Robinhood Event-Contract Revenue Tops Crypto for Second Quarter

Robinhood's event-contract revenue reached $173 million in Q3, topping crypto revenue for a second straight quarter. Crypto revenue was $120 million, up from $100 million in Q2, while event-contract revenue rose from $156 million. Both businesses recovered sequentially, but crypto revenue was down 55% year over year as event-contract revenue grew more than sixfold.

Robinhood reported record net revenue of $1.4 billion, up 12% year over year. Net income fell 14% to $476 million, and diluted earnings per share dropped 16% to 51 cents. The company said results included $67 million in unrealized losses, primarily tied to Robinhood Ventures Fund I.

Why it matters

Event contracts have become a larger revenue line than crypto at Robinhood, but the company says regulatory access is an operating risk. Its Q3 disclosure said it had stopped offering certain new contracts after actual or threatened state enforcement, and warned that litigation, enforcement and legal changes could prevent it from offering the products.

The CFTC sued Utah on the day of Robinhood's results, seeking to block state enforcement against CFTC-registered contract markets. The agency said it had also initiated proceedings against nine other states. The jurisdictional dispute puts the availability of event contracts in play even as their revenue grows.

Market impact

Robinhood reported about $50 billion in crypto notional volume, down 38% year over year but above the approximately $40 billion in Q2. The app generated about $21 billion, down 48% year over year, while Bitstamp contributed about $29 billion, down 28%. The separate figures distinguish app activity from Bitstamp's contribution; the companywide revenue mix does not establish that customers moved from crypto into event contracts.

Customers traded a record 16.4 billion event contracts, more than seven times the year-earlier count. Robinhood also said its Chain recorded more than $80 billion in decentralized exchange volume and more than $50 million in fees in its first quarter on mainnet. Those blockchain metrics are separate from brokerage trading volume and reported crypto revenue.