Robinhood’s losses override revenue, PayPal’s stock dips, while Dave delivers more than expected in Q1

Robinhood's losses override revenue, PayPal's stock dips despite earnings beat, while Dave delivers more than expected in Q1

Everything investors need to know about Robinhood, PayPal, and Dave’s Q1 2023 earnings

by SARA KHAIRI

Robinhood

Robinhood reported its Q1 2023 financial results on Wednesday.

• Q1 revenue was $441 million, down 15.5% over the same period last year, but rose 47% annually
• Net loss worsened by 30% at $511 million compared to the same trimester in 2022
• Diluted losses per share in Q1 went to $0.57 per share from $0.45 per share seen in the same timeframe the year before
• The number of its monthly active users decreased to 11.8 million from 15.9 million a year earlier

Robinhood's decrease of 208% in net loss at $511 million, outweighed the 16% increase in quarterly revenue of $441 million. Its earnings per share declined $345 million or $0.38 per share, compared to the last quarter of 2022. The firm attributed the loss to a one-time share-based compensation (SBC)expense of $485 million related to its co-founders’ cancellation of their 2021 market-based restricted stock unit awards in February.

Despite the huge net loss on its record, Robinhood’s quarterly revenue beat analysts' expectations. Its revenue was mainly driven by an increase of 11% q-o-q in its transaction-based revenuesto$207 million -- fueled by a 7% increase in options trading at $133 million and a 29% increase in equities at $27 million. 

"We're continuing to ship aggressively, increase customer satisfaction, and deliver strong financial performance on the path to GAAP profitability," said CEO Vlad Tenev.

Robinhood also said that it will launch a 24-hour market next week to enable its customers to trade individual stocks all-day-long for five days a week.

Following the release of the report, Robinhood's shares rose 2.81% in after-hours trading.

PayPal

PayPal reported its Q1 2023 financial results on Tuesday.

• First-quarter revenue rose 9% y-o-y to $7.04 billion
• Net profit was $795 million or $0.70 per share, compared to $509 million or $0.43 per share last year
• Adjusted earnings were $1.17 per share in the three-month period, compared to $0.88 per share in the corresponding period of last year

PayPal reported first-quarter sales and earnings per share that beat expectations, with increased revenue driven by a 12% growth in Total Payment Volume to $354.5 billion. But its stock was plunging Tuesday as its outlook on operating margins failed to impress Wall Street analysts.

“We are confident in our momentum and are raising our full-year EPS guidance as a result,” said PayPal’s CEO Dan Schulman.

The company said that its profit margin will expand at a slower pace than previously expected -- owing to the steady growth of its lower-margin Braintree business.

"PYPL shares declined sharply post-earnings despite an acceleration in Branded Checkout TPV growth. The ~6bps Y/Y transaction take-rate decline was a key culprit. Management attributed the pressure to a mix shift towards the less profitable Braintree business, which is growing 5x faster than Branded checkout," said Dan Dolev, senior equity analyst at Mizuho. 

"Since this doesn't explain 100% of the decline, many investors worry about broad-based pricing pressure across PYPL's businesses."

PayPal shares fell 12.7% on the day following the announcement.

Dave

Neobank Dave reported its Q1 2023 financial results on Tuesday.

• Q1 GAAP revenue was up 38% y-o-y to $58.9 million
• Monthly Transacting Members (MTMs) increased 34% y-o-y to 2 million; Transactions per MTM increased 19% y-o-y to 5.4
• ExtraCash originations increased 46% y-o-y to $798 million
• Dave Debit Card spend increased 62% to $295 million compared to $182 million in Q1 2022
• Added 587,000 new members while reducing customer acquisition costs by 39%
• Total operating expense came in at $71.4 million compared to $65.2 million in the same quarter last year -- but net loss improved by 57% y-o-y

Dave had $196 million of cash and cash equivalents, marketable securities, short-term investments, and restricted cash as of March 31, 2023, compared to $193 million on December 31, 2022. The growth for the company was driven by increases in monthly transacting members -- which helped in generating revenue for the quarter surpassing analysts' expectations.

"Q1 revenue was in-line with our expectations as demand for ExtraCash is typically softest in the first quarter due to tax refunds. As a result, we moderated marketing investment, which, in combination with the sequential variable margin expansion, allowed us to more than halve our Adjusted EBITDA loss for the second consecutive quarter," said Jason Wilk, founder, and CEO of Dave.

Market recap

Fintech stocks are on the path to recovery, while others crashed on Q1 earnings

Oportun (OPRT) - up 41% to $5.23 per share

• Oportun reported its Q1 2023 results last Monday. Based on the recently-released numbers and future earnings expectations the stock moved up 41% in a week.
• The company generated $260 million of total revenue, up 21% y-o-y, and $88 million of adjusted net loss, or $2.60 of adjusted net loss per share.

PayPal (PYPL) - down 11% to $64.18 per share

• PayPal reported its Q1 2023 earnings results on Tuesday.
• Despite 9% increased revenue to $7.04 billion, topping estimates by about 1%, its stock slid as Wall Street remained unimpressed with its outlook on operating margins.

Editor's picks

Tweet of the week

Just look at the charts

This week's reads

CFPB head says large banks should pay for insuring ‘uninsured’ depositors

PYMNTS

The head of the CFPB Rohit Chopra, who is a member of the FDIC board of directors, said that he supports the FDIC’s proposal to require banks to pay the extra cost for protecting “uninsured” depositors of Silicon Valley Bank and Signature Bank. The FDIC announced Thursday that it plans to extract $15.8 billion in extra fees over two years to recoup its losses after the rescues of Silicon Valley Bank and Signature Bank.

Goldman’s Marcus hikes yield to 4.15%, matching new Apple product

BLOOMBERG

Goldman Sachs' Marcus just increased the rate on its high-yield savings account to a new all-time high. It's now offering a 4.15% rate, which matches that of a recent partnership between the bank and Apple Inc. for Apple Card holders.

Mastercard taps open banking for digital account opening

FINEXTRA

Mastercard has unveiled a digital account opening tool that uses open banking to integrate customer verification with identity insights into a single API. It verifies a consumer’s account ownership and identity in real-time and also prefills account and routing data to minimize errors.

Goldman Sachs to pay $215mn to settle gender discrimination lawsuit

FT

Goldman Sachs has agreed to pay out $215mn to settle a long-running class-action lawsuit after some 2,800 female staff accused the company of paying women less. A joint statement from the company and the plaintiffs agrees on a pay-out 13 years after the first claimants came forward in 2010 and won the right to lead the class-action lawsuit in 2018. The funds will be shared out among the staff who participated in the lawsuit, mainly in the investment banking and securities divisions - and with about a third of proceeds expected to go towards legal fees.