Vlad Tenev, CEO of Robinhood, attributed the necessity to make more personnel reductions this year to current issues like inflation, the Bitcoin crisis, and overhiring.
Inflation and Bitcoin Crisis Among the Factors Robinhood's Layoff, Says CEO
Robinhood is reducing its employee numbers for the second time this year. The firm said on Tuesday that it would reduce its employment by 23%. Robinhood's "operations, marketing, and program management divisions" will be the primary emphasis of the layoff, according to its CEO.
He blamed the company's recent issues of unprecedented inflation and the Bitcoin crisis. Tenev also stated that the sector overhired the previous year, assuming regular investors would trade shares and cryptocurrencies at the same volume as in the epidemic's early stages.
Robinhood had around 3,800 employees before cutting 9% of them from their payroll in April. "This is on me," he added, "as CEO, I authorized and accepted responsibility for our aggressive personnel trajectory."
Additionally, it released its Q2 earnings on Tuesday, one day early. After the sales dropped by 44% year over year to $318 million, the corporation reported a net loss of $295 million.
According to Tenev, the firm will adopt a new organizational structure that will give general managers much control over how the business is run.
He said the change would reduce cross-functional dependency, flatten hierarchies, and eliminate pointless roles and duties. Robinhood will email and Slack the affected employees. They are permitted to remain with the business until October 1st, 2022.
They will continue to receive their regular salary and benefits, including equity vesting. Additionally, they will get cash severance, COBRA medical, dentistry, and vision insurance premium payments, as well as aid with job searching, including access to the Robinhood Alumni Talent Directory.
All affected workers can book a time with the firm's people team to talk live about their particular issue, Tenev said.
Robinhood's Transaction-Based Revenue in Q2 2022 was Reduced in Half
The transaction-based revenue generated by Robinhood in the second quarter of 2022 decreased by more than half, from $451 million to $202 million. Overall revenue isn't looking much better either. It was down 44% to $318 million from $565 million last year.
They disclose sequential numbers in the body of their results press release while mentioning that this quarter was more robust than the previous one.
The GameStop fiasco brought the meme stock trading revolution to the public's attention, and Robinhood served as its poster child. Retail traders seem to have lost interest in the market as interest rates have increased and trading rules have been less severe.
According to the press release, there were 14 million monthly active users in the second quarter, a 10 percent fall from the first quarter. Additionally, it represents a 33% drop from the company's 21.3 million monthly active user total announced in the second quarter of 2021.
Its assets under custody decreased by a third from the first quarter to $64.2 billion. The business has $102 billion in assets under control in the second quarter of 2021. Oddly, the 2021 results used year-over-year comparisons, whereas these earnings now use consecutive quarters.
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