Robinhood Reports Record Revenue, but Its Shares Fall

A record quarter, and the market sold it anyway. Robinhood posted its highest revenue ever, $1.42 billion, up 12%, and the shares still slid about 7% after hours. Why? Because the headline was good, but the engine room told a more complicated story: crypto revenue collapsed 55%, interest income shrank, and revenue came in just shy of what Wall Street wanted, even as adjusted earnings beat.

What drove it was a handover of power inside the business. Prediction markets exploded (event contract revenue up more than sixfold), options and equities trading surged, and the Gold subscriber base grew 34% to 5.2 million, while crypto and interest rates dragged. Meanwhile, costs increased 16% as credit losses and new ventures like Rothera and Trump Accounts ate into margins.

Watch whether Trump Accounts deposits and prediction markets can keep growing fast enough to offset a weaker crypto and rates backdrop, because early Q4 trading volumes are already running about 5% below Q3.

Key Financial Metrics

Group

●     Revenue: $1.42bn (+12%), a record

●     EBITDA: $808m (+9%), margin 57% (vs 58%)

●     Reported after-tax profit: $476m vs $556m, -14%; includes $67m unrealised loss on Robinhood Ventures Fund I

●     Total operating expenses: $739m (+16%); provision for credit losses $71m (vs $26m)

Revenue streams

Transaction-based revenue

●     Revenue: $867m (+19%)

●     Event contracts: $173m (over 6x); 16.4bn contracts traded

●     Options: $399m (+31%); 905m contracts (+48%)

●     Equities: $121m (+41%); notional volume $992bn (+53%)

●     Crypto: $120m (-55%); notional volume $50bn (-38%), a reversal

Platform KPIs

●     Funded customers: 28.7m (+7%)

●     Robinhood Gold subscribers: 5.2m (+34%)

●     Total Platform Assets: $396bn (+19%)

●     Net deposits: $15.7bn (17% annualised growth); October already above $13bn

Analysis & Outlook

Share Price Performance

Here is the uncomfortable part. HOOD closed at $94.56 on results day, then dropped to about $87.60 in after-hours trading, a roughly 7% fall. The stock was already bruised; it fell about 11.6% in the week to 19 October and roughly 22% over the month to 22 October, worse than Coinbase (-16%) and SoFi (-14%), leaving it about 36% below its 52-week high of $150.47.

What Could Move the Share

Upside:

●     Trump Accounts: Nearly 70 million children eligible, and October deposits already topped $13bn. That is sticky, long-duration money flowing in.

●     Prediction markets: Rothera passed $100m annualised revenue, non-sports contracts rose to about 30% of volume, and earnings and KPI contracts are coming.

●     Cross-sell and subscriptions: Gold, Gold Card, Banking and Strategies keep lifting revenue per customer, and the 2027 expense plan due January or February could show operating leverage.

●     Global expansion: UK crypto is live, and the DFSA licence opens up the Middle East in 2027.

Downside:

●     Regulation: Sports event contracts face state-level pushback, and Robinhood itself flags possible forced withdrawal.

●     Crypto and take rates: App crypto volumes fell 48%, stablecoin products are monetised less, and early Q4 spreads are tighter.

●     Rates and costs: Net interest revenue fell 9%, credit-loss provisions jumped to $71m, and Trump Accounts spend is about $100m this year.

●     Valuation and activity: Q4 equity, options, and crypto volumes were running about 5% below Q3 early on, which leaves little room at 33x forward earnings.

Disclaimer:
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** This article was prepared by BROKSTOCK analyst Maboko Seabi