Robinhood beat analyst expectations on several fronts for the second quarter. That included record revenue of $1.31 billion, which beat estimates of $1.25-$1.28 billion, and earnings per share, which came in at $0.62 versus the $0.42 analysts had predicted. The strong performance was driven in part by an uptick in Robinhood’s Gold subscription business and the popularity of its prediction market business.
Total prediction market volume for Robinhood in Q2 surged to 13 billion contracts compared to 9 billion in the first quarter. Robinhood’s success in the category, which lets users wager on events ranging from sports games to elections, recently led the CEO of industry leader Kalshi to cite the company as its chief rival.
Overall revenue from prediction markets jumped from around $104 million in the first quarter to $156 million in Q2. According to Bill Birmingham, Managing Director at REX Financial, this translated to revenue of 1.15 cents per event contract.
On a call with reporters, Robinhood CFO Shiv Verma noted that, even as prediction market volume grows, the company has been seeking to lower the spread it collects from users, especially on less popular bets. To this end, Robinhood has been directing more transactions to Rothera, an in-house offering it manages with the market maker Susquehanna, which offers lower fees according to Verma. In the past, Robinhood has relied on Kalshi and other firms to operate the back end of its prediction market offerings, sharing a cut of the revenue.
