Robinhood (HOOD) experienced a 4% drop in after-hours trading, despite surpassing Wall Street's expectations for its second-quarter earnings. The stock decline follows a 3.1% fall during regular trading hours.
The brokerage reported $100 million revenue from crypto trading, a 38% decline in a year, offset by stronger options, equities and prediction markets activity.
In the second quarter, Robinhood reported adjusted earnings per share of $0.62, significantly exceeding the analysts’ forecast of $0.43. Revenue also rose by 32% year-on-year to reach a record $1.31 billion, slightly above the consensus estimate of $1.29 billion.
Despite the overall growth, the brokerage faced a notable decline in its cryptocurrency trading revenue, which fell 38% from $160 million to $100 million compared to the previous year. This drop was counterbalanced by increased activities in options, equities, and prediction markets.
Vlad Tenev, Chairman and CEO of Robinhood, stated, "Whether it's the Robinhood Chain, Robinhood Ventures, or Trump Accounts, our product velocity is focused on one goal: making everyone an owner."
During this quarter, Robinhood made significant strides in product development. The introduction of Robinhood Chain, a blockchain platform designed for tokenized U.S. stocks in Europe, marked a pivotal moment in the company's efforts to integrate traditional financial assets into blockchain technology.
Since its launch, the Robinhood Chain has witnessed rapid growth, recording hundreds of millions in daily decentralized exchange volumes, with tokenized stocks such as GameStop, Nvidia, and SpaceX becoming popular among traders. Although trading in memecoins and stablecoins remains prevalent, there has been a steady uptick in trading activity for tokenized equities in recent weeks.
Additionally, the company launched Agentic Trading, a suite of AI tools that enable users to connect third-party AI assistants to their brokerage accounts. This feature allows for market monitoring and trade execution based on personalized instructions while maintaining user control through separate trading accounts, spending limits, and manual approvals.
Robinhood's latest performance offers insights into the possible trends for Coinbase (COIN), which is set to release its second-quarter earnings soon. While the two firms operate under different business models, both are significantly affected by retail trading dynamics and cryptocurrency market sentiments, meaning Robinhood's transaction trends can provide clues about Coinbase's forthcoming results. Investors will be keen to see if the uptick in crypto prices and trading volumes during the quarter translates to increased transaction revenue for Coinbase following Robinhood's report.
The company is scheduled to conduct an investor call at 5 PM ET.