Robinhood posts record Q2 revenue on prediction market surge
Robinhood notched record second-quarter revenue of $1.31 billion driven by a booming prediction market business, signaling a strategic shift away from its historically dominant but declining crypto operations.
Robinhood posted record second-quarter revenue of $1.31 billion, surpassing analyst estimates that ranged from $1.25 billion to $1.28 billion. Earnings per share landed at $0.62, easily topping the consensus forecast of $0.42.
The primary engine for this outperformance was the firm's rapidly expanding prediction market business. Revenue from event-based contracts, which allow users to bet on outcomes ranging from sports to elections, surged to $156 million, up from approximately $104 million in the first quarter. Total prediction market volume spiked to 13 billion contracts, compared to 9 billion in the prior quarter.
According to REX Financial Managing Director Bill Birmingham, Robinhood generated 1.15 cents in revenue per event contract. This robust monetization has allowed the brokerage to fundamentally alter its back-end infrastructure for the segment. Chief Financial Officer Shiv Verma noted the company is intentionally lowering the spread it charges users on less popular bets.
To achieve this margin compression without sacrificing overall revenue, Robinhood is shifting transaction volume away from third-party operators like Kalshi. Instead, it is directing more traffic to Rothera, an internal platform managed alongside market maker Susquehanna that offers lower fees. The strategic pivot has elevated Robinhood to the status of chief rival to Kalshi, according to Kalshi's own chief executive.
The prediction market boom is effectively offsetting a notable decline in another historically volatile revenue stream. Robinhood's cryptocurrency business brought in just $100 million for the quarter, a 38% year-over-year drop tied to a prolonged broader slump in digital assets.
Outside of trading, the company demonstrated underlying balance sheet strength. Robinhood Gold subscriptions grew 39% year-over-year to reach 4.8 million customers. The firm also reported a record $22 billion in customer deposits, which Verma said positions the company with strong free cash flow following disciplined expense management.
Despite the headline beats, Robinhood's stock surrendered early gains to trade around $89 after opening near $92. The equity reversed course alongside a broader market drop of around 3%, which was triggered by the Federal Reserve's decision to hold interest rates steady.
