Discount brokerage Robinhood is to sack nine percent of its employees, citing an unwieldy growth curve that resulted in the creation of "duplicate roles and job functions".
The job cuts were revealed in a blog post by CEO Vlad Tenev on the eve of the release of the company's third quarter results.
Tenev says that "throughout 2020 and H1 2021, we went through a period of hyper growth accelerated by several factors including pandemic lockdowns, low interest rates, and fiscal stimulus."
During this period, the company grew net funded accounts from 5M to 22M and revenue from ~$278M in 2019 to over $1.8B in 2021. To meet customer and market demands, headcount soared almost 6X from 700 to nearly 3800 in the same timeframe.
"This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal," says Tenev. "After carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision to improve efficiency, increase our velocity, and ensure that we are responsive to the changing needs of our customers."
He says the company will also pay closer attention to headcount growth targets, "making sure that we continue to prioritise internal opportunities for automation and operational efficiency that serve our customers. Doing so enables us to be more resilient in hard times, and stronger during the good".
Robinhood posted a net loss of $423 million, or 49 cents a share, in its fourth quarter results in January, prompting a stock market rout that resulted in its share price slipping below $10.