TLDR:
- Robinhood reported 165% growth in crypto revenue to $61 million in the third quarter
- Total revenue increased 36% year-over-year to $637 million
- Assets under custody increased 76% to $152.2 billion
- The company’s shares fell 11% despite strong crypto performance
- Growth initiatives reduced third quarter net income by $27 million
Despite significant growth in its cryptocurrency business, Robinhood Markets faced mixed reactions from investors in its third quarter results revealed both achievements and challenges.
The commission-free trading platform showed remarkable expansion in its crypto segment while managing the costs of its ambitious growth strategy.
The company’s cryptocurrency division emerged as a standout performer, with revenue increasing 165% to reach $61 million in the third quarter. This growth came at a time when the broader crypto market was showing renewed vigor, particularly as Bitcoin neared previous highs. The successful integration of Bitstamp, following its previous acquisition, contributed to increased trading volumes.
Total revenue for the quarter reached $637 million, an increase of 36% compared to the same period last year. The company’s Assets Under Custody (AUC) grew to $152.2 billion, representing a 76% year-over-year increase, driven by consistent net deposits and higher valuations in both the equity and crypto markets.
However, the company’s growth initiatives came at a cost. Chief Financial Officer Jason Warnick disclosed that these efforts reduced third-quarter net income by $27 million. The news helped send Robinhood’s share price down nearly 11% in premarket trading, despite the stock having more than doubled in value over the year.
Robinhood has actively expanded its service offerings beyond its original role as a retail trading platform. Recent months have seen the launch of a desktop trading platform, the addition of futures and index options trading, and the introduction of a credit card. These moves are in line with the company’s strategy to develop into a comprehensive financial services provider.
The company’s year-to-date net deposits grew to $34 billion, demonstrating continued user engagement and confidence in the platform. This growth occurred despite regulatory challenges, including a Wells notice from the Securities and Exchange Commission (SEC) in May regarding potential violations of federal securities laws.
In response to regulatory concerns, Robinhood has taken a more measured approach to product expansion, particularly in its cryptocurrency offerings. While the company continues to list new tokens and enable transfers for assets such as Solana (SOL), these services are currently limited to customers in the EU.
The company’s operating expenses showed improvement, falling 10% in the quarter, drawing praise from analysts for cost discipline. JP Morgan analysts characterized the quarter as “something of a seasonal slowdown in business after a robust first half.”
The regulatory environment remains a key factor in Robinhood’s business. While the SEC issued a Wells Notice earlier in the year, no formal legal action has been taken, allowing the company to maintain its current business operations.
The company’s relationship with the cryptocurrency markets continues to evolve following its previous exposure to FTX. After buying back its shares from Alameda Research in a $605 million deal last year, Robinhood has strengthened rather than diminished its presence in the crypto space.
Robinhood’s results reflect the broader trends in digital asset markets, with its crypto unit benefiting from increased market activity and higher valuations. The platform’s ability to attract and retain assets suggests ongoing user confidence despite regulatory uncertainties.
The company’s third quarter represents its second-best quarter for revenue ever, demonstrating resilience in a competitive market environment. The growth in Assets Under Custody reflects both market appreciation and continued customer engagement.
Recent product launches and service expansions indicate Robinhood’s commitment to diversifying its revenue streams and strengthening its market position. These initiatives, while affecting short-term profitability, are in line with the company’s long-term strategy.
