(Reuters) -Robinhood Inc posted a smaller-than-expected quarterly loss as the brokerage's margin trading business benefited from rising interest rates, while increased volatility in the markets helped its equities and options segments.
Shares of the Menlo Park, California-based company were up 5% in extended trading on Wednesday.
Net interest revenue from its margin investing business doubled to $128 million, as the company benefited from a series of big interest rate hikes.
Annual margin interest rates have jumped to 5.75% for Robinhood Gold customers and 9.75% for non-Gold customers. Robinhood Gold is the company's subscription service, which gives investors access to premium features.
Trading in options rose 10%, while that in equities was up 7% sequentially as investors repositioned their portfolios to take advantage of rising interest rates.
Those factors helped the company post revenue of $361 million in the three months ended September, comfortably beating estimates of $355 million, while narrowing its net loss to $175 million from $1.32 billion a year earlier.
Stripping off one-time items, Robinhood reported a loss of 20 cents a share, narrower than 31 cents estimated by analysts, according to data from Refinitiv IBES.
Robinhood is one of many fintech upstarts that were slammed by a broader market decline as investors shunned speculative assets.
As a result, trading in cryptocurrencies fell 12% sequentially to $51 million. It had surged 860% to $51 million a year earlier.
The commission-free brokerage also saw monthly active users fall to 12.2 million, sequentially.
A year ago, it reported 18.9 million users when Robinhood's easy-to-use interface made it a hit among young investors trading from home on cryptocurrencies and stocks such as GameStop Corp amid the COVID-19 pandemic.
(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Anil D'Silva)
