Online brokerage Robinhood will lay off nearly a quarter of its employees, citing a continued deterioration of the macro environment and a broad crypto market crash.
The bad news came in a blog post on August 2 from cofounder and CEO Vlad Tenev, on the same day it released tepid Q2 financial results, while the New York Department of Financial Services announced a $30 million fine for the company’s crypto branch due to alleged anti-money laundering, cybersecurity, and consumer protection violations.
Tenev wrote that the layoffs would impact all functions in the company, particularly operations, marketing, and program management, with around 23% of the staff let go. The Financial Times estimated the number of employees impacted to be around 780.
“Departing Robinhoodies will be offered the opportunity to remain employed with Robinhood through October 1, 2022 and receive their regular pay and benefits. They will also be offered job search assistance (including an opt in Robinhood Alumni Talent Directory).”
– zerohedge (@zerohedge) August 2, 2022
Robinhood laid off 9% of its staff earlier this year, but Tenev said the cuts “did not go far enough.” He pointed to economic conditions and the collapse of the crypto market as factors in the move.
“This has further reduced customer trading activity and assets under custody.”
In addition, the company had wrongly assumed the heightened engagement seen during the beginning of the COVID-19 pandemic would continue. Tenev wrote:
“As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me.”
The company issued its quarterly financial results a day earlier than scheduled. Results were disheartening, with $318 million in net revenue, down 44% year-on-year, although up 6% over the last quarter. Net loss was $295 million, narrowed from a net loss of $502 million in Q2 2021.
Monthly active users were down 1.9 million from last quarter to 14.0 million in June, and assets under custody dropped 31% to $64.2 billion in that time.
Revenue from cryptocurrency rose 7% quarter-on-quarter to $58 million, however.
Related: Robinhood makes significant strides in crypto business in Q1 despite falling revenue
Robinhood enjoyed a significant spike in share price in May after FTX founder and CEO Sam Bankman-Fried paid $650 million for a 7.6% stake in the company. Share prices fell more than 4% Tuesday in after-hours trading, according to FT.