Surging cryptocurrency trading helps Robinhood beat earnings

Shares in Robinhood Markets Inc. were up over 3% in late trading today after the financial services company surprised with a second-quarter earnings beat thanks to surging levels of customer trading, particularly in cryptocurrency.

For the quarter ended June 30, Robinhood reported adjusted earnings per share of 21 cents, up from three cents per share in the same quarter of 2023, on revenue of $682 million, up a healthy 40% year-over-year. Analysts had expected earnings per share of 15 cents on revenue of $682 million.

The story of Robinhood’s quarter came down to more people using its trading platform. Transaction-based revenues jumped 69% year-over-year, to $327 million. Options revenue up 43%, to $182 million, cryptocurrencies revenue rocketed 161%, to $81 million, and equities revenue rose 60%, to $40 million. Net interest revenue rose 22%, to $285 million, and other revenue, which includes gold subscription services, rose 19% ,to $70 million.

As of the end of the quarter, the company had 24.2 million funded customers, up 1 million year-over-year and investment accounts rose by 1.4 million, to 24.8 million. Assets under custody were up 57% year-over-year, to $139.7 billion, representing both an increase in net deposits and higher equity and cryptocurrency valuations.

Robinhood successfully managed to mostly contain any increasing costs concurrent with surging use, with total operating expenses up a fairly modest 6% year-over-year, to $493 million.

Notable business highlights in the quarter include Robinhood announcing on June 6 that it had agreed to acquire cryptocurrency exchange Bitstamp Ltd. in a $200 million cash deal. Bitstamp holds more than 50 active licenses across the world. The deal would give Robinhood the ability to expand its cryptocurrency trading service into more countries.

“I’m encouraged by the progress we’re making as a business,” Robinhood Chief Financial Officer Jason Warnick said in the company’s earnings release. “In Q2, we set new quarterly records for revenues and earnings per share as we continue to focus on delivering another year of profitable growth.”

Providing a standard forecast when a sizable portion of your business involves cryptocurrency is a hard ask, and Robinhood didn’t. But the company did say that a previous forecast for operating expenses and stock-based compensation for the full-year 2024 remains unchanged at $1.85 billion to $1.95 billion.

Image: Robinhood