Robinhood tops profit expectations as trading frenzy sweeps across asset classes

By Niket Nishant and Pritam Biswas

July 30 (Reuters) - Robinhood Markets HOOD.O exceeded second-quarter profit estimates on Wednesday, driven by a massive surge in volumes as investors traded options, crypto and stocks.

The strong results add to a run of recent successes for the Menlo Park, California-based online brokerage, which has been aggressively rolling out new products to expand beyond its core user base and become a more integral part of customers' financial routines.

They also underscore the resilience of retail investors, who have stayed active despite tariff-related turbulence, and highlight their key role in the current financial landscape.

"When the market drops, our customers tend to lean in and buy. It feels like there's more room for retail engagement from here," Chief Financial Officer Jason Warnick said, adding that the momentum had carried into July.

The company more than doubled its profit to $386 million, or 42 cents per share, for the three months ended June 30. Analysts were expecting 31 cents per share, according to data compiled by LSEG.

Transaction-based revenues increased 65% to $539 million from last year. Crypto revenue jumped 98%, options soared 46% and equities climbed 65%.

Shares were up marginally in choppy after-market trading. They have nearly tripled so far this year, compared with a 9% gain in the Nasdaq composite index .IXIC.

EXPANSION DRIVE

Robinhood is rapidly establishing itself as a major force across asset classes, evolving beyond its origins as a stock-trading app.

But the expansion has faced hurdles. Last month, it launched tokens allowing users in the European Union to trade U.S.-listed stocks, alongside a limited offering providing exposure to private companies such as OpenAI and SpaceX.

OpenAI pushed back, arguing that it did not endorse the tokens. Still, Robinhood CEO Vlad Tenev called tokenization "the biggest innovation our industry has seen in the past decade."

Earlier this month, Robinhood was also floated as a potential candidate to be included in the S&P 500 .SPX index. Such a move typically lifts the stock by triggering buying from funds that track the index.

But the spot eventually went to Datadog DDOG.O, a cloud security firm worth $52 billion.

"It's flattering to be in the conversation," Warnick said.
"It's a really strong signal that we've been on the right track. But it's not something I'm distracted by at all."

Robinhood has cemented its hold in areas of consumer finance beyond trading. It launched a credit card for its Gold subscribers last year, and has since added a wealth management service with fee caps for those users.

The expanded lineup has made the premium subscription more attractive, driving a 76% increase to 3.5 million users.

"It's clear the retail crowd is back, and they're not just YOLOing, now they're subscribing to Gold, swiping the new credit card, and dropping deposits like it's 2021 again," said David Bartosiak, stock strategist at Zacks Investment Research.