Galaxy records $323M profit as Robinhood’s crypto revenue drops 55%

• Crypto remained a weak spot for Robinhood despite record Q3 total revenue of $1.42 billion, with crypto revenue dropping 55% year on year to $120 million.
• With over $80 billion in DEX volume and $50 million in fees, Robinhood Chain secured a top-five ranking among chains by revenue and volume.
• A return to profitability saw Galaxy Digital post net income of $323 million against an $85 million loss in Q2, while adjusted EBITDA stood at $455 million.

Crypto revenue remained under pressure at Robinhood (HOOD), even as total revenue surged. In its results announced on Tuesday, the company posted a 55% YoY fall in Q3 crypto revenue.

What drove Robinhood's record $1.42 billion total revenue?

Robinhood's Q3 earnings statement showed crypto revenue of $120 million for the three months ended September 30. Growth in options trading, equities and event contracts lifted total net revenue by 12% YoY to an all-time high of $1.42 billion.

Helping cushion the fall in cryptocurrency-related income, equities revenue grew 41% to $121 million. Revenue from event contracts jumped more than sixfold from a year earlier to $173 million, while options brought in $399 million, a 31% increase.

Profitability weakened, however, with Robinhood's net income down 14% year on year at $476 million and diluted earnings per share falling 16% to $0.51. The company linked $67 million of the net loss to unrealised losses, largely arising from the valuation of Robinhood Ventures Fund I.

In the earnings release, Robinhood's Chief Financial Officer Shiv Verma said: “Customers are trusting us with more of their assets as we deliver on our product roadmap, leading to our highest quarter ever for revenues,”

On a sequential basis, crypto revenue recovered 20% QoQ to $120 million, even as it remained below the year-earlier level. Robinhood also disclosed a 38% YoY contraction in crypto notional trading volume to $50 billion. Volumes on Robinhood App dropped 48% to $21 billion, and those on Bitstamp decreased 28% to $29 billion.

During its first quarter on mainnet, Robinhood Chain achieved a top-five ranking by revenue and volume. The chain recorded more than $80 billion in decentralised exchange (DEX) volume and generated over $50 million in chain fees.

After ending the session 1.8% higher at $94.56, HOOD subsequently dropped more than 7% in after-hours trading.

How did Galaxy Digital return to a $323 million Q3 profit?

Galaxy Digital (GLXY) posted Q3 net income of $323 million, marking a turnaround from the previous quarter's $85 million net loss.

Against a $77 million loss in Q2, adjusted EBITDA recovered to $455 million. Adjusted gross profit, meanwhile, increased from $43 million to $569 million.

Contributions came from the company's digital asset business, investment portfolio and data centre operations. Much of the improvement was driven by its Treasury and Corporate segment, which delivered gross profit of $419 million as valuations of digital asset holdings and private investments increased.

The Digital Assets segment at Galaxy also strengthened: adjusted gross profit increased from $66 million in the preceding quarter to $71 million. Alongside a 12% QoQ rise in trading volumes, the average loan book grew 27% to $1.8 billion.

A 9.5% gain on the day took GLXY to a closing price of $17.18.