MENLO PARK, Calif. - Robinhood (NASDAQ:HOOD) Markets, Inc. (NASDAQ:HOOD) shares leaped 10.5% following an upbeat fourth-quarter earnings report, where the company posted an earnings per share (EPS) of $0.03, exceeding the analyst consensus of a $0.01 loss.
The online brokerage's revenue for the quarter also surpassed expectations, coming in at $471 million against the estimated $456.33 million.
Shares rose 15% on the news.
The company's Q4 results marked a significant turnaround, with net income reaching $30 million, compared to a net loss of $166 million in the same quarter last year. This improvement was propelled by a 24% year-over-year (YoY) increase in total net revenues, attributed to growth in net interest and transaction-based revenues.
Notably, net interest revenues surged 41% YoY to $236 million, while transaction-based revenues saw an 8% uplift. Robinhood's Gold subscriptions contributed to a 30% rise in other revenues, reaching $35 million.
Chief Financial Officer Jason Warnick highlighted the company's "significant profitable growth" and record full-year revenues, which climbed 37% YoY to $1.9 billion. Robinhood's focus on maximizing EPS over time is aimed at driving long-term shareholder value, with the company already observing a promising start to 2024 with increased Funded Customers and Net Deposits.
For the upcoming year, Robinhood's expense plan anticipates continued growth investments in new products and international expansion, while improving efficiency in existing operations. The company projects GAAP total operating expenses and combined non-GAAP Adjusted Operating Expenses and SBC to be between $1.85 billion and $1.95 billion for full-year 2024.
CEO Vlad Tenev expressed optimism about the company's accelerated product velocity, market share growth, and global expansion efforts. He also emphasized the strong start to the first half of Q1 2024, with more Funded Customers and Net Deposits than the entirety of Q4 2023.
Robinhood's performance in the fourth quarter and the positive outlook for the coming year reflect the company's strategic initiatives and investment in product development, which have resonated positively with investors, as evidenced by the significant stock price surge.
InvestingPro Insights
Following the robust fourth-quarter earnings report from Robinhood Markets , Inc. (NASDAQ:HOOD), the company's shares have shown a remarkable performance, aligning with the optimistic sentiments reflected by management. Insights from InvestingPro reveal that management has been actively engaged in share buybacks, demonstrating confidence in the company's value and future prospects. This strategy often signals to investors a belief by those with intimate knowledge of the company that the stock is undervalued.
InvestingPro data indicates that Robinhood's market capitalization stands at an adjusted $10.24 billion, with a notable revenue growth of 32.29% in the last twelve months as of Q3 2023. Despite a negative P/E ratio of -14.21, analysts are predicting a bright future, expecting net income to grow this year. This anticipated growth is further supported by a significant 44.52% return over the last three months, showcasing a strong rebound and potential for profitability, as many analysts forecast the company will turn a profit this year.
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