Robinhood reported second-quarter results after Wednesday’s close and beat on both lines. Total net revenue came in at $1.308 billion — a company record, up about 32% year over year, against a street around $1.25 billion. Diluted earnings per share landed at $0.62 versus roughly $0.42 expected, up 48%. Transaction-based revenue rose 44% to $776 million.
The mix is the actual story. Event contracts — prediction markets, the business of selling yes/no wagers on outcomes — generated $156 million, more than ten times what the line produced a year ago. That is more than Robinhood made trading crypto, and more than it made trading equities. Crypto revenue fell 38% to $100 million, though even the decline beat the $86.6 million analysts had modeled. One year ago crypto was the growth engine. This quarter it was the hole, and a product that barely existed filled it.
Underneath the revenue lines, the customer numbers kept compounding. Net deposits were $21.7 billion for the quarter, a 28% annualized rate against last quarter’s asset base. Total platform assets reached $369 billion, up 32%. Gold subscribers hit a record 4.8 million, up 39% year over year and roughly 500,000 in three months — the most boring and most durable revenue in the building.
Then the fine print
Of that $0.62, about $0.14 came from the deconsolidation of Robinhood Ventures Fund I, which added roughly $129 million to net income, according to Investing.com’s read of the release. Back it out and a spectacular beat becomes a decent one. The market did that math quickly: shares fell about 3% during Wednesday’s broad selloff and slid roughly another 4% in extended trading.
Our take: Nobody punished Robinhood for a bad quarter. They repriced the quality of a good one. Event contracts are now doing the work crypto used to do, which is great for the growth story and useless for anyone hoping the revenue base had gotten less cyclical — Robinhood has swapped one volatility-dependent, regulator-dependent line for another. Prediction markets are extraordinarily fee-rich per dollar of customer risk, far richer than equities will ever be, and they exist at the pleasure of the CFTC and a stack of state gaming regulators. The number to watch isn’t $156 million. It’s whether that line survives its first genuinely hostile ruling.
What to watch
- Seasonality. A quarter with a World Cup in it is the easiest quarter event contracts will ever have. Q3 is the first clean read on whether $156 million is a base or a peak.
- The regulators. Sports event contracts are still being litigated state by state. An adverse ruling doesn’t dent the fastest-growing line — it removes part of it.
- Two quarters of crypto decline. One down quarter is a comp problem. Two makes $100 million a trend, and the prediction-markets offset has to grow into a bigger hole.
- Gold net adds. Subscription revenue is the least cyclical thing in this P&L. Watch for the quarter where 500,000 adds becomes 300,000.
- Coinbase’s print. If retail crypto weakness shows up there too, this is an industry story, not a Robinhood story — and Robinhood is the one with a hedge.
The framing worth keeping: a brokerage that spent five years being described as a stock-trading app, then a crypto proxy, just reported a quarter where its third act outgrew both. Whether that’s diversification or rotation depends entirely on what a regulator decides next.