Robinhood Now Runs 13 Revenue Lines Above $100 Million a Year. A 2-Month-Old Network Could Be Next.

Key Points

• Robinhood's July earnings release counted 13 business lines above $100 million in annualized revenue.
• Robinhood Chain collected about $3.8 million in fees on Sept. 1 -- more than the Ethereum and Base networks that day -- then topped it with about $4.5 million Wednesday.
• Equities and options order flow still supplies about 36% of revenue.
• 10 stocks we like better than Robinhood Markets ›

Robinhood (NASDAQ:HOOD) shares were up about 15% as of this writing Thursday, at about $123.

The jump followed a wave of analyst notes and a record day on its own new blockchain network. Morgan Stanley upgraded the stock Tuesday to overweight from equal weight and lifted its price target to $150 from $124, and more bullish notes followed this week.

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Morgan Stanley analyst Michael Cyprys argued that Robinhood's expanding product lineup is producing more activity and more revenue per customer. In plain terms, they're arguing Robinhood is no longer just a trading app.

And Robinhood itself put a number on that idea in late July: 13 business lines that have each reached $100 million or more in annualized revenue.

Since then, network data suggests a 14th has joined the list, and it didn't exist three months ago.

Image source: Getty Images.

The count holds up

Robinhood's second-quarter report, released in late July, showed record revenue of $1.31 billion, up 32% year over year, and net income up 48% (helped by one-time investment gains). Chief financial officer Shiv Verma said the results reflected the company's product pace, with "Robinhood Legend and the Credit Card business joining our growing roster of now thirteen different business lines that have reached $100 million-plus in annualized revenues."

I count 13 lines in the 10-Q's revenue table that annualize above $100 million (anything above $25 million in the quarter). They span options, event contracts, cryptocurrencies, and equities, five interest-based lines led by margin lending, Gold subscriptions, proxy services, and two catch-all "other" buckets. The company's list is built on products rather than filing line items (Robinhood Legend doesn't get its own row), but both counts land at 13.

Lines can fall off the list, too. Securities lending was above the bar a year ago, at $54 million in the quarter, and produced just $10 million in this one.

How big is the newest line?

The 14th didn't appear in any of those documents. It barely existed when they were filed.

Robinhood Chain, the company's own blockchain network built for real-world assets such as tokenized stocks, went live on July 1 -- one day after the second quarter ended.

Not only did the network set a fee record of about $3.8 million on Tuesday, but it also collected more than the Ethereum and Base networks that day. It broke that record Wednesday at about $4.5 million, according to DefiLlama data. Its average daily fee pace over the past 30 days now annualizes to about $179 million.

That $179 million needs two adjustments. Robinhood sends about 10% of the network's revenue after costs back to the Arbitrum ecosystem, whose technology the chain runs on. And annualizing the hottest stretch of a two-month-old network is generous math -- the chain's lifetime revenue through the start of this week was only about $10 million, and daily fees that spike may fade just as quickly.

Even with those adjustments, the pace arguably clears $100 million. Zoom out, though, and it amounts to about 2% of Robinhood's revenue pace of roughly $5.2 billion. Big enough to make the list, and far too small to carry the company.

Order flow still supplies a third of revenue

How much of the company still runs on its best-known business, routing customers' stock and options trades to market makers?

In the second quarter, equities produced $129 million of transaction revenue and options $342 million. Together, the two lines produced about 36% of total revenue.

But that share isn't shrinking. A year earlier, the two supplied about a third of revenue as well, and both are still growing. Equities transaction revenue nearly doubled year over year, while options revenue rose 29%.

The diversification is happening elsewhere. Cryptocurrency trading revenue was $160 million a year ago, $134 million in the first quarter, and $100 million in the second -- a steady step down. Meanwhile, event contracts (Robinhood's prediction-markets business) went from $10 million a year ago to $104 million in the first quarter and then $156 million in the latest one, and margin interest nearly doubled to $215 million.

Ultimately, the case under this week's upgrades mostly checks out against Robinhood's own disclosures. The valuation is where I hesitate.

After Thursday's jump, shares cost about 43 times the earnings analysts expect the company to generate next year, while brokerage peer Charles Schwab costs about 14 times its own next-year forecast. Of course, some premium is deserved. After all, Schwab isn't growing revenue 32% or adding two new $100 million lines in a single quarter.

However, higher price targets aren't a reason to buy a stock, and neither is a 15% pop. I wouldn't sell a business that keeps adding $100 million lines. But I wouldn't chase the growth stock here, either. I view it as a hold for now.

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Charles Schwab is an advertising partner of Motley Fool Money. Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool recommends Charles Schwab and recommends the following options: short September 2026 $95 calls on Charles Schwab. The Motley Fool has a disclosure policy.