Robinhood posts record $1.4 billion revenue, but a 14% profit drop exposes hidden portfolio losses

Robinhood's total net revenue reached a record $1.4 billion in the third quarter, a 12% increase year over year. Transaction-based revenue rose 19% to $867 million, supported by options, equities and event contracts. However, net income fell 14% to $476 million, with diluted earnings per share declining 16% to 51 cents.

The company reported $67 million in unrealized losses, primarily related to Robinhood Ventures Fund I. While cryptocurrency revenue grew from $100 million to $120 million quarter-on-quarter, it still fell 55% year over year. Meanwhile, event-contract revenue exceeded crypto revenue for the second consecutive quarter, reaching $173 million.

Crypto trading activity mixed

Robinhood reported about $50 billion in crypto notional volume, down 38% year over year but above the $40 billion reported for the second quarter. The Robinhood app accounted for about $21 billion of this total, down 48% from the prior year, while Bitstamp contributed about $29 billion, down 28%.

The app's steeper percentage contraction shows why separating the two volume streams gives a clearer view of retail activity than the combined figure alone.

Prediction markets face regulatory hurdles

Robinhood's prediction-market expansion creates both opportunity and risk. The company warned that litigation, enforcement actions and changes in law could prevent it from offering these products, which have grown more than sixfold year over year. Customers traded a record 16.4 billion event contracts in Q3, more than seven times the year-earlier count.

On the same day as Robinhood's results, the CFTC announced a lawsuit against Utah seeking to block state enforcement against CFTC-registered contract markets. The agency said it had also initiated legal proceedings against nine other states as it defended its jurisdiction over those markets.

Robinhood Chain shows promise

Robinhood Chain generated more than $80 billion in decentralized exchange volume and more than $50 million in chain fees in its first quarter on mainnet. The company described the network as a top-five chain by revenue and volume, separate from its brokerage operations.