Archive photo: Pierce Larick, CC BY-SA 4.0.
Robinhood’s cryptocurrency revenue fell 55% in the third quarter, while revenue from event contracts rose more than sixfold, a sharp shift in the brokerage’s trading business as it reported record overall revenue but lower profit.
The company’s October 27 earnings release put cryptocurrency revenue at $120 million for the quarter ended September 30. Event contracts generated $173 million, while options revenue rose 31% to $399 million and equities revenue increased 41% to $121 million.
The contrast matters because the gains in event contracts and other trading products helped offset a steep drop in crypto activity. Total transaction-based revenue increased 19% to $867 million, even as crypto notional trading volume fell 38% to $50 billion. Event contracts traded increased more than sevenfold to 16.4 billion.
Total revenue rose 12% from a year earlier to $1.42 billion. Net income declined 14% to $476 million, and diluted earnings per share fell 16% to 51 cents. The company said earnings included $67 million, or 7 cents a diluted share, in unrealized losses primarily related to its Robinhood Ventures Fund I investment.
On Robinhood’s newly introduced adjusted measures, which exclude certain non-operating items, adjusted net income fell 3% to $550 million and adjusted earnings per share declined 3% to 60 cents. Those are non-GAAP figures, separate from the company’s reported profit.
Operating expenses increased 16% to $739 million. Robinhood cited higher credit-loss provisions as its credit card loan book grows, costs related to Trump Accounts and Rothera, and marketing and growth spending.
The company’s customer and asset base continued to expand. Funded customers rose 7% to 28.7 million, Robinhood Gold subscribers increased 34% to 5.2 million, and total platform assets climbed 19% to $396 billion. Net deposits were $15.7 billion during the quarter.
The results show why Robinhood’s business cannot be read through crypto trading alone. Revenue from event contracts exceeded crypto revenue in the quarter, while options remained the largest of the transaction-revenue categories listed in the release. But broader revenue growth did not prevent a decline in reported profit.
JBizNews Desk | Menlo Park, California
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