After its disappointing Q4 2021 financials, Robinhood Markets, Inc. (Nasdaq: HOOD) announced on Tuesday that it is letting go approximately 9% of its full-time employees.
CEO Vlad Tenev shared the company-wide communique related to the announcement. He stressed that while the decision “was necessary,” it wasn’t taken lightly.
The firm chief points the rationale for the layoff to the period of hyper growth in 2020 and H1 2021.
“To meet customer and market demands, we grew our headcount almost 6X from 700 to nearly 3,800 in that time period,” Tenev added.
The exponential increase in staffing has led “to some duplicate roles and job functions, and more layers and complexity than are optimal,” hence, the reduction in workforce.
But this does not mean the firm is putting a brake on its growth. Tenev said they will still continue “to accelerate our product momentum” and introduce new products, as well as to “retain and continue to hire exceptional talent in key roles and provide additional learning and career growth opportunities.”
But the mobile platform said it is scrutinizing its headcount growth targets to ensure the prioritization of “automation and operational efficiency.”
“Our financial position remains strong with over $6B in cash on our balance sheet. To keep it that way we’re anticipating and being responsive to changes in the way our customers invest–especially during this time of global conflict, economic uncertainty, and high inflation,” Tenev said.
Departing employees are being provided with separation packages, healthcare, and job search assistance.
The mobile app firm ended 2021 with US$1.82 billion in annual revenue but also an annual net loss of US$3.69 billion, mainly due to spike in operating expense items. While it expects its annual operating expenses to increase 15%-20% next year, it has a particular projected decline for share-based compensation expense of 35%-40% year-on-year.
The firm is guiding its Q1 2022 revenue to be US$340 million.
Robinhood last traded at US$10.00 on the Nasdaq.
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