(Reuters) -Robinhood Markets said on Wednesday its quarterly profit had nearly quadrupled as retail investors boosted trading volumes amid an AI-fueled rally, and announced the retirement of its longtime
finance chief.
Results from the online brokerage suggest that small investors seized the opportunities presented by the momentum in the markets and largely brushed aside mounting concerns of a bubble.
"Our customers tend to be younger, and have long time horizons. They're naturally drawn to more growth type names, but they are also being pretty prudent," Chief Financial Officer Jason Warnick, who will step down next year, said in an interview.
The Menlo Park, California-based company's profit soared to $556 million, or 61 cents per share, for the third-quarter ended September 30, from $150 million, or 17 cents per share, a year earlier.
Transaction-based revenue more than doubled to $730 million. Equities revenue rose 132% while crypto and options climbed 300% and 50%, respectively.
The company, however, raised its forecast for 2025 adjusted operating expenses, including stock-based compensation, to about $2.28 billion from an earlier estimate of $2.15 billion to $2.25 billion.
Shares were down 2.5% in extended trading.
PANDEMIC TRADERS WHO NEVER LEFT
The surge in retail investor engagement, once written off as a pandemic-era fad, has become a dominant force shaping markets.
"Throughout this year, retail investors have consistently treated market pullbacks as opportunities to add exposure. As institutional appetite fades, retail participation helps cushion declines and slow momentum-driven sell-offs," a note last month from financial research firm Vanda said.
The shift has meaningful implications for brokerages such as Robinhood, a favorite among younger investors eager to get exposure to financial markets.
The company has rolled out new products and features designed to embed itself more deeply in customers' financial lives.
In March, Robinhood launched a prediction markets hub in partnership with Kalshi. Last week, it also launched futures trading for its customers in the UK.
The expanded lineup of products has made Robinhood's premium Gold subscription more attractive, fueling a 77% increase to 3.9 million users.
Warnick also said that the company's fourth quarter was off to a strong start in October, with record monthly trading volumes across equities, options, prediction markets and futures.
The company joined the benchmark S&P 500 index in September, in a major milestone in its evolution from a pandemic-era trading upstart to a fintech powerhouse.
CFO SUCCESSION
Warnick will retire from the CFO position in 2026, the company said, after more than seven years in the role.
The former Amazon executive will transition out of the role in the first quarter and serve as a strategic adviser until September 1, 2026.
The company has named longtime insider Shiv Verma as his successor.
In an interview, Verma said he was bullish on Robinhood's prediction markets business.
"It's a new asset class, and we want to be at the forefront of it. It's one of the areas we are heavily investing in," he said.
(Reporting by Niket Nishant in Bengaluru; Editing by Sriraj Kalluvila)
