Robinhood cuts staff by 23% due to crypto market crash
Layoffs come as Q2 results show US company’s transaction-based revenue fell 7% to $202m
Robinhood is reducing its staff by almost a quarter due to 40-year high inflation and a “broad crypto market crash”.
The CEO and Robinhood co-founder Vlad Tenev said in a company blog post that the business will be reducing its headcount by 23%.
Tenev explained the layoffs will be a “particularly concentrated” in operations, marketing, and programme management functions. However, he did stress all “employees from all functions will be impacted” by the announcement.
Tenev acknowledged how “unsettling” the decision must be, particularly after the company announced earlier in 2022 that it would be “letting go of 9% of its workforce and focusing on greater cost discipline”. However, he added: “This did not go far enough.” Broader macroeconomic factors, such as inflation and the crypto market crash, had “further reduced customer trading activity and assets under custody”.
Covid-19 prompted new hires
The American financial services company is renowned for pioneering commission-free trades of stocks, exchange-traded funds (ETFs) and cryptocurrencies via a mobile app. In 2021, it took on numerous hires in operational functions due to “heightened retail engagement” the company saw during the Covid-19 pandemic. However, this did not persist into 2022.
This resulted in Robinhood “operating with more staffing than appropriate”, said Tenev, something he admitted accountability for. “I approved and took responsibility for our ambitious staffing trajectory – this is on me,” said the CEO.
The company will be changing its organisational structure and moving to a struture of general managers who “will assume broad responsibility for individual businesses” and “reduce cross-functional dependencies and remove redundant roles and positions”.
Those employees asked to leave will be able to work for the company until 1 October 2022, offered a cash severance, medical, dental and vision insurance premiums and job search assistance.
Robinhood’s Q2 results
At the same time, Robinhood released its Q2 results with transaction-based revenues down by 7% to $202m (£166m).
Its options-based trade decreased by 11% to $113m (£93m) and equities by 19% to $29m (£24m). However, its crypto-based trade increased by 7% to $58m (£48m).
The company recorded a net loss of $295m (£243m), which was lower than the net loss it reported in Q1 2022 of $392m (£323m).
