What’s true for Robinhood is likely to be true for many fintechs, which is why sector participants and investors look closely when the company reports its earnings.

Last week, the company made its first quarterly showing of the year—one which was lifted by a $6.3 billion dollar cash position, high hopes for its new retirement product, and anticipation surrounding an advisory product.

In total, Robinhood generated $441 million in revenues in Q1 2023:

• 47.2% ($208 million) of those revenues came from interest (cash, margin balances, etc.)
• 46.9% ($207 million) of those revenues were derived from transactions.
• 5.9% ($26 million) were ‘other revenues,’ which represents monthly revenue from its subscription service, Robinhood Gold.

High interest rates have not gleaned a reputation for creating the most lucrative financial markets. Yet, they were key to unlocking Robinhood’s 47.5% increase in year-over-year revenue.

However, we need to go deeper than numbers to understand what is going on with this fintech royalty. To dive deeper, we read the company’s 108-page quarterly filing so that you didn’t have to—and here are three things you need to know:

Robinhood pushes investors to ‘go long’ with retirement product

After a banner performance in 2020 and 2021, cracks formed in the foundation of Robinhood’s ‘democratization’ dreams. Speculative, young investors left the party—and they took the company’s sky-high revenue with them.

Why did they leave? Well, because the last three years made geniuses out of anybody participating in the markets. That was, at least, until the music stopped. In 2022, Robinhood investors lost over $54 billion of their own money, or over a third of the entire platform’s AUC. This was observably worse than other broker-dealers.

There was some gold at the end of the rainbow, though: Robinhood investors began to swap speculative fare—including penny stocks related to electric vehicles and cannabis—for larger, more established ‘big index names’.’