Quick overview

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Robinhood showcased impressive growth during its Q2 earnings call on Wednesday, surpassing Wall Street expectations. The firm serving retail customers experienced a surge in revenue last quarter because of a resurgence in speculative trading and meme-stock mania. Gains year-over-year increased due to higher trading in options, crypto, and stocks.

Robinhood outperformed expectations for the second-quarter earnings. Revenue for the quarter amounted to $989 million, while the firm’s diluted earnings per share (EPS) were reported at $0.42, marking a 100% increase year-over-year. In contrast, accounts and analysts tracked by Visible Alpha predicted $0.30 in diluted EPS and $920 million in revenue.

As for the third quarter, Robinhood’s CFO Jason Warnick remarked during the earnings call that the trading platform was off to a solid start. July saw record volumes in equity and options trading. He also pointed out that crypto volumes were at 6-month highs at Robinhood and European affiliate crypto exchange, Bitstamp.

The company reported remarkable revenue growth of 45%, reaching nearly $1 billion at $989 million. Additionally, net income surged to $386 million, marking an increase of over 100% compared to the same period last year.

The company’s growth extended beyond revenue. The number of funded customers increased by 2.3 million, bringing the total to 26.5 million and exceeding StreetAccount’s expectation of 26.1 million. Furthermore, investment accounts grew by 10% year over year, totaling 27.4 million.

According to the earnings release, a rise in net deposits, along with the valuation of stocks and cryptocurrencies, contributed to a remarkable 99% year-over-year increase in total platform assets, nearly doubling to $279 billion. This growth was driven by strong net deposits,  assets, and higher equity and cryptocurrency

HOOD is positioning itself to compete with Coinbase as it transitions into full-scale wealth management, away from retail trading. The company has actively attracted customers from Fidelity and Schwab by offering deposit matches. Following the acquisition of TradePMR, assets under management have increased significantly.

The total operational expenses surged by 12% to $550 million, which included costs from the Bitstamp acquisition, a 6% increase in adjusted operating expenses, and share-based compensation to $522 million on a non-GAAP basis. Transaction-based revenue, which reflects trading activity, exceeded StreetAccount’s estimate of $517 million, reaching $539 million. Revenue from options trading is worth $265 million, surpassing  $250 million. Meanwhile, revenue from stocks and cryptocurrencies fell slightly short of expectations, indicating a shift towards trading higher-margin derivatives.