Nov 2 (Reuters) – Robinhood Inc ( HOOD.O ) posted a smaller-than-expected quarterly loss on Wednesday as the brokerage’s margin business rose as interest rates rose and increased volatility in markets helped its equities and options divisions.
Net interest income increased to $128 million for the third quarter as the annual interest rate for Robinhood Gold customers increased to 5.75% and for non-gold customers to 9.75%.
Robinhood Gold is the company’s subscription service that gives investors access to key features.
“We expect Q4 net interest income to increase approximately $25 million from Q3,” Chief Financial Officer Jason Warnick said in a post-earnings call.
Options trading rose 10%, while stocks rose 7% sequentially as investors reshuffled their portfolios to take advantage of interest rates.
Those factors helped the company earn $361 million in the three months ended September, comfortably beating estimates of $355 million, narrowing its net loss to $175 million from $1.32 billion a year earlier.
Robinhood lost 20 cents a share on one-time items, less than the 31 cents expected by analysts, data from Refinitiv IBES showed.
Trading in cryptocurrencies fell 12% sequentially to $51 million, forcing investors to shun other speculative assets amid the broader market. It rose 860% to $51 million a year ago.
“This is better than Robinhood’s competitor Coinbase, which has taken market share this year,” said Michael Ganyan, an analyst at research firm Ypitdata.
The commission-free brokerage’s monthly active users fell sequentially to 12.2 million.
A year ago, amid the Covid-19 pandemic, Robinhood’s easy-to-use interface made it popular with young investors trading cryptocurrencies and stocks like GameStop Corp ( GME.N ) from home, reporting 18.9 million users.
Reporting by Mehnaz Yasmin in Bengaluru; Edited by Anil D’Silva
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