Robinhood doubles its revenue as customers flock to its prediction markets, other new businesses

By Gordon Gottsegen

Robinhood's stock drops in after-hours trading following earnings beat

Robinhood has been expanding into more financial trading products

The stock market had a strong third quarter, with the S&P 500 pushing to fresh all-time highs and posting several months of gains in a row. Meme-stocks were also back on the menu, with companies like Opendoor Technologies Inc. seeing huge gains.

All of this was enough to kick off a trading frenzy among individual investors, and retail brokerage Robinhood Markets Inc. (HOOD) benefited as a result.

Robinhood reported third-quarter earnings late Wednesday, posting revenue that doubled year on year to $1.27 billion, and profit of 61 cents a share, up 259% compared with last year. That was ahead of Wall Street's expectations of per-share earnings of 56 cents a share on sales of $1.2 billion.

Trading volume on the platform was up for equities, options and crypto. With that, Robinhood saw a 129% year-over-year increase in transaction-based revenue, which grew to $730 million. Transaction-based revenue for crypto grew the fastest, up more than 300% on the year.

Robinhood said that the number of funded customers grew by 2.5 million this quarter, bringing the total count to 26.8 million customers. The company highlighted that many customers leaned into its new products.

The quarter was another period of "profitable growth" as Robinhood continued to diversify its businesses. In a statement, Chief Financial Officer Jason Warnick pointed out that two new business lines, prediction markets and Bitstamp, are generating about $100 million in annualized revenues.

Warnick will retire early next year, but will remain as a strategic adviser until Sept. 1. The company named Shiv Verma as its next CFO.

"Prediction markets are really on fire," Robinhood CEO Vlad Tenev said in the earnings call. "It's hard to believe we launched this just about a year ago with the presidential election market. We've doubled volume every quarter since then."

Tenev said that Robinhood handled 2.3 billion prediction-market contracts in the third quarter, and then saw another 2.5 billion contracts traded in October - hinting that the fourth quarter could continue this exponential growth.

Warnick noted that Robinhood's prediction-markets product was the fastest of its businesses lines to reach $100 million in annualized revenue. The company now has 11 business lines generating $100 million or more in annualized revenue.

"That's wild diversification in motion," David Bartosiak, stock strategist at Zacks Investment Research, said about Robinhood's multiple business lines. "Vlad and crew are turning Robinhood into the Swiss Army knife of finance with trading, banking, crypto, even prediction markets."

Despite the beat, shares fell 2% in after-hours trading. Robinhood's stock has gained more than 35% over the past three months, as investors have grown increasingly confident in the company after it posted strong second-quarter profits. But some analysts have concerns with the company's high valuation after a notable run.

"Investors are concerned about the sustainability of peak growth rates and high valuations," Brian Mulberry, senior client portfolio manager at Zacks Investment Management, wrote in an email. "Overall, this quarter will help bolster the return to profitability but 100% growth rates are difficult to sustain for long periods."

-Gordon Gottsegen

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11-05-25 2031ET