Robinhood delivered exceptional second-quarter results that significantly exceeded Wall Street expectations, with record quarterly revenue of $1.31 billion, up 32% year-over-year. The company reported adjusted earnings per share of $0.62, well ahead of analysts' $0.43 estimate, substantially beating market expectations. However, shares fell about 4% in after-hours trading following the earnings announcement, as investors focused on the quality of earnings rather than headline numbers. According to latest reports, Robinhood surprised investors by beating crypto revenue estimates with $100 million in Q2 crypto transaction revenue, comfortably exceeding the $86.6 million consensus estimate despite a 38% year-over-year decline from $160 million. The earnings highlight a changing business model where strong growth in prediction markets, equities, and subscriptions is helping offset weaker cryptocurrency trading, demonstrating that the company is becoming less dependent on crypto market cycles.
The most significant development was prediction markets generating $156 million, overtaking both equities at $129 million and crypto at $100 million for the first time. This shift represents a fundamental change in Robinhood's revenue composition, with the company now generating more revenue from prediction markets than from either cryptocurrency or equities. Options trading contributed $342 million, while equities generated $129 million, representing a 95% annual increase. Net interest revenue climbed to $389 million, while subscription and other revenue reached $143 million, supported by Robinhood Gold memberships and the company's newly launched Trump Accounts. This diversified performance helped offset continued weakness in digital asset trading, reinforcing management's strategy of expanding beyond its original brokerage business. The company also attracted $21.7 billion in net deposits during the quarter, demonstrating sustained customer engagement across its platform.
Despite declining crypto revenue, Robinhood reported $40 billion in crypto notional trading volume during the quarter, with the retail app accounting for $18 billion, down 35% year-over-year, while recently acquired crypto exchange Bitstamp contributed another $22 billion in trading volume. The company continued investing aggressively in digital assets, launching the public mainnet for Robinhood Chain, its Ethereum Layer-2 blockchain focused on tokenized real-world assets and institutional finance. Robinhood expanded stock token availability to more than 120 countries through Robinhood Wallet, introduced Robinhood Earn, its first decentralized lending product, and advanced international crypto expansion plans in the UK, Singapore, and the European Union. These initiatives indicate the company is positioning itself for the next phase of crypto adoption rather than relying solely on transaction fees. Even with the continued slowdown in crypto trading, crypto contributed less revenue than some of Robinhood's newer businesses, with event contracts surpassing both crypto and equity transaction revenue for the quarter.
Despite the strong earnings beat, Robinhood stock closed at $89.84 on July 29, down 3.15%, slipping under $90 even after the company posted its best quarter ever. The stock has fallen about 14% in five days and roughly 20% this year, indicating that the weakness runs deeper than one earnings report. Options traders remain cautious, with the put-call ratio sitting near 0.66 in open interest, a high reading that favors puts, while the volume ratio has climbed toward 0.60 as desks added downside hedges around the earnings date. However, Chaikin Money Flow (CMF) reads -0.09 and tried to cross above zero around July 24, showing that institutional money is bleeding less as compared to the price. Selling volume has thinned since early July even as the stock dropped, suggesting that even retail sellers are losing steam. The chart shows a head and shoulders pattern that broke down on July 24, with the breakdown stalled at $89.87, which also marks the 0.786 Fibonacci retracement. A hold above $89.87 and reclaim of $93.84 would open room back toward analyst targets, while real strength only returns above $108.45.
