Robinhood shares fell nearly 4% in after-hours trading on Tuesday after the company reported third-quarter earnings that missed Wall Street expectations, even as its crypto revenue came in ahead of forecasts. The move reversed a 1.85% gain from the regular session, leaving the stock at $90.90 by 4:11 p.m. ET.

Robinhood posted earnings of 51 cents a share for the quarter, below the 56 cents analysts had expected. Revenue rose 12% from a year earlier to a record $1.42 billion, but that also came in slightly under the $1.44 billion forecast.

Profit and revenue fell short of estimates

Net income declined 14% to $476 million in the quarter. Robinhood said about 7 cents of its per-share result was reduced by a $67 million paper loss tied to Robinhood Ventures Fund I.

Operating expenses increased 16% to $739 million, adding pressure in a quarter when headline revenue still reached a company record. The earnings report left investors weighing top-line growth against lower profitability and a miss versus consensus expectations.

Crypto outperformed forecasts, but trading activity weakened

Crypto revenue totaled $120 million, ahead of forecasts of about $114 million and above the $100 million reported in the second quarter. Even so, the crypto segment was still down 55% from a year earlier.

The year-over-year decline came alongside a 38% drop in crypto trading volume, which fell to $50 billion. That suggests the better-than-expected crypto revenue was not enough to offset concerns about softer activity on the platform or the broader earnings miss.

Options and event contracts played a bigger role

Robinhood’s revenue mix continued to shift beyond crypto. Options revenue climbed 31% to $399 million, while event contracts generated $173 million, more than six times the level from a year earlier.

The company also highlighted progress at Rothera, the exchange it operates with Susquehanna International Group and which is regulated by the CFTC. Robinhood said Rothera surpassed $100 million in annualized revenue in its first full quarter.

That changing mix may become a larger focus for investors, as the company increases its exposure to options and event contracts while regulatory and legal scrutiny around those products rises.

Deposits and subscriptions point to momentum into Q4

Robinhood reported continued growth in customer engagement and funding. Paying Robinhood Gold subscribers rose 34% to a record 5.2 million, and customers added $15.7 billion in net deposits during the third quarter.

The company said momentum carried into the start of the fourth quarter, with October net deposits already above $13 billion month-to-date. That figure includes a $6 billion contribution from the Dell family to Trump Accounts Robinhood services.

The next clear test will come in Wednesday trading, when investors show how they value strong deposit growth and expanding newer revenue lines against a quarter marked by lower profit, higher expenses, and declining crypto trading volume.

Source: beincrypto.com