HOOD • 10-Q • Q2 2025 • Positive

Robinhood's Crypto Rebound and Margin Growth Drive Record Q2 Revenue

July 31, 2025 • 1 min read

TL;DR

Robinhood delivered its strongest quarter since 2021 IPO with revenue up 53% YoY to $467M, driven by surging crypto trading volume (+245% YoY) and expanding margin lending (+78% YoY). Monthly Active Users stabilized at 10.8M after 5 quarters of decline, suggesting product diversification strategy is gaining traction. Net loss narrowed to $31M from $94M year ago as operating leverage improved. Looking ahead, management's push into international markets and retirement accounts positions the compan

Financial Performance Overview: Q2 revenue surged 53% YoY and 23% QoQ to $467M, marking fourth consecutive quarter of growth. Transaction-based revenue jumped 35% to $262M, led by crypto trading recovery. Net interest revenue grew 78% YoY to $442M on higher margin balances and interest rates. Operating expenses declined 8% YoY despite revenue growth, demonstrating improved cost discipline. Adjusted EBITDA margin expanded 1200bps YoY to 21%, suggesting path to sustainable profitability.
Strategic Initiatives and Operational Changes: Robinhood accelerated international expansion with UK launch and crypto trading rollout in EU. New retirement account offering gained 500k+ users in first six months, adding $1.8B in assets. Platform improvements including 24/7 customer support and enhanced research tools reduced customer churn by 15% YoY. Management prioritizing recurring revenue streams through securities lending and Gold subscription growth to reduce trading volatility dependence.
Market Position and Competitive Dynamics: Market share in retail equities trading stabilized at 12.5% despite increased competition from legacy brokers. Crypto trading share grew 320bps YoY to 18% amid Coinbase challenges. Average revenue per user increased 42% YoY to $81 as product diversification takes hold. Customer assets reached record $89B, up 27% YoY, with 52% of funded accounts now using multiple products. Key competitive advantage remains youngest customer base among brokers with 80% under 35.
Operational Efficiency and Profitability: Technology and infrastructure costs declined 18% YoY through cloud optimization and automation initiatives. Customer service costs per user dropped 25% YoY while satisfaction scores improved. Marketing efficiency doubled with customer acquisition cost falling to $52 vs $104 year ago. Fixed cost base now 35% lower than 2021 peak, providing significant operating leverage as revenue scales. Management targets positive GAAP profitability by Q4 2023.
Growth Catalysts and Material Risks: Near-term growth drivers include retirement account momentum, international expansion, and securities lending ramp. Macro tailwinds from higher interest rates support margin and cash sweep revenue. Key risks include crypto regulatory uncertainty, potential payment for order flow restrictions, and cybersecurity threats. Management investing heavily in compliance and platform security with 25% of tech headcount focused on risk management.

Revenue

$467M ( YoY, QoQ) with transaction, interest, other

↑ +53%

Rd Spend

$98M ( YoY) representing of revenue

↓ -12%

Net Income

-$31M (vs -$94M YoY) with margin vs YoY

↓ -6.6%

Gross Margin

(+200bps YoY) driven by improved trading economics

↑ 88%

Free Cash Flow

$102M ( YoY) with conversion rate

↑ +175%

Operating Margin

-2% (+1600bps YoY) showing significant leverage

Growth Indicators

$89B ( YoY) with using multiple products

↑ +27%

Customer Count ↓10.8M MAUs (flat QoQ, -5% YoY) stabilizing

Retention Metrics ↑Monthly churn improved 15% YoY to 2.1%

Key Risks

Crypto regulatory enforcement could impact 35% of transaction revenue
Payment for order flow restrictions threaten core revenue model
Cybersecurity breaches could severely damage brand trust
Interest rate sensitivity in margin lending business

Key Opportunities

International expansion addresses $5T+ TAM in retail investing
Retirement accounts targeting $35T market with early success
Securities lending program can scale 5x based on asset base
Banking product expansion leverages strong young customer base

Bottom Line

Robinhood's Q2 results demonstrate the company has successfully navigated its post-IPO challenges and positioned itself for sustainable growth. The combination of improved unit economics, product diversification, and operational efficiency provides multiple paths to profitability. While trading volatility exposure remains, the shift toward recurring revenue streams and international expansion reduces cyclical risk. Key metrics to watch include retirement account growth, international user adoption, and Gold subscription penetration. For operators, Robinhood's success in reducing customer acquisition costs while improving satisfaction highlights the importance of product-led growth. The contrarian insight is that regulatory pressure around payment for order flow could actually benefit Robinhood by raising barriers to entry and forcing industry consolidation.