Robinhood delivered a stronger-than-expected second quarter, posting record revenue of $1.31 billion that surpassed analyst estimates ranging from $1.25 billion to $1.28 billion. Earnings per share came in at $0.62, well above the $0.42 analysts had projected. The results were fueled in part by growth in the company's Robinhood Gold subscription business and robust activity in its prediction market offerings, marking a notable shift in the revenue mix as the company diversifies beyond its traditional equities and crypto trading base.

Total prediction market volume on Robinhood's platform surged to 13 billion contracts in Q2, up from 9 billion in the first quarter. The category, which allows users to wager on outcomes spanning sports, elections, and other events, has grown rapidly enough that the CEO of Kalshi, an industry leader, recently identified Robinhood as its primary competitor. Prediction markets have drawn increasing mainstream attention as the Commodity Futures Trading Commission, which regulates event contracts, has engaged with platforms operating in the space, creating a regulatory pathway distinct from securities oversight.

Revenue from prediction markets climbed from approximately $104 million in Q1 to $156 million in Q2. According to Bill Birmingham, managing director at REX Financial, this translated to roughly 1.15 cents in revenue per event contract.

Speaking with reporters on an earnings call, Robinhood CFO Shiv Verma explained that as prediction market volume expands, the company has been working to reduce the spread it collects from users, particularly on less popular bets. To achieve this, Robinhood has been routing more transactions through Rothera, an in-house platform operated in partnership with market maker Susquehanna, which Verma said offers lower fees. Previously, Robinhood relied on Kalshi and other external firms to handle the back end of its prediction market operations, sharing a portion of the revenue. The move echoes Robinhood's broader strategy of building internal infrastructure for order routing and execution, a pattern it previously followed in equities and options as those product lines scaled.

Verma highlighted additional strengths from the quarter, including 39% year-over-year growth in Robinhood Gold subscriptions, bringing the total to 4.8 million customers. He also pointed to a record $22 billion in customer deposits and said the company's disciplined approach to expense management has positioned it favorably in terms of free cash flow. The Gold subscription tier bundles features such as higher interest on uninvested cash and margin lending at reduced rates, offerings that compete with premium tiers at established brokerages.

The earnings report was not without downside. Robinhood's cryptocurrency business, historically a significant revenue driver, continued to contract. The segment generated $100 million in Q2, marking a 38% year-over-year decline as the broader crypto market remained in an extended downturn. Retail trading volumes across major crypto platforms broadly declined during this period, pressuring fee-based revenue models.

Robinhood shares initially rose following the earnings release but later relinquished those gains. The broader market had fallen approximately 3% the same day after the Federal Reserve's decision to hold interest rates steady. HOOD shares were trading around $89 after opening near $92.

This story was originally featured on Fortune.com.