2021., compared to the quarter ended June 30, 2021, due to the exceptionally strong interest in trading, especially in cryptocurrencies, we have known during the quarter ended June 30, 2021, and the seasonality of overall business activities.
KPM’s declining revenue and slowing growth isn’t exactly the best set of metrics in the world to display on an IPO. But a quick look at Robinhood’s income in 2020 indicates that the unicorn is unlikely to be able to show year-over-year growth in the last two quarters of 2021. Still, its period of rapid income growth seems to have come to an end. after Robinhood has posted quarterly revenue expansion since Q4 2019.
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