Robinhood's Q2 Earnings Boosted by Cryptocurrency Trading
Shares in Robinhood Markets Inc. climbed over 3% in late trading following a surprising second-quarter earnings beat, driven primarily by a surge in customer trading, especially in cryptocurrency. For Q2 ending June 30, Robinhood reported adjusted earnings per share (EPS) of 21 cents, a significant increase from three cents per share in the same quarter of 2023, on revenue of $682 million, marking a robust 40% year-over-year growth. Analysts had anticipated EPS of 15 cents on the same revenue figure.
Transaction-Based Revenues Skyrocket
The driving force behind Robinhood’s impressive quarter was the growing number of users on its trading platform. Transaction-based revenues surged 69% year-over-year to $327 million. Among the constituents, options revenue climbed 43% to $182 million, cryptocurrencies revenue soared 161% to $81 million, and equities revenue increased by 60% to $40 million. Additionally, net interest revenue rose 22% to $285 million, and other revenue, including gold subscription services, rose 19% to $70 million.
Growing Customer Base and Assets
By the end of the quarter, Robinhood had 24.2 million funded customers, up by 1 million year-over-year, and investment accounts rose by 1.4 million to 24.8 million. Assets under custody also saw a remarkable 57% year-over-year increase, reaching $139.7 billion, reflecting both increased net deposits and higher equity and cryptocurrency valuations.
Controlling Operational Costs
Despite the surge in platform usage, Robinhood managed to control any rising costs effectively, with total operating expenses increasing by a modest 6% year-over-year to $493 million.
Strategic Acquisition of Bitstamp Ltd.
A significant highlight of the quarter was Robinhood's announcement on June 6 regarding its agreement to acquire cryptocurrency exchange Bitstamp Ltd. in a $200 million cash deal. Bitstamp holds over 50 active licenses globally, enabling Robinhood to expand its cryptocurrency trading services into more countries.
Positive Outlook and Financial Discipline
Robinhood's Chief Financial Officer, Jason Warnick, expressed optimism about the company's progress. “In Q2, we set new quarterly records for revenues and earnings per share as we continue to focus on delivering another year of profitable growth,” Warnick noted in the earnings release.
While providing a standard forecast can be challenging with substantial cryptocurrency involvement, Robinhood maintained its previous forecast for operating expenses and stock-based compensation for the full year 2024, which remains unchanged at $1.85 billion to $1.95 billion.
