Robinhood Broadens Trading Mix as Event Contracts Surge
Transaction-based revenue climbed 25% from the prior quarter to $776 million as options, equities and event contracts offset weaker cryptocurrency activity.
Robinhood Markets (HOOD), the online brokerage and financial-services company, broadened its trading-revenue mix in the second quarter as transaction-based revenue rose 25% QoQ and 44% YoY to $776 million. Event-contract revenue exceeded $156 million, more than ten times the year-earlier level, while cryptocurrency revenue fell 38% to $100 million.
Options remained the largest transaction business, with revenue increasing about 32% QoQ to $342 million, while equities revenue rose about 57% to $129 million. Cryptocurrency revenue declined about 25% from the first quarter, extending the shift toward other trading products.
Net interest revenue provided a second source of growth, rising 8% QoQ and 9% YoY to $389 million as growth in interest-earning assets outweighed lower short-term rates and weaker securities-lending activity. The increase reversed three consecutive quarterly declines, though net interest revenue remained 15% below its third-quarter 2023 level.
Customer funding accelerated. Net Deposits reached a record $21.7 billion, up 23% QoQ, and the annualized growth rate increased to 28% from 22% in the first quarter. Cash and Deposits rose 34% YoY to $18.7 billion, while Cash Sweep balances fell 9% after Robinhood transferred more than $6 billion into customer free-credit balances to support margin lending.
That funding helped the Margin Book more than double YoY to a record $21.6 billion. Robinhood Banking accumulated more than $3 billion of deposits from over 240,000 funded customers, with about 40% enrolled in direct deposit.
Credit costs rose alongside the expansion in lending. Provision for credit losses increased 56% QoQ and doubled YoY to $56 million, marking a faster buildup than in the preceding quarter.
Robinhood repurchased $414 million of shares, up from $250 million in the first quarter and $100 million in the fourth quarter of 2023. Of the second-quarter total, $290 million was associated with a convertible-note offering and occurred outside the existing authorization.
Operating expenses rose 12% QoQ and 33% YoY to $734 million, reflecting marketing and growth spending, restructuring charges, and costs tied to Trump Accounts and Rothera. Expenses nevertheless held at 56% of revenue and improved from 61% in the first quarter. Robinhood now expects 2024 adjusted operating expenses and stock-based compensation of $2.675 billion to $2.775 billion, a lower and narrower range that incorporates efficiencies partly funding Rothera and WonderFi.