Robinhood beat analyst expectations on several fronts for the second quarter. That included record revenue of $1.31 billion, which beat estimates of $1.25 billion to $1.28 billion, and earnings per share, which came in at $0.62 versus the $0.42 analysts had predicted. The strong performance was driven in part by an uptick in Robinhood’s Gold subscription business and the popularity of its prediction market business.
Total prediction market volume for Robinhood in Q2 surged to 13 billion contracts compared with 9 billion in the first quarter. Robinhood’s success in the category, which lets users wager on events ranging from sports games to elections, recently led the CEO of industry leader Kalshi to cite the company as its chief rival.
Overall revenue from prediction markets jumped from around $104 million in the first quarter to $156 million in Q2. According to Bill Birmingham, managing director at REX Financial, this translated to revenue of 1.15 cents per event contract.
On a call with reporters, Robinhood CFO Shiv Verma noted that, even as prediction market volume grows, the company has been seeking to lower the spread it collects from users, especially on less popular bets. To this end, Robinhood has been directing more transactions to Rothera, an in-house offering it manages with market maker Susquehanna, which offers lower fees according to Verma. In the past, Robinhood has relied on Kalshi and other firms to operate the back end of its prediction market offerings, sharing a cut of the revenue.
On the call, Verma called out other high points from the quarter’s earnings, including 39% year-over-year growth in its subscription offering, Robinhood Gold, to 4.8 million customers. He also boasted of a record $22 billion in customer deposits, and said Robinhood’s prudence in managing expenses has left the company in an enviable position when it comes to free cash flow.
Wednesday’s earnings didn’t disclose only good news for Robinhood, however. The company’s cryptocurrency business, which has in the past been a major source of revenue, continues to decline. The business brought in $100 million for the second quarter, a 38% decline from a year ago as the broader crypto market remains in a prolonged slump.
Robinhood’s stock, meanwhile, initially jumped on the earnings report but then gave up those gains. Following a day when the broader market dropped around 3% in response to the Federal Reserve’s decision to hold interest rates steady, HOOD shares were trading around $89 after opening closer to $92.