rokerage major Robinhood Markets has beaten Wall Street estimates for its second-quarter profit, as robust trading in equities, options and prediction markets helped the American venture offset weakness in cryptocurrency trading.
Retail trading remained robust during the quarter as heightened market volatility, driven in part by the Iran war and its impact on inflation expectations and the Federal Reserve’s interest-rate outlook, kept investors active.
Adjusted earnings came in at 48 cents per share, topping analysts’ average estimate of 44 cents, according to data compiled by LSEG.
While the total net revenues increased 32% year-over-year to USD 1.31 billion, transaction-based revenues increased 44% year-over-year to USD 776 million, primarily driven by event contracts revenue of USD 156 million, up over 10 times.
Options revenue reached USD 342 million, up 29%. Equities revenue touched the USD 129 million mark, with a 95% quarterly hike. Cryptocurrencies revenue stood at USD 100 million, down 38%.
Robinhood’s net interest revenues increased 9% year-over-year to USD 389 million, primarily driven by growth in interest-earning assets, while partially offset by lower short-term interest rates and securities lending activity.
Other revenues increased 54% year-over-year to USD 143 million, primarily driven by Trump Account service revenues and increased Robinhood Gold subscription revenues.
Net income increased 48% year-over-year to USD 573 million, including USD 129 million of gains primarily related to the deconsolidation of Robinhood Ventures Fund I (RVI).
“The business is firing on all cylinders. We delivered record revenues and drove new highs across equity, option, and event contract volumes, as we continue to win market share. Our product velocity continues to deliver new products for customers and drive a more diversified business, with Robinhood Legend and the Credit Card business joining our growing roster of now thirteen different business lines that have reached $100 million-plus in annualized revenues,” said Shiv Verma, Chief Financial Officer of Robinhood.
“Whether it’s the Robinhood Chain, Robinhood Ventures, or Trump Accounts, our product velocity is focused on one goal: making everyone an owner. Broad ownership is essential to a free, stable, and prosperous society,” said Vlad Tenev, Chairman and CEO of Robinhood.
However, Robinhood’s muted performance at the crypto bank can also be attributed to the rapid expansion of prediction markets, that has shifted investor focus away from the virtual currency, with analysts expecting the industry shift to play a massive role in Robinhood’s revenue mix.
Other reasons behind crypto sector’s poor run have been weaker digital asset prices, persistent market volatility and a shift in investor interest toward AI-related assets.
Interest in prediction markets surged during the 2024 United States presidential election, boosting user engagement and trading activity.
“This was not merely a prediction-market beat. Robinhood delivered better-than-expected transaction revenue, NII, deposits, subscription growth and expense control simultaneously,” said Bill Birmingham, managing director at REX Financial.
Third Bridge analyst Jacob Zuller told the Reuters that prediction markets had evolved from a curiosity into arguably Robinhood’s most important growth driver. He further added that prediction markets would serve as a customer acquisition funnel for the venture.