Robinhood's Q3 financial report shines: profits triple, and "event contracts" become a new rise engine.

Original Title: “Income Doubled, Profits Tripled, 'The Home of American Retail Investors' Robinhood's Earnings Report Exceeds Expectations, 'Event Contracts' Trading Experiences Explosive Rise | Earnings Report Insights”

Original authors: He Hao, Long Yue

Source:

Reprint: Mars Finance

The “American internet celebrity brokerage” Robinhood has delivered impressive third-quarter results.

The online brokerage's third-quarter financial report released on Wednesday showed that its revenue and profit both exceeded Wall Street expectations. Thanks to a comprehensive rise in cryptocurrency, options, and stock trading volumes, the company's trading-based revenue more than doubled year-on-year, driving net profit from $150 million in the same period last year to $556 million. At the same time, cryptocurrency revenue surged by 300%, but fell short of expectations.

Despite strong performance, Robinhood's stock price fell slightly in after-hours trading. The company also announced a significant executive change, as Chief Financial Officer (CFO) Jason Warnick, who has served for more than seven years, plans to retire in 2026. The company has appointed Senior Vice President of Finance and Strategy Shiv Verma as his successor. This smooth transition arrangement aims to ensure continuity in the company's strategy.

Since the beginning of this year, Robinhood's stock price has risen nearly 270% and was included in the S&P 500 index in the third quarter. What was once seen as a retail investor frenzy during the pandemic seems to have evolved into a force shaping the market, and Robinhood is successfully capitalizing on this trend.

Robinhood Q3 earnings highlights: Performance significantly exceeded expectations, trading income doubled.

Main financial data:

· Revenue: Q3 net revenue of $1.27 billion, analysts expected $1.21 billion.

· EBITDA: The adjusted EBITDA for the third quarter was 742 million USD, while analysts expected 726.9 million USD.

· Earnings per share: $0.61, expected $0.53, earnings per share $0.17 in the same period last year.

· Net Profit: Net profit increased to $556 million, significantly higher than last year's net profit of $150 million.

· ARPU: The ARPU (Average Revenue Per User) for the third quarter was $191, while analysts expected $182.

· Monthly active users: In the third quarter, the monthly active users reached 13.8 million, with analysts expecting 13.31 million.

Business Data:

· Q3 revenue based on trading was $730 million, while analysts expected $725.8 million.

· In the third quarter, the revenue from cryptocurrency reached $268 million, a rise of 300%, but it fell short of analysts' expectations of $287.2 million.

· Q3 options revenue of $304 million, analysts expected $301.3 million.

The core driver of performance rise comes from the strong recovery of trading business. In the third quarter, the company's trading-based revenue reached 730 million dollars, more than doubling year-on-year. Among them, stock trading revenue rose by 132%, options trading revenue increased by 50%, while cryptocurrency trading revenue soared by 300% to 268 million dollars, slightly below analysts' expectations of 287.2 million dollars.

The “event contract” has become a new rise engine.

One of the most striking highlights in the financial report is the explosive rise of the “Prediction Markets” business. In the third quarter, the trading volume of event contracts on the platform surged to 2.3 billion, more than double that of the previous quarter.

According to the soon-to-retire CFO Jason Warnick, the fourth quarter has started even stronger, with a trading volume of over $2.5 billion just in October. This includes about $25 million from the platform's prediction market business.

Recently, Robinhood has expanded the scope of event contracts from the initial focus on sports and finance to further include politics, entertainment, and technology. By partnering with Kalshi, Robinhood allows users to bet on the “yes/no” outcomes of future events in sports, politics, entertainment, and technology.

Warnick stated in the announcement that the prediction market business has become one of the company's new revenue streams, contributing approximately $100 million in annualized revenue. Incoming CFO Shiv Verma also emphasized in an interview: “This is a new asset class, and we want to be at the forefront; this is one of the areas we are focusing our investments on.”

Event contracts still account for a small portion of Robinhood's overall revenue. However, the prediction market business has seen a rapid rise in recent weeks: Analysts at Piper Sandler estimate that trading volume on Kalshi and competing platform Polymarket nearly doubled in October. The analysts also stated that this weekend marked the two most active trading days for these platforms since the 2024 election.

However, such prediction market contracts—especially those related to sports and entertainment—have also sparked controversy as they blur the lines between investment and gambling.

Executive Speech: Banking and venture capital businesses will be launched successively.

Robinhood CEO Vlad Tenev stated in a statement:

“Our team continues to rapidly launch new products, driving record business performance in the third quarter, and we will not slow down—market business is predicted to rise quickly, Robinhood's banking services are gradually going live, and Robinhood's venture capital business is also set to launch soon.”

CFO Jason Warnick stated in the announcement:

“In the third quarter, we achieved strong and profitable rise again, continuing to diversify our business, and added two new business lines with an annual revenue of approximately $100 million or more - Prediction Markets and Bitstamp.”

The CFO announced retirement plans and promoted an internal successor.

Robinhood announced in its financial report that the company's Chief Financial Officer Jason Warnick will retire in 2026. This executive, who previously worked at Amazon, has served at Robinhood for over seven years and is a key figure in the company's development.

According to the plan, Warnick will complete the handover in the first quarter of 2026 and will continue to serve as a strategic advisor until September 1, 2026. The company has appointed Shiv Verma, Senior Vice President of Finance and Strategy, as the next CFO. This move is seen as an internal promotion to ensure a smooth transition of the company's financial strategy.

Analysis Comment: Diversification strategy shows results, moving towards a fintech company

Robinhood has been working to diversify its revenue sources to reduce reliance on its trading business. Earlier this week, the company announced a partnership with Sage Home Loans to enable its customers to access home loans. Additionally, the company plans to launch a closed-end fund to give American retail investors exposure to private companies.

Analysts say that Robinhood's third-quarter results released on Wednesday exceeded Wall Street expectations, continuing its strong performance this year and making it one of the standout companies among large U.S. tech stocks this year. Robinhood is betting that a new generation of investors will want to place bets not only on stocks but also on sports, cultural, and political events on the same platform. So far, this bet seems to be paying off.

As Robinhood expands its business into comprehensive wealth management, the company is gradually narrowing the gap with Coinbase. The company has been actively attracting customers from Fidelity and Schwab by offering deposit matching incentives and is driving its asset management growth through the acquisition of TradePMR.

Robinhood primarily targets retail investors. Robinhood was originally known for its user-friendly platform, allowing beginners to easily buy and sell stocks. However, its trading business has greatly expanded: in the third quarter, nearly 90% of Robinhood's trading-related revenue came from categories other than stocks, including options, futures, and cryptocurrencies.

David Bartosiak, a stock strategist at Zacks Investment Research, wrote in a morning report: “This is no longer the Robinhood of the pandemic era. It is now more streamlined, more diverse, and is quietly growing into a true fintech competitor.”