Author: Nancy, PANews

As October comes to a close, publicly listed companies are gradually revealing their third-quarter results. The American popular brokerage firm Robinhood has delivered an earnings report that exceeded expectations, with both revenue and profit hitting record highs, showcasing the initial success of its diversification strategy as it accelerates its transformation into a fintech company. However, despite the impressive performance, Robinhood's stock price fell against the trend after the earnings report was released.

Cryptocurrency Trading as the Core Growth Source, Predictive Trading as a New Growth Engine

In the third quarter of 2025, Robinhood presented a remarkable performance. The platform's total revenue reached $1.27 billion, a year-on-year increase of 100%; net profit reached $556 million, a year-on-year increase of 271%; and diluted earnings per share (EPS) was $0.61, a year-on-year increase of 259%. Meanwhile, the platform added 2.5 million new funded accounts this quarter, bringing the total to 26.8 million. From the data, it is evident that after years of diminishing early benefits from commission-free trading, Robinhood has clearly found a new growth path, transforming from a single trading platform into a diversified fintech group.

Despite the strong growth in performance, the results still fell short of market expectations, leading to a decline in its stock price post-earnings report, reflecting investors' concerns about the sustainability of its future profitability.

Structurally, Robinhood's current revenue primarily comes from trading income (57%), net interest income (36%), and subscription-related other income (7%). Among these, cryptocurrency trading has become the core growth source for this quarter. This business generated $268 million in revenue, a year-on-year increase of over 300%, accounting for more than one-third of trading income.

This year, Robinhood expanded its cryptocurrency business line by acquiring the cryptocurrency exchange Bitstamp and partnering with the predictive market Kalshi, which have become the two main drivers for this quarter's revenue breakthrough and are listed as one of the major business lines with annualized revenue exceeding $100 million. The recovery of the cryptocurrency market has driven increased activity among retail and institutional investors, the consolidation of Bitstamp has contributed to institutional and derivatives trading, and the launch of the predictive market business has attracted a large number of new users, boosting the growth of cryptocurrency trading revenue. However, cryptocurrency revenue still slightly fell short of the market expectation of $287.2 million.

The addition of Bitstamp significantly increased trading volume. The earnings report shows that in October, the nominal trading volume of cryptocurrencies on the Robinhood platform exceeded $32 billion, with Bitstamp contributing $18 billion (mainly from institutional trading). Moving forward, Bitstamp will also become the main business platform for Robinhood to promote tokenized stock offerings. However, while Bitstamp's institutional trading has led to a surge in transaction volume, the relatively low fee rates have limited actual revenue contributions, raising market concerns about revenue growth.

At the same time, the predictive market business has also seen rapid growth. In the third quarter, Robinhood's predictive contract trading volume doubled quarter-on-quarter to 2.3 billion contracts (each contract valued at $1), becoming the third most active trading category after stocks and options. In October, trading volume reached $2.5 billion, with the platform expected to profit approximately $25 million from it that month.

Aside from cryptocurrency and predictive markets, Robinhood's stock trading revenue grew by 132%, and options trading revenue increased by 50%. However, these trading businesses are generally viewed as having strong cyclicality. Rothschild & Co Redburn analyst Charles Bendit rated Robinhood as a "sell," believing that while the company has performed excellently in product execution, the current performance may reflect a cyclical peak, while the market valuation implies unverified long-term stability.

Becoming This Year's S&P 500 Dark Horse, Preparing for Banking and Investment Businesses

In 2025, Robinhood became one of the best-performing stocks in the S&P 500 index, with its stock price rising over 222% throughout the year, far exceeding the Nasdaq 100 index. The strong stock performance is not only a recognition of Robinhood's growth story by the market but also reflects its fundamentals consistently exceeding expectations.

In fact, since launching its stock repurchase program in 2024, Robinhood has repurchased approximately $810 million in shares. Meanwhile, Robinhood CEO Vlad Tenev's long-term incentive plan (which grants the two founders 13.8 million shares each if the stock price reaches $101.5 per share before 2025) was fully realized in the third quarter, with his annual cash salary currently at only $40,000.

Robinhood's strong financial performance also provides ample cash flow support for business diversification. The earnings report shows that as of the end of the third quarter, Robinhood held $4.3 billion in cash and cash equivalents, with shareholder equity of approximately $8.57 billion. The adjusted operating expenses for the full year of 2025 are expected to be around $2.28 billion, slightly higher than the original expectation, mainly due to increased employee bonuses resulting from better-than-expected performance and ongoing investments in new businesses and technology platforms. Although operating expenses grew by 31% year-on-year in Q3, revenue doubled, allowing profit margins to continue to improve.

Robinhood is also optimistic about its future financial performance, noting that the fourth quarter has started very strongly, with monthly trading volumes for stocks, options, predictive markets, and futures on the platform reaching all-time highs in October, and margin balances also hitting new highs. Currently, Robinhood has 11 business lines with annualized revenues reaching or exceeding $100 million, and plans to launch more asset categories in the future.

"In terms of product vision, we plan to build Robinhood into a family financial center," Vlad Tenev revealed during the earnings call, stemming from systematic adjustments in organization, culture, and technology over the past few years, significantly enhancing the company's product execution and iteration speed, and establishing the core goal of "rapid product delivery." The platform is currently vigorously promoting multiple business lines.

For example, in the predictive business, Robinhood's predictive market segment is entering a rapid expansion phase, currently offering over 1,000 types of contracts covering sports, finance, entertainment, culture, and technology. The company is communicating with overseas regulatory agencies, including the UK's Financial Conduct Authority (FCA), to explore the feasibility of launching offshore predictive markets outside the United States.

In banking, Robinhood Banking is being rolled out in phases, aiming to become the preferred platform for users' salary deposits by offering a diverse range of financial products and services.

In investment, the company is preparing Robinhood Ventures and has submitted documents to the U.S. SEC, focusing on investing in innovative projects to introduce new growth engines to the platform.

Additionally, in terms of tokenized stocks, Robinhood has launched related services in over 30 countries and expanded to over 400 products, with plans to implement related trading on the Bitstamp platform and integrate into the DeFi ecosystem.

Beyond the U.S. market, Robinhood is planning international expansion, proposing that within the next decade, markets and institutional clients outside the U.S. will contribute over 50% of revenue to change the current structure where retail business accounts for too high a proportion. However, it prefers to achieve expansion through organic growth but does not rule out the possibility of mergers and acquisitions. Currently, internationalization is still in its early stages.

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