Online brokerage Robinhood reveals revenue surge in IPO filing

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FILE PHOTO: The Robinhood App is displayed on a screen in this photo illustration January 29, 2021. REUTERS/Brendan McDermid/Illustration/File Photo

July 1, 2021

(Reuters) -Robinhood Markets Inc, the online brokerage at the center of Wall Street’s recent retail trading frenzy, revealed a huge surge in revenue on Thursday as it set the stage for one of the most anticipated stock market listings of the year.

The company, hit with a $70 million fine by regulators this week for systemic failures and providing false and misleading information, reported a 245% jump in revenue last year, according to the filing, as it fed on the surge in trading by ordinary Americans stuck at home.

Revenue for the year ended Dec. 31, 2020 rose to $959 million, the company said. Net income was $7 million, compared to a loss of $107 million a year earlier.

For the three months ended March 31, total revenue soared 309% to $522 million from the same period a year earlier.

Robinhood was at the center of a confrontation between a new generation of retail investors grouping on social media and Wall Street hedge funds in late January.

The platform’s easy-to-use interface has made it a go-to for young investors trading from home during coronavirus-induced restrictions and its popularity has soared over the past 18 months. The Menlo Park, California-based was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt.

Robinhood, which plans to list on the Nasdaq under the symbol “HOOD”, had in March confidentially submitted plans to regulators for a U.S. IPO.

In December, Reuters reported that the app had picked Goldman Sachs Group Inc to lead preparations for an initial public offering, which could value it at more than $20 billion.

Robinhood said underwriters would reserve between 20% and 35% of its Class A shares for sale to customers through its IPO Access feature, a platform it unveiled in May to give retail investors the opportunity to snap up shares in IPOs.

The company, however, faced criticism after it was forced to curb trading in the middle of the surge this year in GameStop and other previously beaten down stocks.

At the time, the company was forced to raise $3.4 billion in emergency funds after its finances were strained by the massive jump in retail trading and a resulting increase in capital demands from clearing houses.

Those funding rounds were led by Ribbit Capital and included existing investors ICONIQ, Andreessen Horowitz, Sequoia Capital, Index Ventures and New Enterprise Associates. The latest financing valued Robinhood at around $30 billion, according to people familiar with matter.

Goldman Sachs and J.P. Morgan are the lead underwriters for Robinhood’s offering.

(Reporting by Anirban Sen and Noor Zainab Hussain in Bengaluru; Editing by Sriraj Kalluvila)





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