Robinhood Posts Record Revenue Despite Crypto Plunge
Key Summary
Robinhood notched $1.42 billion in Q3 revenue, up 12% year-over-year, but missed EPS estimates at $0.51 due to a 55% drop in crypto revenue and $67 million in venture fund losses. Options, equities, and event contracts cushioned the blow while platform assets expanded to $396 billion.
Key Bullets
- Robinhood reported Q3 total net revenue of $1.42 billion alongside diluted earnings per share of $0.51.
- Cryptocurrency revenue fell 55% to $120 million while notional trading volume dropped 38% to $50 billion.
- Event contracts surged past previous marks to bring in $173 million, growing six times year-over-year.
- Robinhood Ventures Fund I produced $67 million in unrealized investment losses that reduced net income.
Record Revenue Fails EPS Estimates
Robinhood reported Q3 total net revenue of $1.42 billion, marking a 12% jump from the previous year. Diluted earnings per share came in at $0.51, falling short of analyst estimates ranging from $0.54 to $0.57. Record sales paired with an earnings miss confused Wall Street observers. Crypto trading weakness created an immediate headwind for the brokerage.
Transaction-based revenue reached $867 million, showing a 19% increase year-over-year. Options trading grew 31% to $399 million, maintaining its spot as the largest single transaction line. Equities revenue climbed 41% to $121 million. Total platform assets grew 19% to reach $396 billion.
Crypto Volume Plummets Fifty Percent
Cryptocurrency revenue dropped 55% to $120 million for the quarter. Notional crypto trading volume across the platform fell 38% year-over-year to $50 billion. Equities revenue now slightly exceeds crypto revenue on the platform. High-margin digital asset trading dried up quickly.
Retail traders pulled back from digital assets during the period. The steep drop dragged down bottom-line performance despite gains elsewhere. Crypto market participation hit a clear speed bump.
Venture Losses Drag Down Net Income
Two specific factors explain the earnings per share decline. The first factor was the severe crypto margin contraction. The second factor involved $67 million in unrealized investment losses tied to Robinhood Ventures Fund I.
These paper losses counted directly against reported quarterly earnings. Net income landed between $468 million and $476 million. The venture markdowns surprised analysts monitoring portfolio health.
Event Contracts Surge Past Crypto
Event contracts emerged as the surprising star of the quarter. That specific line brought in $173 million, multiplying six times over its level from a year prior. Paid subscription tier Robinhood Gold grew 34% to hit a record 5.2 million subscribers.
Net deposits for the quarter reached $16 billion. Funded customers grew to 28.7 million. Diversification shielded the top line from total stagnation.
Traders took immediate note.
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