Robinhood Markets (HOOD -1.83%) recently issued its first earnings report since going public, and the numbers look quite strong. But it's important for investors to know where Robinhood's earnings are coming from to be able to properly evaluate the risks.

In this Fool Live video clip, recorded on Aug. 23, contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss the key takeaways investors need to know.

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Jason Moser: Matt, Robinhood didn't have such a beautiful day the day after its earnings announced. The market didn't really receive, I think, that report all that well. Going through the release, I feel like all things considered between the market's reaction and the actual numbers, for me this isn't a company I feel compelled to put on my radar, but I also feel like this earnings report could've gone far worse.

Matt Frankel: The numbers were great. Revenue more than doubled year over year. But what investors really need to know is, it's not a stock trading app. Everyone thinks of Robinhood as this big trading app. They make the bulk of their money through options and crypto.

Moser: Yeah, I was going to say it's a crypto trading app.

Frankel: There are other platforms that do the stock trading part better in my opinion. SoFi has a platform that does it better, Cash App brokerage platform does stock trading better. No one does options trading quite as free and democratized as Robinhood does, and no one offers as much variety in crypto as Robinhood does through a traditional brokerage platform. Robinhood has seven cryptocurrencies, including Dogecoin, which accounted for 34% of its crypto revenue this quarter by the way.

Moser: That can't be good. Let's be real here, folks, that can't be good.

Frankel: My point is, those are things that are, the crypto, I don't want to call it a fad because there are some long-term use cases for those. Dogecoin's a fad. I will be plain and simple.

Moser: It feels like it is.

Frankel: But is it going to be at its current interest level forever? I don't know. It may be, maybe not. That was 51% of Robinhood's transaction-based revenue. This quarter was crypto trading. That's a lot to rely on crypto trading.

Moser: It is. It really is.

Frankel: Options trading especially is a worry. It's not quite as big as crypto trading for Robinhood, but it's a lot bigger than equities trading. It made up $165 million out of $565 million of revenue. You could probably back me up on this. If you don't know what you're doing with options, you're probably going to lose money.

Moser: I would agree. I think that with options, it's far more nuanced. It requires more education. I think it's far more than an active style of investing. You need to stay on top of that strategy far more than you would if you're just say, a buy-and hold investor taking that longer view.

Frankel: That's the point. Robinhood are relying on these other options traders to keep trading at these elevated volumes. But what happens when inexperienced option traders buy too many call options and lose their money and then lose interest?

Moser: I feel like we've seen the worst case scenario there. We've seen some stories that exist, the worst of the worst case.

Frankel: I would worry as a shareholder, I'm not a shareholder of Robinhood but, If I were, I would worry that they are so dependent on those two forms of revenue that make up almost between the two of them. That's 90% of their transaction-based revenue. They make a little bit of revenue from selling subscriptions. They've a premium, the Robinhood gold platform that accounts for a little bit of revenue. But 90% or close to it of their transaction-based commission revenue, in other words, not commissions, but they make a payment for order flow, things like that, comes from crypto and options. That would worry me if it was, say 50% stock trading revenue, great, that's sustainable. The crypto and options thing scares me. I don't know about you.

Moser: Well, it does. For me, I don't know if it scares me as much as it just makes me really doubt the sustainability. I think that's the key. It's one thing to do it well for long stretches of time, and I think that's where I grow a little bit concerned, and I think one of the signs with Robinhood that makes me view it a little bit more glass half empty, you look at assets under custody, and it was very encouraging when you look at the actual number. Assets under custody reached $102 billion. I think it was up something like 205% from a year ago. On the surface it sounds great, but now, when you couple that with the actual number of cumulative funded accounts at 22.5 million accounts, all of a sudden now you see that there's this account average of around $4,500. That's telling us a couple of things. It's telling us number one, that, on the average, they're not high-value clients. I mean, $4,500, it's not a high-value client, particularly when you look at something like a Schwab that hold like $7.5 trillion under custody. I would also imagine that of that $4,500 average, I bet you the median is far lower. You've got this one-two punch of not the most valuable clients in the world, and they're not investing as much as they are speculating. That to me is scary.