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Crypto is now driving half of Robinhood’s revenue

Reuters/Dado Ruvic
The wow moment.
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Robinhood investors are loving crypto.

In its first earnings report as a public company, the investing platform said crypto trading accounted for 52% of its main source of revenue—selling users’ orders for options, equities, and cryptocurrencies to market makers like Citadel Securities—up from just 0.03% in the second quarter of last year. Dogecoin, which was originally created to make fun of the crypto hype, made up 62% of crypto trading volume, the company said Aug. 18.

“Robinhood is now clearly on the map for crypto trading,” said Jason Warnick, Robinhood’s CFO, in a conference call.

Revenue from cryptocurrencies soared by 4560% to $233 million in the second quarter, up from $5 million in the same period last year. Equities trading revenue, meanwhile, dropped by 26% to $52 million vs. $71 million. As a result, equities’ share of revenue shrank to 12% from to 38%.

 Overall, transaction-based revenue hit $451 million in the second quarter, up 141% from $187 million.

Robinhood warns of lower trading activity ahead

But the company said it expects “seasonal headwinds and lower trading activity across the industry,” which will result in lower revenue and fewer new funded accounts on the trading app in the third quarter. In June, trading volumes at major crypto exchanges fell by more than 40%.

Robinhood executives said the volatile nature of the crypto market makes it “incredibly difficult to predict when those moments will continue or happen again.” Still, Warnick added that cryptocurrencies have become more mainstream and more accepted than they were in the past. The company sees crypto as a “long-term business” and has been scaling its crypto team, he said.

Robinhood shareholders seem interested in crypto, too. Ahead of its earnings call, the California-based company collected shareholder questions, which ranged from whether investors can get a Robinhood hat and hoody to whether the company will pay out a dividend in the future. 

The top-voted question: Is Robinhood getting a crypto wallet? On Wednesday, the company said achieving that at scale is tricky partly due to security reasons, but it is something it will be focusing on.

Clarification: An earlier version of this story incorrectly referred to market maker Citadel Securities as Citadel, which is a hedge fund.

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