Robinhood Markets Inc on Wednesday surpassed Wall Street estimates for first-quarter revenue, as the U.S. Federal Reserve's rapid rate hikes boosted the online brokerage's interest income.

Shares of the company, which was at the center of 2021's retail trading frenzy, pared gains and were last up 2% in volatile extended trading after Robinhood also said it will launch 24-hour trading for five days a week.

Fed's aggressive monetary tightening to curb stubborn inflation helped Robinhood partially offset a slump in its mainstay retail trading arm, which saw customer engagement dwindle over the past year amid market volatility.

Loss in the first quarter ended March 31 was 57 cents per share, below analysts' average estimate of a loss of 61 cents, per Refinitiv data.

"The current rising interest rate environment has been a significant tailwind," said Andrew McGee, analyst at global research firm Third Bridge.

Net interest revenue nearly quadrupled to $208 million from a year earlier for Robinhood, which allows eligible customers to borrow money to purchase securities for a interest.

On a call with analysts, Robinhood executives said the company was "making some progress on discussions" to purchase most or all the shares, about 7.42%, that were acquired by Sam Bankman-Fried's Emergent Fidelity Technology last year, using borrowed funds.

Robinhood had announced plans to repurchase the shares, in February but ownership of the stock has remained in flux amid multiple legal hurdles.

DECLINE IN USERS

In the face of a turbulent economy, first-quarter monthly active users for Robinhood decreased to 11.8 million from 15.9 million a year earlier. Transaction-based revenue also declined 5% to $207 million as trading volumes tempered.

Chief Financial Officer Jason Warnick said that while active users declined from last year, the number has "stabilized a bit" compared to the previous quarter.

The company reported revenue of $441 million, beating analysts' average estimate of $424.53 million.

  - Reuters