Robinhood’s first profitable quarter since IPO comes even as crypto revenue continues slide

Robinhood’s first profitable quarter since IPO comes even as crypto revenue continues slide

Revenue from Robinhood’s cryptocurrency transactions dropped to $31 million in the second quarter—an 18% decrease from the first quarter, and a year-over-year decline of approximately 47%—setting a new low for the online brokerage that went public in 2021.

Overall, however, with an earnings per share of 3 cents, Robinhood beat analysts’ predictions of a loss of 1 cent, according to data from the Wall Street Journal.

Robinhood posted a net income of $25 million in the second quarter, its first positive result since the initial public offering. Total revenue increased 10% from the prior quarter, to $486 million, notching a year-over-year increase of 53% and beating analysts’ expectations of $473 million.

In after-hours trading, shares fell more than 7% to a low of $11.47. Recently, Robinhood’s shares have risen in concert with other publicly traded crypto and crypto-related companies following a federal judge’s ruling in the Securities and Exchange Commission’s case against Ripple.

“While shares of the online broker fell in post-market trading, I think a lot has to do with the negative sentiment in the market resulting from the historic U.S. debt downgrade,” Jesse Cohen, a senior analyst at Investing.com, told Fortune in an email.

Robinhood’s improved earnings follow a succession of quarters marked by losses and layoffs, as the online brokerage, founded in 2013 by Stanford University graduates Vlad Tenev and Baiju Bhatt, has looked for other sources of revenue beyond the small fees it pockets on trades.

One of the company’s larger bets has been on crypto. In 2018, Robinhood began letting users buy and sell digital assets, initially offering them the ability to trade only Bitcoin and Ether, the native cryptocurrency for Ethereum.

The firm eventually expanded the tokens it listed to 18 and has announced other crypto products, including a wallet unveiled in April 2022 as well as a recently announced programming interface to let users on applications outside of Robinhood’s exchange buy and sell digital assets.

Following the SEC’s lawsuits against Binance and Coinbase, in which the agency argues that more than 13 tokens are unregistered securities, Robinhood decided to delist cryptocurrencies for the Solana, Polygon, and Cardano blockchains.

Robinhood also said that it’s still looking to formally buy back the 7% stake, or 55 million shares, Sam Bankman-Fried, the disgraced founder of bankrupt crypto exchange FTX, purchased in 2022. At current prices, the shares would be worth more than $680 million.

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