Robinhood Markets Inc. reported blockbuster third-quarter results on Wednesday, with total net revenue of $1.27 billion, double the year-ago level and ahead of analyst expectations.
The company said GAAP diluted earnings per share came in at $0.61, a 259% increase from the prior year.
The growth in crypto
The results were powered in part by a surge in cryptocurrency activity, as crypto transaction revenue reached $268 million, rising more than 300% year-over-year, the company said in its Q3 report. Adjusted EBITDA for the quarter was $742 million.
“Our team’s relentless product velocity drove record business results in Q3, and we’re not slowing down— Prediction Markets are growing rapidly, Robinhood Banking is starting to roll out, and Robinhood Ventures is coming,” Robinhood CEO Vlad Tenev said in the earnings release on Wednesday.
Along with its third-quarter results, the firm revealed that Jason Warnick, its CFO, will retire next year and leave his position in the first quarter. Shiv Verma, an insider, will succeed Warnick as CFO once he goes down.
Robinhood shares fell as much as 2% in after-hours trading on the results. The stock’s surge has been spurred by new product releases this year, including tokenised stocks in Europe, prediction markets, and crypto staking, as Robinhood seeks to increase consumer wallet share.
“I see lots of companies copying from Robinhood,” Paul Brody, EY global blockchain leader, told Yahoo Finance on Wednesday, “offering these additional services, integrating them together in a very nice user experience, and delivering them to their end customers.”
Why the growth?
The analysts cited the fast expansion of the platform’s prediction markets, which were established earlier this year, as the main reason.
The program allows traders to speculate on the outcome of important events such as football games, Nvidia’s (NVDA) earnings, the length of the government shutdown, and bitcoin’s year-end price objective.
It was previously reported in July that Robinhood Markets is in negotiations with European regulators after introducing blockchain-based stock tokens for OpenAI and SpaceX. The US brokerage sent the tokens to qualified EU users on June 30 as part of a larger offer.
The action sparked public criticism from OpenAI, sparking inquiries from the Bank of Lithuania and other institutions over whether the tokens function as genuine shares or as derivatives.
Robinhood also made a huge revelation at its “To Catch a Token” keynote event in Cannes, revealing an ambitious expansion into blockchain infrastructure and tokenised banking. The online brokerage and finance industry leader is creating its own Ethereum Layer 2 blockchain, initially using the Arbitrum network.
Crypto revenue is also likely to increase, thanks to rising fees and “staking” services. Staking allows token holders to secure their digital assets while earning incentives, equivalent to a dividend or return.
Also Read: Robinhood Consults EU Regulators On Controversial Stock Tokenisation Plan