Robinhood cuts 23% of staff; CEO Vlad Tenev says, ‘This is on me’ – TechCrunch
It’s been a volatile year for retail investment behemoth Robinhood. The fintech company is laying off 23% of its workforce, as first reported by the Wall Street Journal and confirmed by TechCrunch. The layoff comes just three months after Robinhood cut 9% of full time staff.
At the time of its last layoffs in late April, it is believed that Robinhood had about 3,100 employees after letting go of around 300 workers. Doing the math, a 23% reduction in staff would amount to about 713 employees affected, leaving roughly 2,400 employees currently employed at the company
The company did not comment directly on the latest layoffs, pointing TechCrunch only to a blog post by CEO and co-founder Vlad Tenev. In that post, Tenev wrote that while “employees from all functions would be impacted, the layoffs are “particularly concentrated” in the company’s operations, marketing, and program management functions.
In the post, Tenev took responsibility for Robinhood’s apparent over-hiring in the frenzy that was 2021. He said that the company last year staffed many of its operations functions under the assumption that the “heightened retail engagement” that was taking place would continue in 2022.
“In this new environment, we are operating with more staffing than appropriate,” he wrote. “As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me.”
Tenev also addressed that its earlier round of layoffs “did not go far enough.”
“Since that time, we have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash. This has further reduced customer trading activity and assets under custody,” he wrote. Robinhood is not alone in its choice to conduct two rounds of layoffs in a short period of time; just seven weeks after crypto exchange Gemini cut approximately 10% of its workforce, the company cut another 7% of staff, according to sources.
Robinhood also today released its second quarter financials, revealing a 6% increase in net revenue of $318 million on a net loss of $295 million, or 34 cents per diluted share. That loss was narrower than its net loss of $392 million, or 45 cents per share, in the first quarter of 2022.
Transaction-based revenue was down 7% to $202 million while cryptocurrencies increased 7% sequentially to $58 million.
Robinhood also included operating expenses associated with severance and restructuring, saying that expenses will be $17 million in connection with the April restructuring, and an estimated $45 million to $60 million with the August restructuring. In 2022, total operating expenses are still expected to be down between 7% to 10% from the prior year, Robinhood claims.
Robinhood’s stock price has been volatile over the past year, as well. At the time of publication, the company is trading at $8.90 after hours, dramatically lower – by 89% – than its 52-week high of $85. It’s also down 3.6% after hours.
Earlier today, the WSJ wrote that Robinhood was slapped with a $30 million fine by a New York financial regulator, specifically on its cryptocurrency trading arm.