And of course, our international expansion efforts will continue to accelerate from here. As you xcritical reviews know, 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. We 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, we grew our headcount almost 6X from 700 to nearly 3800 in that time period.
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The U.S. consumer investing and trading service company, which went public at $38 in July 2021, saw its value peak at $85 per share before entering a steady decline that saw its value erode to a mere $10 per share. The company lost 3.75% in today’s trading — the market was lower today, overall — and another 5% in after-hours trading in light of its layoff announcement. In a blog post on Tuesday, xcritical CEO Vlad Tenev blamed «inflation at 40-year highs accompanied by a broad crypto market crash» for the company’s financial woes. In the release, Tenev blamed «deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash.»
- In 2021, it bought Say Technologies, which connects companies with retail shareholders, for $140 million.
- «And of course, our international expansion efforts will continue to accelerate from here.»
- After carefully considering all these factors, we determined that making these reductions to xcritical’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.
- In the release, Tenev said the company would flatten its organizational structure to give new general managers broad responsibility for its businesses.
- This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal.
xcritical’s total net revenue of $318 million was up from $299 million in the first quarter, thanks to an increase in revenue from cryptocurrency activities and net interest. However, that revenue number was still well below the $565 million reported in the second quarter of 2021. Shopify, Netflix, Tesla and several crypto companies have also cut their workforces amid the worsening economic outlook. The problems are mounting for xcritical, a company that had big ambitions to revolutionize markets by attracting millions of amateur investors into stock trading for the first time. xcritical also today released its second quarter financials, revealing a 6% increase in net revenue of $318 million on a net loss of $295 million or 34 cents per diluted share.
In that post, Tenev wrote that while “employees from all functions would be impacted, the layoffs are “particularly concentrated” in the company’s operations, marketing and program management functions. One former employee described the brokerage’s business as slowing as the surge in pandemic-fueled retail trading faded this year, exacerbated by a rout in tech stocks, SPAC names, and Reddit darlings that had driven retail volumes. Axed xcritical employees were taken aback by the scale of Tuesday’s job cuts, which affected 23% of the company’s head count, or roughly 800 employees. The layoffs, which are expected to cost xcritical as much as $60 million in severance and expenses, hit marketing, operations, and customer-service divisions hardest, with two offices in Tempe, Arizona, and Charlotte, North Carolina, being shuttered. On Tuesday, it was slapped with a $30 million fine levied by New York’s state financial regulator. Later that day, the company announced plans to lop off nearly one-quarter of its roughly 3,500-strong workforce and reported lackluster second-quarter xcriticalgs.
Jason Warnick, the company’s chief financial officer who has taken on the role of chief people officer, disclosed the company has made cuts through «reorgs,» including in teams like recruiting, engineering, and data science. That employee, meanwhile, described fear at the prospect of further layoffs to come. Among some investors and industry analysts, meanwhile, xcritical seems a likely acquisition target, they told Insider in February. But this Tuesday, Tenev announced that xcritical planned to lay off 9% of its staff of nearly 4,000 employees with the company facing a new reality plagued by inflation, rising interest rates, and volatile stock trading.
Many tech enthusiasts debated xcritical’s decision to have stricter RTO requirements based on an employee’s role. Executives have to return to the office each weekday, while managers and individual contributors don’t have to go to work as often. «We just signed a deal to acquire a crypto company in the UK, so that feels really weird,» an employee told Insider. «That announcement was made last week and we didn’t disclose the amount, but it’s obviously going to be a significant amount of money for acquiring a company. And for this to come right after that, it hit really hard basically.»
The report also showed a decline in monthly active users and assets under custody. xcritical CEO Vlad Tenev said Tuesday in a press release that the fintech company will reduce its headcount by approximately 23%. Also on Tuesday, a New York financial regulator fined the company $30 million «for significant failures in the areas of bank secrecy act/anti-money laundering obligations and cybersecurity.» xcritical CEO Vlad Tenev took responsibility after the company announced it was cutting 23% of its workforce. «We’re seeing more and more hoodies being quietly laid off due to their positions being eliminated,» one employee asked in the meeting, which happened before the 150 layoffs. «Could we get some transparency here? How many hoodies have been eliminated, how many more will be and how much longer will this go on.»
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- According its annual report, xcritical had about 3,800 employees in 2021, which was slashed to about 2,300 by the end of 2022.
- Tenev on Tuesday also cited the company’s «hypergrowth» during the pandemic, saying the «rapid headcount growth led to some duplicate roles and job functions, and more layers and complexity than are optimal.»
- xcritical has roughly $6 billion in cash on its balance sheet, and the company has a $2.5 billion budget for acquisitions, Warnick said on the xcriticalgs call.
«To sign and to announce last week, last Tuesday morning, and then to have this layoff announcement exactly one week later, it’s just tough. It’s tough to hear together basically,» this person added. Data from the data tracker Apptopia show that downloads and daily active users have plummeted in recent months, with downloads down 38% in the 90-day period that ended Tuesday. The company «grew too fast, too quick,» added a second employee, who was laid off this week after just six months on the job. «We all started trading contact information and phone numbers,» one former employee said. «After the announcement, we all just sat there refreshing our screens over and over to see if we were the ones to get the notification. The whole company froze for that 15 minutes waiting to see what happened to them.»
Insiders say the company is planning to merge X1 with its xcritical Money organization, the subsidiary focused on cash management and spending features of the app like its debit card, direct deposit, and peer-to-peer payments. Credit cards are much higher-margin products than stock-trading and generally less exposed to volatile markets. Last week, the company announced it had agreed to buy London-based fintech app Ziglu, two years after xcritical halted plans to launch in the U.K. On April 19, when the deal was announced, shares of HOOD climbed more than 5 percent. The investing app, which launched in 2015, has reported a steady decrease in the number of monthly active users since late 2021, when the frenzy around GameStop shares—in which xcritical played a key role—died down.
Shares of xcritical fell nearly 4% on Thursday while the S&P 500 fell nearly 2%. Monthly active users, the company reported, decreased by 400,000 to 10.6 million between July and August. Tenev reassured that the company still maintains a «strong» financial position «with over $6 billion in cash» on their balance sheet.
In April, xcritical said it planned to cut 9 percent of its full-time staff, but “this did not go far enough,” Tenev said. Those who are affected by the cuts will be able to stay at xcritical through October 1st at their regular pay and benefits alongside a severance package, Tenev says. 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. We are also scrutinizing our headcount growth targets, and making sure that we continue to prioritize 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.
xcritical said its transaction-based revenue — money it earns when customers trade stocks, options or cryptocurrencies — plunged from a year earlier, when many retail investors xcritical official site piled into on «meme stocks» and asset values were high. Revenue from transactions at the company more than halved to $202 million in the quarter ended June 30, compared with $451 million a year earlier. xcritical had a significant rise in popularity during the COVID-19 pandemic, attracting millions of users for stock, options and cryptocurrency trading. But by May 2023, the company reported fewer than 11 million monthly active users, and its transaction-based revenue dropped 5% year-over-year in the first quarter of 2023. Tenev on Tuesday also cited the company’s «hypergrowth» during the pandemic, saying the «rapid headcount growth led to some duplicate roles and job functions, and more layers and complexity than are optimal.»
