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Chief financial officer Jason Warnick said the company has about $17bn in assets that generate interest revenue.

Transaction based revenue dropped 22% to $208m. Robinhood’s September monthly active user count fell 35% to 12.2m from a year ago, the lowest level since the fourth quarter of 2020.

Robinhood, which has spent heavily to grow its business, is now cutting back. Its operating expenses in the third quarter were $535m, a 69% decrease from the same period last year. The company has made two rounds of layoffs this year.

Its net loss narrowed to $175m from $1.32bn in the same period last year. Its stock ticked up 4.1% in aftermarket trading on 2 November.

Launched less than a decade ago, Robinhood fuelled the pandemic’s day-trading boom thanks to its easy-to-use, mobile-first design. The online brokerage signed up millions of investors during the pandemic but is struggling to keep them as markets reel from the Federal Reserve’s interest rate hikes and traders’ return to offices.

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Robinhood’s revenue is closely tied to trading volume. It sends customer orders to high-speed trading firms in exchange for cash in a practice called payment for order flow. That has become less lucrative for brokerages as their customers became less active over the past year.

Order flow revenues at the dozen largest US retail brokerages were $767.5m in the third quarter, a decline of 13% from the same period in 2021, according to data compiled by Larry Tabb, head of market-structure research at Bloomberg Intelligence. Robinhood’s order flow revenue from stocks and options trading fell 29% in the third quarter to $149.9m, compared with the same quarter last year, Tabb’s data shows.

Shares of Robinhood have plunged 36% this year and finished 2 November at $11.40. The stock is down 70% from its July 2021 initial public offering price of $38 a share, according to Dow Jones Market Data.

Robinhood has faced stiff competition from larger and more entrenched players in the brokerage industry. Its users tend to be younger and have less money in their brokerage accounts than at many competitors.

The online brokerage has tried to capitalise on growing interest in cryptocurrency by broadening the number of currencies traded on its platform to 19. It recently launched the beta version of its “Web3 wallet” to 10,000 users. The wallet — separate from the main Robinhood trading app — allows users to trade and swap cryptocurrencies with no network fees.

Vlad Tenev, chief executive of Robinhood, said the company plans to roll out the wallet internationally early next year.

“We’ve been making a ton of investments in the past year despite it being crypto winter,” Tenev said on the company’s earnings call.

Write to Vicky Ge Huang at vicky.huang@wsj.com

This article was published by The Wall Street Journal, a fellow Dow Jones Group title