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

Robinhood's event-contract revenue exceeded crypto revenue for the second consecutive quarter, reaching $173 million in the third quarter, up from $120 million in the second quarter, according to the company's results.

Both businesses grew from the second quarter, with Robinhood's crypto revenue rising from $100 million to $120 million quarter-on-quarter. Revenue from prediction markets rose from $156 million to $173 million in the same period.

Year over year, cryptocurrency revenue fell 55%, while event-contract revenue grew more than sixfold. That growth raises the stakes in the dispute over whether states can restrict federally regulated prediction markets.

Total net revenue reached a record $1.4 billion, up 12% year over year. Transaction-based revenue rose 19% to $867 million, supported by options, equities and event contracts.

Net income fell 14% year over year to $476 million, while diluted earnings per share declined 16% to 51 cents. Robinhood said the result included $67 million in unrealized losses, primarily related to Robinhood Ventures Fund I.

The lead over crypto was already evident in Robinhood's second-quarter revenue mix. These companywide figures show how Robinhood earns money across products, but they don't show whether individual customers switched from coins to outcome contracts.

Crypto trading activity also recovered from the second quarter but remained below its year-earlier level. Robinhood reported about $50 billion in crypto notional volume, down 38% year over year but above the company-rounded $40 billion reported for the second quarter.

Within the third-quarter total, the Robinhood app accounted for about $21 billion, down 48% from the prior year. 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.

Meanwhile, customers traded a record 16.4 billion event contracts, more than seven times the year-earlier count. Options remained the largest of the reported trading revenue lines at $399 million, up 31% year over year. Equities generated $121 million, up 41%.

A growing revenue line faces state enforcement

Robinhood's prediction-market expansion creates a revenue opportunity alongside an operating risk consisting of restrictions on which contracts it can offer.

In its third-quarter risk disclosure, Robinhood said it had previously stopped certain new event contracts following actual or threatened state enforcement. It warned that litigation, enforcement actions and changes in law could prevent it from offering the products, so continued access is part of the growth outlook alongside customer demand.

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.

The lawsuit seeks to protect access to federally registered markets while the jurisdictional dispute remains unresolved. State enforcement can interrupt product offerings even as event contracts generate substantially more revenue than a year earlier.

Robinhood also said 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.

Robinhood described the network as a top-five chain by revenue and volume. Network DEX volume and chain fees measure activity on the blockchain, while brokerage notional volume across the app and Bitstamp and company-recognized crypto revenue are separate operating and accounting measures.

The company also reported launching crypto trading in the UK and receiving Dubai Financial Services Authority authorization covering trading and custody across all ten DFSA-approved asset classes. Robinhood said it plans to begin rolling out its product suite under that authorization in 2027.