Robinhood Markets delivered its best quarter ever in terms of overall revenue and profit, but the shine was dulled by a 38% year-over-year plunge in cryptocurrency revenue. Shares of the trading app fell roughly 4% in after-hours trading following the earnings release Wednesday.
The company didn't break out specific crypto trading volumes, but the drop in revenue from digital assets suggests retail interest in crypto continues to cool after the boom years. Robinhood's crypto business had been a key growth driver during the 2021 frenzy, but the sector has since faced regulatory headwinds and a prolonged price slump.
Record overall, but crypto drags
Robinhood's total net revenue hit a new high, fueled by a surge in options trading and a growing subscription business. The company also reported its second consecutive quarter of profitability, a milestone it had struggled to reach.
Yet the crypto line item stood out for all the wrong reasons. The 38% decline from the same period last year was steeper than many analysts had expected. In the prior quarter, crypto revenue had already fallen 24% year-over-year, so the trend is accelerating.
Robinhood's CFO said on the earnings call that the company remains committed to crypto and is investing in new features, but didn't provide a timeline for a rebound. The firm has been expanding its crypto offerings, including adding support for more tokens and improving its wallet infrastructure.
Market reaction
Investors seemed to focus on the crypto weakness rather than the record overall numbers. The 4% share drop suggests the market is pricing in continued pressure on Robinhood's crypto segment.
The timing isn't great. Robinhood is still awaiting clarity from the SEC on whether its crypto listings comply with securities laws. The company has been in active discussions with regulators, but no resolution has been announced.
Robinhood's stock has been volatile this year, trading in a wide range as the company balances its traditional brokerage business with its crypto ambitions. The earnings report didn't resolve that tension.
Robinhood will hold its annual shareholder meeting next month. Investors will be watching for any updates on the regulatory front and for signs that crypto revenue can stabilize. The company hasn't given formal guidance for the current quarter, but analysts will be modeling a further decline unless trading volumes pick up.
For now, the message from the market is clear: a record quarter isn't enough if the crypto engine keeps sputtering.
