Crypto
Robinhood's Prediction Markets Out-Earned Crypto
Robinhood's crypto revenue fell 55% in its quarterly results as bitcoin trading slowed, while event contracts earned $173 million and overtook it. Total revenue of $1.42 billion slightly missed forecasts, and the shares fell about 7% after hours to $87.60.
For most of its life as a public company, Robinhood's results have moved with the price of bitcoin. The third quarter showed a different business. The company said on Tuesday, October 27, that transaction revenue rose 19% to $867 million, but crypto revenue fell 55% from a year earlier to $120 million, and event contracts, the prediction-market products on elections, sports and economic data, brought in $173 million, more than six times the year-earlier figure. It is the first quarter in which prediction markets earned more than crypto.
The crypto decline mirrors the market. Total crypto notional volume fell 38% to $50 billion, with volume in the Robinhood app down 48% to $21 billion and on the Bitstamp exchange down 28% to $29 billion. Bitcoin, which hit a record above $126,000 a year ago, traded around $80,000 this week. On a quarterly basis, crypto revenue actually rose 20%, but only because of $26 million from Robinhood Chain, the company's own blockchain; excluding it, crypto trading revenue fell 6% from the second quarter to $94 million even though volume rose from $40 billion to $50 billion, which means Robinhood earned less on each dollar traded.
Elsewhere the core brokerage grew. Options revenue rose 31% to $399 million and equities 41% to $121 million, funded customers reached 28.7 million, Gold subscribers a record 5.2 million and platform assets $396 billion, up 19%. Net deposits were $15.7 billion. Net interest revenue fell 9% to $415 million as rates on cash balances came down from last year's levels, and net income fell 14% to $476 million, or $0.51 a share.
That is where the market focused. Total revenue of $1.424 billion was a little short of the roughly $1.43 billion expected, and diluted earnings of $0.51 compared with forecasts around $0.55, although adjusted earnings of $0.60 beat. The shares closed at $94.56 and fell to about $87.60 after hours, a drop of about 7%, according to Investing.com; CNBC put the early after-hours fall at 4%. The company trimmed the top of its 2026 expense outlook by $25 million to a range of $2.675 billion to $2.75 billion.
The quarter answers one question and raises another. Robinhood is less dependent on crypto than it was, but the business that replaced it is newer and regulated in a contested way, with state gaming regulators challenging sports event contracts in court. With the US midterm elections on November 3, the fourth quarter should be strong for event contracts; whether that revenue lasts beyond an election season is what the next few reports will show. Coinbase, which reports on Thursday, will give the cleaner read on crypto trading volumes.