Robinhood Markets reported quarterly profit that topped Wall Street estimates, driven by robust retail activity in equities, options and prediction markets even as cryptocurrency trading weakened.
The online brokerage said transaction-based revenue climbed 44% to $776 million for the three months ended June 30, with equities, options and event contracts contributing $156 million of that total. Net interest income rose 9% to $389 million, reflecting growth in interest-earning assets.
Profit for the period was $573 million, or $0.62 per share, compared with $386 million, or $0.42 per share, in the year-ago quarter. On an adjusted basis, the company reported earnings of $0.48 per share, above analysts' average estimate of $0.44 per share, according to data compiled by LSEG.
Management and outside observers highlighted the breadth of the company’s performance. Shiv Verma, chief financial officer, said on a media call that "the takeaway from the quarter is businesses (are) humming, firing across all cylinders, (with) record transactions across equities, options, prediction markets."
Analysts have noted a notable expansion in Robinhood's prediction markets business, a trend the company expects to play a growing role in its revenue mix as investor attention moves away from cryptocurrency trading.
Bill Birmingham, managing director at REX Financial, said the quarter was more than just a prediction-markets beat. "Robinhood delivered better-than-expected transaction revenue, NII, deposits, subscription growth and expense control simultaneously," he said.
Despite the earnings beat, Robinhood's shares fell 2.9% in after-hours trading. The stock has declined 20.6% year-to-date as of the last close.
Market volatility over the quarter, attributed in part to the U.S.-Iran conflict and its knock-on effects for inflation expectations and the Federal Reserve's interest-rate outlook, kept many retail investors active, supporting trading volumes across several product lines.
Not all commentary was uniformly positive. David Bartosiak, a stock strategist at Zacks Investment, cautioned that valuation remains a concern after the stock's strong run. He added that some of the quarter's earnings-per-share benefited from one-time investment gains.
Key financial figures from the quarter:
- Transaction-based revenue: $776 million, up 44% year-over-year
- Revenue from equities, options and event contracts: $156 million
- Net interest income: $389 million, up 9% year-over-year
- Reported profit: $573 million, or $0.62 per share
- Adjusted EPS: $0.48, above the $0.44 consensus
Observers and management signaled that while core trading businesses are performing strongly, shifts in investor behavior and questions around valuation and one-time gains will remain points of focus for investors monitoring the company's next moves.