Business

Robinhood to cut 23% of its workforce, revenue drops 44%

The latest cuts, which will affect 780 employees, continue a massive free fall for the once high-flying online brokerage. In another development on Tuesday, New York State hit the company in Menlo Park, Calif., with a $30 million fine.
In a blog post On the company’s website, Robinhood CEO Vlad Tenev said the “deteriorating macro environment” – including decades-high inflation coupled with a cryptocurrency crash – has reduced the trading activity of the firm’s clients and assets under custody.
In his second quarter results report, also released on Tuesday, the company showed a 44% drop in revenue from a year ago. Robinhood monthly active users in June decreased by more than $7 million, or 34%, and assets in custody fell by more than $37 billion, or 37%, from the second quarter of last year.
The company’s approach to staffing and operations, he added, has been tailored to the pursuit of high-growth crypto boom of the pandemic era.

“Last year, we staffed many of our operational functions assuming that the heightened retail engagement we had seen with stock and crypto markets in the COVID era would persist well into 2022,” he said. writes Tenev in a message to employees. “In this new environment, we are operating with more staff than necessary.”

He added, “As CEO, I have endorsed and taken responsibility for our ambitious staffing trajectory – it’s on me.”

The layoffs will affect employees across all functions of the business, with operations, marketing and program management positions hardest hit, he said. The company planned to notify all employees via email and Slack on Tuesday of their status as well as resources if they were affected.

Separately on Tuesday, the New York State Department of Financial Services fined $30 million on Robinhood’s cryptocurrency arm for allegedly breaching reporting requirements related to anti-money laundering and cybersecurity regulations.

“As its business grew, Robinhood Crypto failed to invest the appropriate resources and attention to develop and maintain a culture of compliance – a failure that resulted in significant violations of the department’s compliance regulations. anti-money laundering and cybersecurity,” Adrienne A. Harris, the department superintendent said in a statement.

Correction: An earlier version of this story misrepresented Robinhood’s custody asset drop percentage. These fell 37% in the second quarter.

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