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Author: He Hao, Long Yue, Wall Street News
“American internet celebrity brokerage” Robinhood delivered impressive third-quarter results.
The online brokerage reported third-quarter earnings on Wednesday that beat Wall Street expectations for both revenue and profit.Thanks to overall growth in cryptocurrency, options and stock trading volumes, the company’s trading-based revenue more than doubled year-on-year, driving net profit to $556 million from $150 million in the same period last year.Meanwhile, cryptocurrency revenue jumped 300%, but fell short of expectations.
Despite the strong results, Robinhood shares fell slightly in after-hours trading.The company also announced an important high-level change. Chief Financial Officer (CFO) Jason Warnick, who has served for more than seven years, plans to retire in 2026. The company has appointed Senior Vice President of Finance and Strategy Shiv Verma as his successor.This smooth transition arrangement is designed to ensure the continuity of the company’s strategy.
Robinhood shares have risen nearly 270% this year and were included in the S&P 500 Index in the third quarter.Retail investing, once seen as a pandemic-era craze, appears to have evolved into a market-shaping force, and Robinhood is successfully seizing on this trend.
Key points of Robinhood’s third quarter financial report: Performance exceeded expectations across the board, trading revenue doubled
Key financial data:
Revenue: Net revenue in the third quarter was US$1.27 billion, analysts expected US$1.21 billion;
EBITDA: Adjusted EBITDA in the third quarter was US$742 million, while analysts expected US$726.9 million.
Earnings per share: $0.61, vs. $0.53 expected, compared with $0.17 per share a year ago.
Net Profit: Net profit increased to $556 million, significantly higher than the $150 million reported in the same period last year.
ARPU: ARPU (average revenue per unit user) in the third quarter was US$191, analysts expected US$182.
Number of monthly active users: The number of monthly active users in the third quarter was 13.8 million, analysts expected 13.31 million.
Data by business:
Transaction-based revenue in the third quarter was US$730 million, while analysts expected US$725.8 million;
Cryptocurrency revenue in the third quarter was US$268 million, a 300% jump, but less than analysts’ expectations of US$287.2 million;
Options revenue in the third quarter was US$304 million, while analysts expected US$301.3 million.
The core driver of performance growth comes from the strong recovery of the trading business.In the third quarter, the company’s transaction-based revenue reached $730 million, more than doubling year-on-year.Among them, stock trading revenue increased by 132%, options trading revenue increased by 50%, and cryptocurrency trading revenue soared 300% to $268 million, but slightly lower than analysts’ expectations of $287.2 million.
“Event contracts” become a new growth engine
One of the most eye-catching highlights in the financial report is the explosive growth of its “Prediction Markets” business.In the third quarter, event contract trading volume on the platform surged to 2.3 billion, more than double the previous quarter.
According to retiring CFO Jason Warnick, the fourth quarter started stronger, with transaction volume in October alone exceeding 2.5 billion.This includes approximately $25 million from the platform’s prediction market business.
Recently, Robinhood has expanded the scope of event contracts, initially from sports and finance, to further expand into politics, entertainment and technology.Robinhood has partnered with Kalshi to allow users to place yes/no bets on the outcome of future events in sports, politics, entertainment and technology.
Warnick said in the announcement that the prediction market business has become one of the company’s new business lines with an annual revenue of approximately US$100 million.Incoming CFO Shiv Verma also emphasized in an interview: “This is a new asset class, and we want to be at the forefront. This is one of our key investment areas.”
Event contracts still account for only a small portion of Robinhood’s overall revenue.But the prediction markets business has grown rapidly in recent weeks: Analysts at Piper Sandler estimate that trading volumes at Kalshi and competing platform Polymarket nearly doubled in October.Analysts also said that this weekend the two platforms saw the most active trading days since the 2024 election.
However, such prediction market contracts – especially those related to sports and entertainment – have also sparked controversy because they blur the line between investing and gambling.
Executive speech: Banking and venture capital businesses will be launched one after another
Robinhood CEO Vlad Tenev said in a statement:
“Our team continues to roll out new products at a rapid pace, driving record business performance in the third quarter, and we are not slowing down – prediction markets business is growing rapidly, Robinhood banking is starting to gradually come online, and Robinhood venture capital business is about to launch.”
Chief Financial Officer Jason Warnick said in the announcement:
“The third quarter once again achieved strong and profitable growth. We continued to diversify our business and added two new business lines with annualized revenue of approximately US$100 million or more – Prediction Markets and Bitstamp.”
CFO announces retirement plan, promotes successor internally
Robinhood announced in its earnings report that the company’s chief financial officer, Jason Warnick, will retire in 2026.The former Amazon executive has served at Robinhood for more than seven years and is a key figure in the company’s development.
According to the plan, Warnick will complete the handover in the first quarter of 2026, and will continue to serve as a strategic advisor until September 1, 2026.The company has appointed Shiv Verma, senior vice president of finance and strategy, as its next CFO.The move is seen as an internal promotion to ensure a smooth transition of the company’s financial strategy.
Analysis and Comment: Diversification strategy pays off, moving towards a financial technology company
Robinhood has been working to diversify its revenue sources to reduce its reliance on trading.Earlier this week, the company announced a partnership with Sage Home Loans to enable its customers to obtain home loans.In addition, the company plans to launch a closed-end fund to give U.S. retail investors exposure to unlisted companies.
Analysts said Robinhood’s third-quarter results announced on Wednesday exceeded Wall Street expectations and continued its strong performance this year, making it one of the most outstanding companies among large U.S. technology stocks this year.Robinhood is betting that a new generation of investors will want to trade not just stocks but also bets on sports, cultural and political events on the same platform.So far, the bet appears to be paying off.
As Robinhood expands its business into comprehensive wealth management, the company is gradually narrowing the gap with Coinbase.The company has been aggressively offering deposit matching offers to attract clients from Fidelity and Schwab, and it has grown its assets under management through the acquisition of TradePMR.
Robinhood is primarily aimed at retail investors.Robinhood was initially known for its easy-to-use platform that made it easy for novices to buy and sell stocks.But now, its trading business has greatly expanded: nearly 90% of Robinhood’s trading-related revenue in the third quarter came from categories other than stocks, including options, futures and cryptocurrencies.
David Bartosiak, equity strategist at Zacks Investment Research, wrote in a morning note: “This is no longer the Robinhood of the pandemic. It is now leaner, more diversified, and is quietly growing into a true fintech competitor.”
