(Bloomberg) -- Robinhood Markets Inc. fell after the brokerage reported revenue that missed analyst estimates because of a customer promotion program that required the firm to offset a portion of the haul.
The company posted third-quarter net revenue of $637 million, less than the $663.5 million analysts predicted. Third-quarter net income was $150 million, which also missed forecasts for $169.8 million.
The company said net revenues were reduced by $27 million in the quarter due to promotions paid to customers who transfer their balances from other brokerages. Those match dollars get recognized as an offset to revenue, according to Chief Financial Officer Jason Warnick, who said the economics of the promotion — and the ability to compound growth over time — are “really attractive.”
“We’re really hitting all-time highs across all of our major financial metrics,” he said on a conference call discussing earnings.
Shares in the company tumbled in late trading and were down 9.5% at 4:36 p.m.
Robinhood is seeking to expand its offerings beyond the retail-brokerage services and commission-free trading that made the company a household name. The firm has expanded into retirement, credit cards, crypto and cash accounts, and has rolled out its app in the UK.
In a bid to attract more sophisticated investors to its platform, the firm just broadened its offerings to futures trading and index options. The Menlo Park, California-based company is also rolling out a browser-based trading platform that’s more akin to those offered by Interactive Brokers Group Inc. and Charles Schwab Corp., which are geared toward more mature investors and allow for advanced customization.
Warnick called it another strong quarter in the company’s statement.
“We drove 36% year-over-year revenue growth, and dropped most of that to the bottom line,” he said. “We entered 2024 with the goal of delivering another year of profitable growth, so we’re excited to have already broken prior full year records for both revenue and EPS.”
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