Robinhood Tops Q2 Forecasts as Prediction Market Volume Soars to 13 Billion

Retail trading platform Robinhood Markets delivered stronger-than-expected financial performance for the second quarter, powered by rapid expansion in its event-contracts business and steady growth across premium subscriptions.

The financial brokerage posted record total net revenue of $1.31 billion, surpassing Wall Street expectations that ranged between $1.25 billion and $1.28 billion. Adjusted earnings per share reached $0.62, comfortably outpacing the $0.42 projected by equity analysts.

A primary engine behind the revenue beat was the company’s prediction market unit, which lets users wager on outcomes ranging from sports games to political elections. Total prediction contract volume reached 13 billion during the quarter, rising sharply from 9 billion in the first quarter.

That volume expansion drove prediction market revenue to $156 million, up from approximately $104 million in the preceding quarter. Analysis from REX Financial Managing Director Bill Birmingham indicated the segment generated roughly 1.15 cents in revenue per contract traded.

The rapid trajectory has repositioned Robinhood as a formidable player in event derivative trading, prompting the chief executive of rival platform Kalshi to publicly designate the retail broker as its main competitor.

To optimize margins and reduce transaction friction, Robinhood has altered its backend trading operations. Chief Financial Officer Shiv Verma noted that the firm is seeking to lower spreads collected from investors, particularly on less popular event bets.

Rather than relying primarily on external venues like Kalshi and sharing yield, Robinhood is increasingly directing order flow through Rothera, an internal service managed alongside market maker Susquehanna. The operational pivot offers lower fee structures while keeping a larger share of transaction economics within Robinhood.

Beyond prediction markets, the broker’s subscription offering saw substantial gains. Subscriptions for Robinhood Gold grew 39% year-over-year to 4.8 million customers, helping power a record $22 billion in total customer deposits. Verma highlighted that prudent expense management has sustained strong free cash flow across the organization.

Conversely, the company’s cryptocurrency trading business experienced continued headwinds amid a broader market downturn. Crypto revenue fell 38% from the previous year to $100 million.

Market reaction to the earnings release was muted by macroeconomic conditions. HOOD stock traded near $89 after opening around $92, giving up initial post-earnings gains as the broader market fell nearly 3% following the Federal Reserve decision to keep interest rates steady.